Tax revenue contributes 51.2pc of national budget, 8.51pc of GDP

Melaku Fenta, director general of the ERCA, heads up the press conference at his office on August 12, 2010.

The Ethiopian Revenues and Customs Authority (ERCA) reported collecting 35.6 billion Br from tax and non-tax revenues in the 2009/10 fiscal year, beating its target by a billion Birr and contributing 51.2pc of the national budget.

The ERCA recorded 61.1pc, 47.9pc, and 48.6pc growth, respectively, in collections of direct tax, non-tax revenues, and import and export tax, to the amount of 8.7, 8.8, and 18.1 billion Br each.

The authority had stepped up audits of customs, tax, and investigation as well as prosecution of tax evaders in the past year to increase the collection and enforcement of tax, said Melaku Fenta, director general of the ERCA.

The audits led to the discovery of 6.8 billion Br owed to it from desk audits, customs, taxes, and investigation audits, out of which 2.8 billion Br was collected. Fourteen companies alone owed the authority 1.2 billion Br. The authority is working on collecting the remaining four billion Birr owed to it, according to him.

The prosecution department of the ERCA had 1,936 criminal cases in different stages of processing throughout the year. It won 905 cases out of the 1,160 criminal charges it had instituted, leading to prison sentences of six months to 15 years for 1,122 people, Melaku said.

The ERCA has also taken 165 cases to the Cassation Bench of the Federal Supreme Court, including the high-profile cases of Ayele Debela, Gebrekidan Beyene, Kebede Tessera, and Ayalew Tessema involving massive tax evasion and fraud.

The authority, through its different branch offices, also confiscated goods worth 150.9 million Br that were being smuggled into the country and goods worth 25.8 million Br and cash in the amount of 2.4 million Br and 1.1 million dollars that were being smuggled out of the country. It has also confiscated gold worth 12.2 million Br and cars worth 182.5 million Br that were circulating  in Ethiopia illegally.

The Basic Tax Administration Process (BTAP) has taken steps to harmonise facilitation and control procedures, according to the one-year performance report.

To this end, the ERCA has prepared a list of 100 importers and 50 forwarders which have a high record of tax and customs fraud and a profile of 2,245 companies who pose a high risk.

The authority plans to increase its tax base and spread the tax system across the country in a bid to collect 54.1 billion Br in the 2010/11 fiscal year from tax and customs revenues. This will bring the gross domestic product (GDP) contribution of tax to 11.2pc, from 8.5pc last year. The increase would still be much lower than the African average of 24pc.

A part of the increased collection is expected to come from the National Lottery Administration of Ethiopia (NLAE), which is expected to contribute 65.5 million Br, up from 50.8 million Br in 2009/10.