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Assessment on the Value Added Tax implementation in Ethiopia

Abstract: 

Since the major shift in economic policy from the command economy to market oriented economic system in 1992/93, the Government of Ethiopia has taken a series of tariff and tax reform measures with the objective of doing away outdated tariff and tax laws, to strengthen customs and tax administration, to improve the balance of trade to attract domestic and foreign direct investment, to facilitate trade and liberalize trade, and to generate adequate revenue to cover current and capital expenditures hence to finance poverty reducing project send development in general. During the period of 1993/94 to 2002/03 the federal revenue to GDP ratio has increased from 8.9% in 1993 /94 to 11.87% in 2002/03 while national tax revenue to GDP ratio has increased to 15% in 2003 /03 from 10. 9% in 1993/94 to 102. 9% in 2002 /03 As is the case internationally, the value added tax (VAT) was introduced since January 1/2003 with the objectives of reducing distortions by other indirect taxes, to compensate for import tariff revenues lost as a consequence of trade liberalization and due to governments need to increase its revenue during the fifteen months of the implementation of VAT, there is an indication that the tax will bolster revenue as the C- efficiency ratio rises however, the current increase in VAT collection has been generated from a compliance level of 28% out of 8512 registrants up to march/2004, the balance being nil-filers, non-filers and stop filers. Coupled with many unregistered liable businesses, it seems that the tax base has been eroded. Though, collection of VAT at customs entry point doesn't have any problem the taxes of the federal Inland Revenue authority in the identification

Corporate Author: 
Alemayehu Seyoum ... [et al.] (editor)
Publisher: 
Ethiopian Economic Association (EEA)
Primary Descriptors: 

value added tax (VAT); Taxation

Secondary Descriptor: 

Tax reform

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
02/27/2013
Broad Subject heading: 
Economic policy - revenu - tax
Call Number: 
330.963 PRO 2005
Serial Key Title: 
Proceedings of the Second International Conference on the Ethiopian Economy
Publication catagory: 
Content type: 
Volume: 
III
Publication date: 
2013-05-27 23:05:00
Forum or Discussion date: 
2013-02-27 15:01:59
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annualy
Author: 

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