IMF expects the government’s revenue to grow from 7.5 as of 2023/24 to 8.4 as of 2024/25.
Traders in Africa’s largest market, Mercato, Addis Ababa, Ethiopia, have shut down businesses in protest of the tax authority’s new receipt-based trading requirements.
The largest portions of Mercato’s commercial areas have remained closed today, although the protest started a week ago.
The merchants expressed their frustrations over the alleged government plan of collecting unreasonable or inflated taxes and seizing property in the name of the receipt-based trading system.
For the Addis Ababa Revenue Bureau, the receipt-based trading system is designed to register businesses that have not yet entered the VAT system, issue licenses to previously unlicensed businesses, enable eligible businesses to print invoices and address the widespread evasion of official invoicing practices.
Following today’s protest, the Deputy Mayor of Addis Ababa city, Jantirar Abay, and other officials from the city’s administration met with merchants of Mercato to discuss the problems hours ago.
Retailers reportedly said they cannot obtain receipts, instead, they suggest the government prioritize controlling the manufacturers and importers, adding that some government officials allegedly exploit the new regulation for personal gains.
Nevertheless, the International Monetary Fund (IMF) appreciated the Ethiopian government’s tax reform in its statement issued on October 18, 2024.
“The authorities have embarked on ambitious and comprehensive tax mobilization reforms, which will be guided by the recently approved National Medium-Term Revenue Strategy,” reads the statement.
“The new VAT law further streamlines exemptions, expands the revenue base, and strengthens administration and compliance framework. Sustained tax revenue mobilization reforms are critical for creating sufficient space for social and development spending needs,” IMF stressed.
The IMF Board approved US$ 3.4 billion for Ethiopia with an immediate disbursement equivalent to US$1 billion on July 29, 2024, and expects the government’s revenue to grow from 7.5 as of 2023/24 to 8.4 as of 2024/27.
