Walter hellerstein abstract this paper gives an overview of the indian tax system and discusses the challenges in tax collection faced by developing economies using india as a model. The zero rate is also applied to all exports and sales to exempted sectors under specific regimes. This study was restricted on bishoftu town vat registered business those who have annual sales turnover of birr 500,000 and above. Here are the highlights of the value added tax proclamation and regulation. Value added tax refund declaration form 5 by directive 272002. The tax authority conducts annual tax assessment to improve the efficiency and fairness of tax in the given country or region.
Mscprogram value added tax vat withholding practices and challenges acknowledgment. Value added tax 7 issue 1 chapter 476 value added tax act date of assent. Assessments of value added tax vat administration in guraghe zone revenue authority article pdf available in research journal of finance and accounting 1007. Value added tax administration in ethiopia unsw business school. Some of the amendments have introduced significant changes which are yet to. Tax assessment refers to valuing the income or value of the individual for the purpose of tax payment. However the vat is expected to have application in situations where supplies are made by statutory or local authorities which are equivalent or similar to those supplied by taxable. Definitions in these regulations, unless the context requires otherwise. Branch the ethiopian revenue and customs authority erca submitted by me.
Tax regulations in ethiopia details written by administrator published on 30 april 2008 category. As most of the developing countries do, ethiopia was highly dependent on external financial resources to finance its development activities. Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. It seizes and takes legal action on the people and vehicles involved in the act of smuggling while it facilitates the legitimate. A proclamation to amend the value added tax proclamation. Few fiscal issues are more important in developing and transitional economies dte than the value added tax vat. It includes all economic activities conducted in algeria. The international centre for tax and development ictd is a research network improving the quality of tax policy and administration in subsaharan africa. On this page, you can find the rate of vat in ethiopia, voluntary and obligatory registration of vat in ethiopia, zero rate vat in ethiopia, and vat on imported goods.
Despite this trend, there is limited understanding of value added tax vat compliance in africa. The vat regime under ethiopian law with special emphasis. International licence, which permits downloading and sharing provided the. Ethiopia has recently implemented the value added tax system to its tax regime. Pdf addis ababa university faculty of business and. Value added tax the panel developed and analyzed a proposal to adopt a value added tax vat that would replace a portion of both the individual and corporate income taxes. Pdf assessments of value added tax vat administration. An act of parliament to impose a tax to be known as value added tax on goods delivered in, or imported into kenya.
Value added tax registration, rates, and exemptions in. The starting point of conventional economic growth theorisation is the neoclassical model of solow 1956. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. It is a general tax that applies, in principle, to all commercial activities involving the production and distribution of. The aim of the study will generally, to assess the main problem relating to vat administration and vat payers in bishoftu town. Vat calculator ethiopia free online math calculator and. Now it raises about 20 percent of the worlds tax revenue, and affects about 4 billion people keen and lockwood, 2007. Posted by the ethiopia observatory teo by addis fortune.
The challenges of tax collection in developing economies with special reference to india by pramod kumar rai under the direction of prof. Ethiopia sales tax rate vat 20142020 data 20212022. Tax base of sales tax and vat value added tax is often considered to be essentially a retail sales tax. The challenges of tax collection in developing economies. A word or term in these regulations shall have the same meaning that it has in the. Pdf value added tax collection challenges in ethiopia. Vat is imposed for every imported goods and services other than an exempt imports and an import of services. Sales tax rate in ethiopia is expected to reach 15. Now, therefore, in accordance with article 55 1 and 11 of the constitution of the federal democratic republic of ethiopia it is hereby proclaimed as follows. Because tally must respond to changing market conditions, it should not be interpreted to be a commitment on the part of tally, and tally cannot guarantee the. African governments are increasingly seeking to improve tax compliance in the pursuit of domestic revenue sources.
In addition to raising revenue, the mor is responsible to protect the society from adverse effects of smuggling. Value added tax refund declaration form 4 by directive 272002. Fifty years ago the value added tax vat was rarely heard outside of france and a few dry specialist texts. In ethiopia, increased vat compliance is essential for the government to meet its ambitious domestic revenue goals. Perhaps a necessity for the emerging tplf aristocracy.
Since then, the value added tax decree, had been amended more than half a dozen times the latest being the value added tax amendment act of 2007. Subnational value added tax in ethiopia and implications for states fiscal capacity. Value added tax is a recent addition to the tax regime in ethiopia. Addis ababa university school of graduate studies the sources of the recent inflationary experience in ethiopia a thesis submitted to the school of graduate studies of addis ababa university in partial fulfillment of the requirements for the degree of master of science in economics international economics by. Assessment on the implementation of valueadded tax vat. It works with african partners to collaboratively generate policyrelevant research and build african research capacity in the area of taxation.
Value added tax vat vat is applied on the supply of goods or services in algeria. For many decades, the tax contribution to gdp was very less and this needs an improvement. Academic work so far analyzed the hotel quality based on the existence of an. This paper examines vat administration in ethiopia and identifies key. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. The information contained in this document is current as of the date of publication and subject to change. A low inflation environment is important to keep real wages stable and ensure that returns on edu.
Nevertheless, it differs from a retail sales tax in that it is collected at each stage of the production and distribution process, not solely at the stage where a product is. Now, therefore, in accordance with article 55 1 and 11 of the constitution of the federal democratic republic of ethiopia it is hereby procloaimed as follows. Official pdf, 80 pages world bank documents world bank group. Valuedadded tax vat was introduced in january 2003 and may mean a. The gross domestic product gdp in ethiopia was worth 94 billion us dollars in 2019, according to official data from the world bank and projections from trading economics. Value added tax vat or goods and services tax gst as termed in some countries has become a major tax instrument in a large number of countries worldwide. In the longterm, the ethiopia sales tax rate vat is projected to trend around 15. The vat is a type of consumption tax that is similar to a retail sales tax but is collected in smaller increments throughout the production process. The structure of tax and rationale of recent business. The value added tax vat proclamation no 2852002 which has rescinded and replaced the sales and excise tax proclamation no. Poverty, incidence analysis, valueadded tax, povertyrelated expenditure. Short title these regulations may be cited as the council of ministers value added tax regulations no. Whereas, it has become necessary to amend the value added tax proclamation no. Here in this thread i am sharing lecture notes in ebook format pdf for the subject vat value added tax for llb and ba.
Perceptions of value added tax filing and invoicing. Ethiopian ministry of revenues mor is the body responsible for collecting revenue from customs duties and domestic taxes. Anheuserbusch inbev 20f annual report filed 20191231. It is a consumption tax for it is borne ultimately by the final consumer. Standard vat is currently fixed at the rate of 15%. The principal taxes that affect businesses in ethiopia are income taxes, value added tax vat, turnover tax. Value added tax levied at each stage on value added in the economic chain of supply and it is a constant rate. Tax this page presents links to guide you on types of taxes, tax rates, exemptions, tax filing procedures and other information you need when you start up a business as a selfemployed person, a partnership or a limited company. Nevertheless, it differs from a retail sales tax in that it is collected at each stage of the production and distribution process, not solely at the stage where a product is sold to the consumer. Ethiopia introduced value added tax vat in the year 2003 as a replacement to sales tax. The value added tax vat was introduced in nigeria in 1993 by the federal military government. Value added tax, implementation of vat in ethiopia, implementation challenges, jigjiga town introduction value added tax herein after vat is a general consumption tax assessed on the value added to goods and services. A comparative overview dasalegn mosissa jalata lecturer department of accounting and finance, college of business and economics. The study focused on value added tax administration at bishoftu town.
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