- Study suggests extending VAT withholding to private companies, similar to public bodies.
- Implementation of VAT and excise taxes on fuel expected to reduce Ethiopia’s tax-to-GDP gap.
- Decline in imports and public investment identified as factors in tax-to-GDP ratio drop.
- Report recommends large private companies as VAT withholding agents and increasing VAT rate to 17.5%.
- Warns of risks with private sector withholding and potential impact of VAT rate increase.
- Public entities currently handle VAT withholding on procurement.
- Structural changes and policy differences contribute to tax-to-GDP ratio disparity.
- Government measures like stricter VAT and fuel excise enforcement projected to narrow gap.
- Research shows minimal impact of tax policy changes on declining tax-to-GDP ratio since 2015/16.
- Emphasizes need for stronger enforcement and structural reforms for better revenue collection.
- Tax-to-GDP ratio declined by 4.6 percentage points from 2015/16 to 2022/23.
- Factors include reduced public investment, declining imports, and weakened tax collection efforts.
Source: capitalethiopia.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
