By Hayal Alemayehu | The Reporter
The shortage of foreign currency reserve has helped drop tax revenues following [a slower] foreign trade performance, Belachew Beyene, Director of Duties and Tax Audit with the Ethiopia Customs and Revenue Authority (ECRA), said Thursday.
“The import/export trade [during the current Ethiopian fiscal year] has not performed as expected partly due to shortage of foreign currency,” Belachew said. “And this has led the tax revenue to decline.”
The director made the remark while presenting a paper at a half-day seminar on “tax compliance” organized by the Association of Chartered Certified Accountants (ACCA).
Foreign trade accounts for 48 percent of the total tax revenue, with direct and domestic tax constituting 21 and 31 percent, respectively, according to the director.
Revenues secured from the export sector during the first nine months of the current fiscal year has fallen USD 800 million short of the target while the import trade showed a slight slowdown.
Aside from the shortage of foreign currency reserves, non-tax compliance was to account for the slowdown in tax revenues, according to Belachew.
“The average tax revenue /GDP ratio in sub-Saharan Africa, middle income countries and high income economies is 16 percent, 25 percent and 40 percent, respectively,” Belachew said. “The average tax revenue/GDP ratio for Ethiopia is 11 percent [which shows a weaker tax compliance rate compared to countries around the world].”