Loopholes in the Tax Assessment of Coffee Traders in Ethiopia: The Case of Southern Nations, Nationalities, and Peoples Region and Addis Ababa
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Date
2019-06
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Addis Ababa University
Abstract
Tax assessment is a technical and legal procedure to assess taxable income from prospective tax-payers. Different tax assessment methods stated in Ethiopian tax law to achieve revenue collection effort and exhaustively collect tax revenue to the entire public service. The Ethiopian economy mainly depends on agricultural goods. In 2017/18, 90 % hard currency obtained from agricultural goods export, coffee contributes 33 % of total agriculture goods. 15 % of Ethiopian people directly or indirectly engaging in the coffee business. However, tax collection from the coffee industry is not an easy task for the government for different reasons, especially in coffee supply traders. Tax collectors and coffee business regulators didn’t work in harmonizing ways to achieve their common goal. There is no clear law and regulation other than general income tax law to regulate tax on the coffee business, especial in the primary production level. One of the main factors to flourish coffee smuggling business over the nation is a result of lenient tax assessment application on the coffee trade. Different types of Loophole in the tax assessment on coffee business are a public mystery, especially in coffee grower areas and local markets like Merkato. "Coffee marketing and control proclamation" the current or the previous strongly prohibited exportable coffee trading in the local market. But, the fact is in daylight exportable coffee sales in different local markets. One of the main issues in tax assessment is the coffee conversion ratio in the supply and export coffee process. Ethiopia adopts international coffee conversion agreements. This agreement holds coffee conversion factors indicators in general but tax collectors did not apply those indicators and they prefer to use the different dismantled directive and circulars. Tremendous tax compliant and litigation go to appellant bodies and courts in the past decade in SNNPR and Addis Ababa, and this comes from a loophole in the tax assessment on the coffee business. There is no national conversion to the green coffee equivalent standard applicable for tax assessment and govern a coffee marketing business tractability. In Recent move Ethiopian coffee and spices market development authority working on to issue a national coffee conversion standard applicable for the export coffee process. And SNNPR regional CTSA also submit a three consecutive year red cherry coffee conversion to green bean research data to tax collectors for the sake of tax assessment even if not welcomed tax collectors. This thesis tried to find out the loopholes in tax assessment in the coffee trade in Ethiopia in general and recommend possible ways to stakeholders.
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Law