Issues and Problems Associated with Value Added Registration: Practice Oriented Analysis
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Date
2017-04
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Addis Ababa University
Abstract
The administration of Value Added Tax (VAT) necessitates identification of taxable persons.
Countries execute this duty through a method of registration. Any country which has accepted
the VAT system should put in place institutional and legal frameworks which are instruments for
the registration of taxable persons. In addition to organizing such institutional and legal frame
works, countries should also establish systems which ensure the proper implementation of such
laws by the concerned governmental bodies. Moreover, they should have also a system which
evaluates the performance of the institutions and revising laws dealing with VAT registration.
Ethiopia introduced the VAT system by enacting proclamation No 285/2002 in 2002. This
proclamation has incorporated provisions which regulate the registration process of taxable
persons and other administrative aspects of VAT. Like the laws of other countries, it has also put
in place institutions which carry out the registration process. Moreover it has empowered the
Ministry of Finance and Economic Cooperation (MoFEC) and the Ethiopian Revenues and
Customs Authority (ERCA) to make directives pertaining to VAT registration when the need
arises.
The primary objective of this research was to scrutinize the practical implementation of the VAT
law provisions dealing with VAT registration and cancelation and examining practical problems
associated with registration. In addition, it tried to look into treatment of grievances related to
registration and cancellation. Furthermore attempt was made to evaluate the directive making
process of (MoFEC) and (ERCA) whether it adheres to the principle of legality or not. In the
process of doing this research, the researcher realized the existence of many practical and legal
gaps related to VAT registration. Besides the existence of such practical and legal gaps, the
writer of this paper has identified that the approach followed by ERCA in the process of
registering the taxable person is against the principle of legality. The research work concludes
that the existing legal and practical gaps are critical which can militate against the tax policy of
Ethiopia in general and the rationale behind VAT registration in particular. So, the researcher
strictly recommends that the reexamination of the law and the institutional frame work of
Ethiopia is very much necessary.
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Law