The first face to face meeting between representatives of the Ethiopian Customs Authority and those of the business community as delegated by AACCSA took place in June 2009. The meeting was called to discuss problems related to the current taxing system about which businesspeople had been voicing serious complaints and requested the relevant authorities to address them promptly before they sustained further damages in the course of their business activities.

It is to be recalled that at the June meeting, an official with the customs Authority said that the government was ready to work in collaboration with the business community to effectively deal with complaints pertaining to the taxing system. The Deputy Director of Change Management and Support Operations with the Authority, Ato Nebeyu Samuel had said that the government was committed to tackle problems encountered in the process of tax and VAT rating and promised that the complaints would be duly addressed through a working mechanism put in place for this same purpose and known as the Tax Appeal Hearing Council.

At the same meeting Ato Nebeyu had said that the Authority was committed to putting in place an effective, transparent and accountable tax system while admitting that some practices that hinder the legal trade and investment activities were observed in the process. A close reading of this statement rather suggest that the Authority has already admitted that there are practices in the tax and VAT rating system that adversely affect normal business flow and that such constraints need to be addressed through legal and institutional channels. The Authority further promised at that time to take administrative measures to correct the malpractices that have unduly affected the business community provided that the complaints were concretely substantiated.
A follow up to this meeting was called don September 8, 2009 to discuss the same complaints voiced by members of the business community concerning the fixing of profit and VAT. This was in fact a continuation or follow up meeting of the June 2009 deliberations that were exploratory in nature. The September 8 should have been a meeting where the Customs Authority should have come with concrete solutions to the problems already articulated by the business community but this did not happen unfortunately. Over 300 taxpayers who are members and non-members of AACCSA have taken part in each of the last two meetings and voiced the same complaints. Yet, the senior officials of the Authority made almost the same promises at the two meetings and no substantial advance was made over the first meeting. This, I am afraid might lead to what is often called an impasse or a kind of dialogue of the deaf whereby the same arguments are made but no understanding and concrete action results from them. Dialogue should rather be the art of resolving disputes and not a time wasting exercise in which both interlocutors make the same statements every time they meet. While the Customs Authority should have come up with concrete solutions to the concrete problems, it has limited itself to making the same vague statements that do not go into the heart of the matter.
The main arguments as initially articulated by the business community suggested that the present tax and VAT rating system was damaging to many businesses since it is arbitrary and hence too inflated or unrealistic and does not take into consideration the concrete problems faced by businesspeople in the various sectors. The controversial decision by the Ethiopian Revenues and Customs Authority to raise income tax and VAT as well as basic tax and interest rating was found to be unrealistic and damaging to their very survival at this particular time when the business community is facing the above-mentioned economic difficulties. No less alarming is the other decision concerning the method of tax rating recently introduced by the Authority and/or rating interests on taxes not on the basis of the audit results but through what is called “desk auditing” without consulting the business statements or documents presented by the businesses. Such a method has put the levels of both the taxes and the interests on taxes unrealistically high threatening some of businesses with bankruptcy.

As it was evident during the September 8 meeting deliberations were made on issue related to market problems caused by shortages of construction materials. These problems in turn reflect on the level of profits those involved in the sector used to enjoy. As business cools down profits re likely to go down and unless the tax and VAT system takes this into consideration, all those involved in the sector are bound to sustain double damage; first as a result of falling profits and second as a result of the unrealistic tax and VAT rating system put in place by the Authority. This is but one example among many. The tax and VAT rating system has become such a hot issue or a bone of contention because it affects many businesspeople in many sectors of the economy.
The other argument is that the arbitrary nature of the current tax and VAT rating system is vulnerable to corrupt practices on the part of the Authority and this is going to bring about additional damage to businesspeople who respect the law while favoring those who might break it and do not respect it, maybe because it is unfair in the first place. This is not however a good argument on the part of law breakers since the only legal way in which such unfairness could be addressed is through the proper channels as most members of the business community are doing now. The tax and VAT rating system should not harm the majority of law abiding and tax paying citizens while favoring a few transgressors. In a way, the unfairness of the tax and Vat rating system is bound to have further ramifications that complicate the issue.
As it was made evident during both the June and September meetings, AACCSA wants the Customs Authority to have an effective and transparent tax and VAT rating system that is clear to understand and most of all is fair to the business community. As Ato Fekadu Bekele, policy advocacy department manager with AACCSa said during the September meeting, the deliberations should help tax payers and tax collectors to address the misunderstandings in the tax system and put in place transparent working procedure because such a transparent approach would help avoid loopholes likely to arise from lack of awareness on the part of the business community on tax rules and procedures. Now that the arguments are clear and the problems are identified it will be up to the customs Authority to come up with concrete solutions to the problems and not waste time over meetings where the same arguments are repeated. Four months have passed since the first meeting was held and it is now time to settle the disputes as quickly as possible so that additional damages the business community might sustain can be avoided. This should be the time for concrete solutions to concrete problems and no further time wasting should be allowed.