Bahir Dar Journal of Education

The 2016-Income Tax Reforms of Ethiopia: Drivers, Major Legislative Changes, and Constraints

2023-11-27T08:12:15+00:00

This article investigated Ethiopia’s 2016 income tax reform in terms of its drivers, actors involved in the process, major legislative changes and constraints that may impede its intended goals. It employed a qualitative research methodology, by which it gathered relevant data from key informant interviews, and document review. Legal analysis and description of issues are used as methods of analysis and discussion of the findings. The article identified the drivers of the reforms as addressing changes in the economy, enhancing revenue mobilization, improving efficiency and equity, and addressing gaps in previous income tax legislations. In the reform process, the Ministry of Finance had the upper hand position, though; practically the International Monetary Fund had a significant stump in the course of the process. However, the participation of other key national actors, including the Ministry of Revenues and the Ethiopian Chamber of Commerce was minimal. The reform has introduced major legislative changes, including the introduction of Schedule ‘E’ and new tax bases; taxation of residual income; and consolidation of tax administration laws. The article also discussed constraints that may impede the goals of the reforms, including the absence of impact assessment of the 2016 reforms; inflation; poor tax administration; lack of meaningful stakeholder participation; and low tax-to-GDP ratio. Finally, suggestions are made for undertaking impact assessment of the 2016 income tax reforms; redesigning the income tax system to be responsive to inflation; modernizing the tax administration; and enhancing meaningful stakeholders’ participation

The Need to Revisit Ability-to-Pay Principle in the Ethiopian Employment Income Tax System

2023-11-27T08:18:51+00:00

The application of the ability-to-pay principle in a given country supports the realization of a fair tax system and the protection of the basic rights of taxpayers. However, the application of the principle remains unclear in the Ethiopian employment income tax system. This article, through qualitative, comparative, and doctrinal research tools, tried to assess the application of the ability-to-pay principle under the income tax legal regime and its role in contributing to poverty reduction efforts in Ethiopia and to the protection of human rights. The result reveals that the Ethiopian employment income tax structure neglects the personal and family status of the taxpayer, the number of dependents and disability, thereby causing employees to pay the highest price as a result of the ever-increasing cost of living. This raises the need to reconsider the tax policy and amendment of the income tax laws in such a way it ensures tax payment based on the ability-to-pay and assist employees fulfil their basic needs

Appraisal of Ethiopian Tax Dispute Resolution System at the Review Department (of the Ministry of Revenue) and at Federal Tax Appeal Commission

2023-11-27T08:23:00+00:00

Tax disputes are inherent parts of a tax system, and require resolution mechanisms that effectively regulate and protect the interest of disputing parties. Commonly, countries provide for several layers of dispute resolution schemes. The schemes comprise internal review and external dispute resolution mechanisms that include quasi-judicial tax tribunals, courts and different kinds of Alternative Dispute Resolution methods. Ethiopia has made successive reforms on the laws and institutions pertaining to taxation and tax dispute resolution procedures. Despite successive reforms in the substantive content of tax laws, the dispute resolution system by and large remained the same. The 2016 reform, one of the latest reform moves, maintained much of the dispute resolution institutions with some changes in the details. The failure or success associated with these reforms and the overall application of tax dispute resolution system in the country has not been sufficiently studied. Using a qualitative research approach, this research thoroughly examined the Ethiopian law and the practice pertaining to the prevailing tax dispute resolutions system at Review Department of the Ministry of Revenue and the Federal Tax Appeal Commission. The research found out several legal and practical limitations regarding geographical accessibility, independence, legal certainty and access to justice. Thus, the existing tax dispute resolution system of Ethiopia needs to be re-visited so that the Country will have a tax dispute resolution system that balances the interest of the public and taxpayers

The Treatment of Ethiopian Consumer Cooperative Societies under the Ethiopian Income Tax and Value Added Tax Regime: Law and Practice

2023-11-27T08:28:17+00:00

The economic and social contribution of Cooperative Societies is immense in Ethiopia. In recognition of this, Federal Co-operative Society Proclamation No_985/2016 exempt them from income tax with restrictions on their transaction. Yet, they are obliged to pay all other direct and indirect taxes including VAT. There has been a rampant complaint in many parts of the country over the transactions of these institutions and their income & VAT treatment. The article aims at examining the magnitude and manifestations of the problem of Consumer Cooperative Societies taxation in Addis Ababa city and other three regional states (Amhara, SNNP and Oromiya). To attain this, a qualitative research approach is employed in the course of which pertinent legislations, key informant interviews and literature have been explored, analyzed and synthesized. The FDRE Constitution, Ethiopian Cooperative Laws and other legislations are used as primary sources of data. Key informant interview has also been conducted with authorities in Federal and city administration Cooperative Agencies and Revenue Authorities. Additionally, books, articles, journals, and other relevant materials on the subject are examined as secondary data sources. Finally, the study concludes that the Consumer Cooperatives in the study area are transacting outside members without taking in to consideration the unique feature of ‘serving only members’ and this income is treated as the income from Cooperative members; and there is no uniform system on levying and collecting of VAT., Therefore, Cooperative Agencies and Revenue Authorities of the country should exercise their mandate of regulating Co-operatives transaction and taxation

Issues of Design in Ethiopia’s Property Tax Reform: Lessons from Previous Legislative Regimes and Other Jurisdictions

2023-11-27T08:37:27+00:00

While property tax is the oldest of all types of taxes worldwide, the impulse to reform and reintroduce it in its ‘modern forms’ is a recent undertaking. Ethiopia has started property tax reform in 2011 intending to modernize the urban property valuation and taxation system across the urban centers of the country. The recent draft legislations and debates in the media seem to end the reform process that has stalled or been thrown into reverse. This article identifies and examines issues of design in Ethiopia’s property tax reform based on lessons from previous legislative regimes and experiences of other jurisdictions. Primary data were collected through legal document analysis and semi-structured interviews while secondary data were collected through document review. The findings from the investigation showed that there are various property tax design options in the determination of tax bases, rates, valuation methods, rules of exemptions and administrative procedures. The article put an emphasis on the need to carefully draw lessons from own past and other jurisdictions to successfully end the ongoing property tax reform.

A Critical Legal and Practical Appraisal of Ethiopian Fault Based Liability Rules

2023-11-27T08:46:12+00:00

Ethiopia’s Civil Code governing tortious liability was adopted six decades ago and is still applicable without any amendment. The basic purpose of this research is to explore the shortfalls and practical application of the Ethiopian tort law on liability arising from fault. To this effect, a qualitative research method is employed. Therefore, relevant laws are critically analyzed and data is collected by interviewing judges, attorneys, and law professors. The research findings reveal that the special part of the fault-based liability section of the Code is insufficient and does not adequately address breaches of human rights recognized under the FDRE constitution. The findings of the research also demonstrate that some of the provisions on fault-based liability are not practically applied by courts. Therefore, this article suggests an amendment to accommodate constitutional stipulations. The article also recommends extending the list of special faults to embrace emerging issues.

The Ethiopian Tort Law Vis-a-Vis Constantly Evolving Technology: An Empirical Analysis of Cyberspace and Product Defects Tort Liability

2023-11-27T08:50:38+00:00

Book IV, Title XIII, of the 1960 Ethiopian Civil Code governs the three categories of tortious liability—fault-based liability, strict liability, and vicarious liability—and the quantum and modalities of compensation. This law has existed for the last seven decades without significant revision. Consequently, one might hypothesize that Ethiopia's vast majority of tortious liability provisions must be more responsive to contemporary development. Hence, there are efforts to incorporate tort provisions in different legislations of the country, including the 1995 FDRE constitution, the 2005 FDRE Criminal Code, the Computer Crime Proclamation No. 958/2016, the Freedom of the Mass Media, and the Access to Information Proclamation No. 590/2008 (as amended by the Media Proclamation No. 1238/2021). Despite this, legal scholarship still needs to give tort law issues the proper attention they deserve. There needs to be more research outputs and a comprehensive analysis of Ethiopian tort law. Evidence-based research and recommendations in addressing the gaps in tort law contribute to policymakers addressing existing problems and serve as input to the revision of Book VI-Title XII of Ethiopia's Civil Code of 1960 on extra-contractual liability. Accordingly, this study attempts to show the legal loopholes in Ethiopian tort law regarding cyberspace torts and product liability as a case study. A triangulation of doctrinal and empirical qualitative research approaches is employed for data collection. The researchers employed document analysis, desk review, and semi-structured interviews with the relevant stakeholders to collect primary data. The researchers consulted relevant books, journals, periodicals, reports, and newspapers as secondary data sources. The finding shows that the 1960 Ethiopian Civil Code needs to be updated to administer tort liabilities caused by cyberspace and product liability. Concerning cyberspace torts, it fails to regulate online gambling and defamation, pop-up advertising, cybersquatting, spamming, and other cybers mearing tortious liabilities. By now, cryptocurrencies in Ethiopia are operating in the gray area of the law, which results in tortious liability. It needs careful revision to regulate product defects arising from 3D printing and autonomous driving. Therefore, the study recommends reforming the existing tort law in Ethiopia to bring it up to date with emerging developments such as cyberspace torts and product defects