1. Chapter Eleven
Tax Administration

2. Tax administration
Systematic organization and arrangements to assess and collect taxes from taxpayers
Tax administration has:
Management system
Tax Laws or Codes
Knowledgeable Administrator

3. Requirements for an efficient and effective tax administration
Simplification of the Tax Procedures
Establishment of separate units for tax reforms
Provision of training to employees
Development of a good accounting system
Monitoring closely the behavior of taxpayers
Provisions of relief to industries facing difficulty

4. Requirments- cont'd
Viewing taxpayers more as a clients than as enemies
Encouraging self assessment
Educating taxpayers
Decentralizations of tax Administration
Encouraging Tax Withholding and Record Keeping

5. Tax administration Structure in Ethiopia
Federal tax collecting body, ERCA constitute
Ethiopian Customs Authority, National Lottery Administration and Inland Revenue Authority (Federal or Regional).
Federal Inland Revenue Authority and Bureaus of Regional Tax Authorities collect all the direct taxes and three indirect taxes (Value Added Tax, Turnover Tax and Excise Tax).
The Ethiopian Customs Authority is responsible for Collecting Customs Duty, Excise Tax, Value Added Tax and Withholding Tax on imported goods

6. Revenue sharing b/n Federal Government and Regions
According to FDRE constitution, the FDRE comprises of a federal/central government, nine member national regional self-government and two city administrations.
Each of the organs has their respective legislative, executive and judicial powers.
Accordingly, both the federal government and each of the state governments are empowered to levy and collect taxes (revenues) within their own spheres.

7. Reven ue sharing- c0nt'd
The FDRE constitution divides the power of taxation into four categories, namely:
Federal power of taxation
State power of taxation
Concurrent power of taxation and
Undesignated power of taxation.

8. Federal (Central) power of taxation
It is the exclusive power of the federal government of Ethiopia to levy and collect the following types of taxes through the Ethiopian Revenue and Customs Authority:
Duties and taxes on foreign trade
Employment income tax from employees of the federal government and international organizations
Tax on enterprises owned by the federal government.
Taxes on game of chances
Taxes on income of air, rail (train) and sea (marine), transport services.
Federal stamp duties and,
Fees and charges relating to licenses issued by organs of the federal government.

9. State (regional or National) power taxations
The following are separate list of taxes and other revenues to be collected by the regional/ state governments through the representative Bureaus of regional Revenue Authorities.
Personal income tax on employees of state government and private enterprises within the regional states,
Taxes on sole proprietorships businesses within the territory.
Agricultural income tax,
Royalties and land rentals on mining activities.
Fees and charges relating to licenses and services rendered by organs of the regional governments,
Rural land use fee.

10. concurrent power of taxation
A concurrent power of taxation exists where the federal government and the state governments have joint constitutional authority to levy and collect a particular tax. The federal government and state governments shall jointly levy and collect the following taxes and other revenues:
Taxes on enterprises jointly owned/established by the federal and regional governments.
Taxes on private companies.
Taxes on dividends due to shareholders of private companies, and
Taxes on incomes derived from large-scale mining

11. Revenue sharing for concurrent power of taxation
Types of Joint Revenue
Revenue Sharing Ratio
Jointly Established Companies
Federal Government
State Governments
Profit Tax
As per Capital Share
As per Capital share
Employee Income Tax
50%
Indirect Taxes
70%
30%
Private Companies
Dividends
Minerals and Petroleum
Royalty
60%
40%

12. Undesignated powers of taxation
For taxes which are not specifically listed to be collected either by the federal government, state governments or jointly by the federal government and state governments
The house of the federation and the house of people’s representatives shall, in a joint session, determine by a two-third majority vote on the exercise of powers and taxation.

13. End of the ………..
Finished!