Thursday, June 20, 2024
BusinessAll tax schemes under revision: MoF

All tax schemes under revision: MoF

All tax schemes are under revision, Director of Tax Policy at the Ministry of Finance, Mulay Woldu told The Reporter.

All tax schemes including Value Added Tax (VAT), income tax, turnover tax and other tax schemes are under the process of revision, Mulay said.

According to the director, much of the revision work is mainly conducted to improve the country’s tax regime and other sorts of revenues.

The director noted that the main reason for the review is encouraging investment, creating more jobs and benefitting consumers. He stated: “One thing that needs to be known is the reason why work is underway to improve tax revenue. It is not to impose pressure on society or the producer in order to raise revenue. Rather, it is to encourage investments and create more jobs, and ensure that consumers benefit as we collect the taxes we need to collect,” said Mulay.

In addition, he stated, there are ongoing efforts to increase tax revenue and bridge policy gaps. He said a committee composed of members from the Ministry of Finance, Ministry of Revenues, the Customs Commission and the Ministry of Trade and Industry meet weekly to assess administrative and policy issues and make necessary improvements.

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Though the Ministry of Finance started the process of revising all tax schemes a year ago, the director explained, the COVID-19 pandemic has delayed the process that needs a wide-ranging discussion. The process has, however, resumed.

The director stated that all issues of revising the tax system are examined from two perspectives: both administratively and policy wise. He noted that the changes will then be issued as a policy and administrative amendment, resolving the gap between governance and policy. He further stated that there will also be a huge improvement in revenue generation.

According to the Ministry of Finance, one of the major reforms being conducted currently is the issue of duty free privileges. In the past, at least 35 institutions in the country issued duty free privileges.  

However, privileges should be given to a single center in a way that encourages investments. The main purpose of the amendment is not to control the flow of investment but to reduce the inconvenience of providing services to the investor by gathering them in one center.

The privilege will only be provided by the Ministry of Finance. The revised tax scheme will be presented to the Council of Ministers for approval.

Two weeks ago, the Ministry of Finance announced a new customs tariff book, a price index of 8,000 international import items, used to determine customs duty rates.

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