Wednesday, February 21, 2024
BusinessEnterprise seeks Parliament’s assistance to resolve Turkish textile plants’ tax issue

Enterprise seeks Parliament’s assistance to resolve Turkish textile plants’ tax issue

Public Enterprises Holdings and Administration (PEHA) is seeking assistance from Parliament to resolve a concerning issue involving two Turkish textile plants that owe over two billion birr in unpaid accumulated taxes.

The massive textile enterprises, Else Addis Industrial PLC and Ayka Addis, commenced operations in 2010 and 2011. However, they have failed to repay millions of dollars in loans to the Development Bank of Ethiopia (DBE). Consequently, the bank eventually sold the collateral factories to another investor after numerous unsuccessful attempts.

During a report hearing session on November 29, 2023, Sewagegne Chane, the head of Finance Enterprises at PEHAA, informed the public enterprise holding standing committee that due to the sale of the companies to a third party by the DBE, the unpaid taxes from the initial investments of the factories are not imposed on the bank or the latest buyer.

Hence, the bank is requesting the cancellation of the outstanding taxes.

The Head further explained to the committee that the Development Bank’s largest nonperforming loans were in the manufacturing and agricultural sectors. Nevertheless, the bank has managed to transform itself from a USD five-billion loss position a few years ago into a profitable organization.

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However, since these companies were expected to pay the accumulated unpaid taxes during their investment period, the transfer of the collateral properties to the third party by the bank has created an issue regarding the payment of the outstanding taxes.

Due to the factories’ failure to pay the taxes on time, the DBE brought up the issue of cancelling the unpaid taxes with the finance minister when it transferred the collateral properties to a third party.

According to Sewagegne, documents have already been provided to the Ministry of Finance for assessment and cancellation. However, since the enterprise requires approval from Parliament, a prompt resolution on the matter is being requested.

Ayka Addis Textile Factory, once a prosperous textile industry, faced bankruptcy in 2014, resulting in the loss of employment for 4,500 workers. The factory’s dysfunction was further exacerbated by the political turmoil in Ethiopia.

Else Addis Textile Factory was the first Turkish firm to default, leading to the transfer of ownership to Ethiopian Capital after the owners failed to repay their debts.

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Video from Enat Bank Youtube Channel.

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