UK to Help Ethiopia Boost Revenue Collection

 

UKLondon, Aug 9, 2018- The UK has pledged to help Ethiopia transform its tax system and become less reliant on aid, the Department for International Development has announced.

This ‘tax partnership programme’ is aimed at helping the country generate more revenue so it can finance its own services and development.

DfID is ploughing £35m into the project, which it says is its largest bilateral tax programme ever. Public Finance International has asked exactly what this money will provide and is awaiting a response.

Ethiopia has implemented a number of tax reforms in the past two decades to create and run an efficient tax collection system. This year, it included deducted tax rates.

The programme will build on the achievements that the government has made in improving its tax collection and enforcement, DfID said.

The African country has achieved one of the fastest growth rates in the region over the past decade, averaging up to 10% a year.

In January this year, the country’s revenue and customs authority said it expected the total taxable income for the current year to increase by 47% compared to the previous year.

This would be done by strengthening the enforcement and expanding the tax base. The authorities said they expected to collect close to $7.4bn at the end of the fiscal year, which concluded last month.

International development secretary Penny Mordaunt announced the partnership on Tuesday during her meeting with Ethiopian finance minister.

She said: “Ethiopia’s security, development and prosperity matter for the UK – which is why we’re working with the country to help it generate more tax from its rapid growth.

“This will help Ethiopia fund its own development – and ultimately transition beyond aid.”

DfID said about the programme: “Extra tax revenues will help the country tackle poverty, invest in its own services, boost economic growth and move beyond aid.”

The UK has previously announced that it would give £80m to finance the Ethiopian Jobs Compact Programme.

This will support industrialisation in the country and aims to create 100,000 new jobs for the locals and 30,000 for refugees in Ethiopia over the next six years.