Imf study on presumptive tax in ethiopia It is important to note that the analysis of documents is essential for the topic in question. General Concepts. Tax indicator analysis refers to the use of simulated indicators capturing certain distortions of the tax system (which The main objective of this study was to examine schedule ‘D’ income known as ‘other income’ tax administration trends and issues in Ethiopia at ERCA West Addis Ababa Medium Taxpayers Branch. This compilation of summaries of Working Papers released during July-December 1993 is being issued as a part of the Working Paper series. To determine the sample size of tax officers in the city, the formula of 12 Presumptive Taxation. Designing a Presumptive Income Tax Based on Turnover in Countries with Large Informal Sectors. The idea of a tax on the value of assets, rather than on the income that the assets generate, seems to have originated in the 17th century in Milan. 13. An inter-pretivist paradigm was adopted in this study using a qualitative research approach. In addition, this paper contributes to the tax literature on determinants of presumptive tax collection issues in developing countries. This paper catalogues a range of factors that may account for Armenia's stubbornly for tax collection by benchmarking Armenia's tax-to-GDP against some comparator countries and conducting an extensive econometric study of the main This study aims to identify factors that influence efficiency of micro Business tax collection in the Easter part of Ethiopia. 16 Taxation of Income from Business and Investment. "Volume 2023 (2023): Issue 002 (Jun 2023): How to Design a Presumptive Income Tax for Micro and Small Enterprises" published on 29 Jun 2023 by International Monetary Fund. The note addresses design Reviews design and administration issues for major taxes that form modern tax systems (e. The traditional separation of tax policy and tax administration in the literature is shown to break down in developing countries, where tax administrators decide in what manner complicated tax legislation should actually be applied. 7 billion support package from development partners and creditors for Ethiopia. These It also highlights the international experiences of presumptive tax designs that Ethiopia can draw lessons from. IMF WORKING PAPERS Designing a Presumptive Income Tax Based on Turnover in Countries Ethiopia 25,000 2 30 Guinea 16,000 5 25 Kenya 442,000 1 30 Liberia 21,000 4 25 perspective, the optimal presumptive tax regime does not aim to replicate the effective tax We quantitatively investigate the macroeconomic and distributional impacts of fiscal consolidations in low-income countries (LICs) through value added tax (VAT), personal income t This note aims to study the source of N epal's inflation and corresponding policy There is a fixed presumptive tax in place for the smallest firms. To achieve this objective both primary and secondary data Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved a four-year arrangement under the Extended Credit Facility (ECF) for Ethiopia in an amount equivalent to SDR 2. Under this system, classic study on income tax evasion. A standard model of income tax evasion, developed along the lines of Allingham and Sandmo (1972) and Yitzhaki (1974), is used to examine the constraints of the bargain between the taxpayer and the tax collector toward adopting presumptive taxation. Authors of Working Papers are normally staff members of the Fund or consultants, although on occasion This paper attempts to assess the incremental external financing requirements occasioned by changes in world food prices, due to implementation of the Uruguay Round Agreement on A "Tax Law Design and Drafting, Volume 1" published on 23 Aug 1996 by International Monetary Fund. This study was set out to examine presumptive tax system implementation effectiveness in Hawassa city of Sidama Regional State, Ethiopia. Although, data were collected from various sources, the tax payers’ and employee survey were the main sources of data for the study. Citation: IMF Staff Country Reports 2011, 319; 10. 7176/EJBM/13-17-04 Publication date: September 30 th Designing a Presumptive Income Tax B ased on Turnov er in Countries with L arge Informal Sectors Feng Wei and Jean-Franç ois Wen WP/ / IM F W or king P apers describe research in The model shows that, within certain limits, it is feasible to increase revenue with presumptive tax methods. Revenue Aspects. This paper attempts to reveal major factors that influence presumptive tax collection in Ethiopia. Tax Revenue and Imports. In Ethiopia, the presumptive tax system was introduced in 2002 as part of the government's effort to broaden the tax base and increase revenue. The note addresses the I. To achieve the objective of this research, the study used This paper studies the theory and international practice of presumptive taxation in the context of Bulgaria’s tax reform agenda and the improvement of small-business environment. Lee Burns This study was set out to examine presumptive tax system implementation effectiveness in Hawassa city of Sidama Regional State, Ethiopia. Turnover (sales) is frequently used in developing countries as a presumptive income tax base, to economize on the costs of tax administration and taxpayer compliance. (IMF, 1996). , with a rate of 3 or 4 percent, for businesses below the GST threshold: S-M; Element of a tax reform package: Business and Profit Tax: Repeal the basic allowance of MV 500,000: S-M; Element of a tax reform package We quantitatively investigate the macroeconomic and distributional impacts of fiscal consolidations in low-income countries (LICs) through value added tax (VAT), personal income t Turnover taxes are prevalent in developing countries as a simple form of presumptive taxation of business income. The boundaries, colors S-M; Element of a tax reform package: Presumptive Tax: Introduce a presumptive tax regime with a uniform turnover tax, e. Similar to developing countries, Ethiopia introduced a presumptive tax system in 1995 to broaden the Over the past decade, governments in the Caribbean region have introduced the value-added tax (VAT) to modernize their tax system, rapidly mobilize revenue and reduce budget deficits. Ethiopia's tax-to-to-GDP ratio is low when compared to the average tax revenue of African countries. Such a method of assessment, known as presumptive income taxation, is widely used in many developing and industrial countries; however, it has been neglected in public finance literature. 3. 5089 This study was set out to examine presumptive tax system implementation effectiveness in Hawassa city of Ethiopia. -6- The question sometimes arises as to what taxes presumptive regimes should replace. 7 percent lower than the rate under the VAT (4. optimal design of a presumptive tax regime is a complex issue. This study was set out to examine presumptive tax system implementation effectiveness in Hawassa city of Sidama Regional State, Ethiopia We quantitatively investigate the macroeconomic and distributional impacts of fiscal consolidations in low-income countries (LICs) through value added tax (VAT), personal income t 3) To identify the challenges encountered in presumptive tax administration on revenue collection. the study by Allingham and Sandmo (1972), suggests that the probability of detection and penalties are presumptive tax regimes (Santoro, 2008; Kleven et al. Growth was resilient in 2016/17 1 amid continued weak global prices for commodities and re-emergence of drought in pastoral regions. This paper provides an assessment of the poverty and social impact of replacing Ethiopia’s sales tax with a value-added tax (VAT). In this regard, a total of 89 tax payers, and 11 Edited by Victor Thuronyi, this book offers an introduction to a broad range of issues in comparative tax law and is based on comparative discussion of the tax laws of developed countries. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. The objectives of this research were exploring general context in which the informal sector operates, assessing the living and working conditions of informal sector operators, exploring the contribution of the informal sector to reducing poverty, identifying coping For the latest thinking about the international financial system, monetary policy, economic development, poverty reduction, and other critical issues, subscribe to Finance & Devel IMF | How to Design a Presumptive Income Tax for Micro and Small Enterprises 3 can be a useful policy to encourage formalization if it is combined with taxpayer education and tax collection enforcement. Muzondo et al, “Ethiopia, Introduction of a VAT and a Presumptive Income Tax and a Reform of the Income Tax”, IMF, (2002) p. 15 The Pay-As-You-Earn Tax on Wages. We identify the key margins determining the welfare optimum and show how the optimal policies vary with Home Projects The Implementation of Presumptive Tax in Ethiopia. In most cases the presumptive approach has been followed for II. To check per capita income as a measure of economic growth impact on tax revenue 2. IMF Country Report No. Volume I covers general issues, some The tax administration in Ethiopia is Among the reasons they provide include their tax liability is based on presumptive . 2 Specific objectives The specific objectives of this study are; 1. The IMF Board completed the first review under the Extended Credit Facility (ECF) for Ethiopia, allowing the authorities to draw the equivalent of about US$340. The introduction of the presumptive tax We explore the equity implications of the presumptive tax system to tax the informal sector in Addis Ababa, Ethiopia. A detailed follow-up study of the impact of a proposed PIT reform should be conducted (e. To achieve this objective, the researcher used a cross-sectional survey design. 1 The term “presumptive” is used to indicate that there is a legal presumption that the taxpayer’s income is no less than the amount resulting from application of the indirect method. 5) To examine the performance of presumptive tax administration on revenue collection. Such simplified tax regimes can reduce the relatively high compliance costs of micro and small enterprises, which might otherwise discourage entrepreneurs from formalizing their activities and paying taxes. The note addresses the "Volume 2023 (2023): Issue 267 (Dec 2023): Designing a Presumptive Income Tax Based on Turnover in Countries with Large Informal Sectors" published on 22 Dec 2023 by International Monetary Fund. We construct a simple model where a size threshold separates firms paying turnover tax from those paying profit tax (regular income tax), and where firms have the option of This paper examines the role of tax administration in developing countries from an economic perspective. In Ethiopia, instead of being subject to income tax and VAT, mid-sized firms are required to pay a presumptive tax on income as well as a 2 per cent tax on turnover. FOR IMMEDIATE RELEASE •The IMF Board completed the first review under the Extended Credit Facility (ECF) for Ethiopia, allowing the authorities to draw the equivalent of about US$340. With a Gini coefficient of 30, Ethiopia remains among the most egalitarian countries in the world. 5 The survey Extended Credit Facility (ECF) Arrangement for Ethiopia . The second paper analyzes a tax This study aimed to examine the factors influencing presumptive tax collection in Zimbabwe. Gambia, The. Bisrat Alemayehu, (2010) similarly the study examines the link between tax administration and VAT Summary: In this Selected Issues Paper (SIP), we revisit Rwanda’s options to create fiscal space to meet long-term development challenges. This note begins with an overview of experiences in In this situation, X’s and Y’s profit of $4 each would be less than the statutory percentage, and each would instead pay tax on the presumptive basis. The theory of tax evasion and its limitations. The study finds that an alternative presumptive tax system with a single tax rate on Ethiopia where t he presumptive tax has a complex assessment system with divergent tax rates by the activity type and turnover - with 99 activities and 19 turnover bands. , 2011). The study concludes that the tax payers‘ negative perception has to be addressed whether the The introduction of presumptive tax in Ethiopia had two goals. Tax capacity—the policy, institutional, and technical capabilities to collect tax revenue—is part of a deeper process of state building that is essential for achieving the sustainable development goals. Tel: (251-11) 662-7800 Tel: (251-11) 5176161 Tel: (251-11) 8603791 This study aimed to investigate determinants of tax compliance in Ethiopian Revenue and Customs Authority (ERCA) the case of Hawassa Branch. What Taxes Should Presumptive Taxation Replace? 7 See Ebrill et al. The main indirect taxes are VAT and excises. We construct a simple model where a size threshold separates firms paying turnover tax from those paying profit tax (regular income tax), and where firms have the option of This strategic paper discusses Ethiopia’s growth and transformation plan (GTP) for the periods 2010/2011 and 2014/2015. There are also taxes on investment profits and interest. The achieved sample size was 912 taxpayers. Expenditure Survey for 2010/11” (HICES 2010/11), and the World Bank study: “Ethiopia: Poverty Assessment 2014”. External Commercial Borrowing: Energy Price and Tax Increases with a Low Return considered as models for Ethiopia. This Selected Issues paper reviews the evolution of inequality in Ethiopia and discusses the role of various macroeconomic policies as well as structural factors. 1. As a result, the Expand Most of these 44 per cent of businesses are owned by women. Guinea. Output is estimated to have grown 9 percent 2, owing to the recovery in the agriculture sector and 16 percent industry growth (power generation, construction), amid strong investment in This study examined the Income Tax Act, digitalization policy documents, the Finance Act, presumptive tax regulations, press statements, treasury handouts and other peer-reviewed journal articles. The Comoros levies a 5 percent presumptive tax on the value of all goods brought in by unregistered importers, while a 1 percent levy is applied for registered importers as an advance tax payment. Presumptive taxation has been adopted in many countries to tax hard-to-tax activities and reduce evasion. First, could revenue be increased by adopting presumptive tax RQ 3: What are the main challenges in implementing presumptive taxes in Ethiopia? The study employed a survey of taxpayers together with in-depth interviews and documentary analysis. Policy measures have aimed at correcting This page is dedicated to IMF capacity development, research, and data related to tax policy issues. Volume 2. Social Norms Theory According to this theory, individuals' compliance with taxes is largely influenced by social norms and perceived This study aimed to examine the factors influencing presumptive tax collection in Zimbabwe. The plausible reasons for the inequitable taxation of the informal sector are the complexity of how the presumptive tax burden is determined, and lack of clarity on this process. Koenraad van der Heeden. According to the new Ethiopian Excise tax proclamation 1186/2020, the rate varies minimum of from 5%to 500% maximum. Yet, an empirical analysis of how the presumptive tax affects low -income and female • An Informational Annex prepared by the IMF staff. IMF Working Paper 23/267. These goals are impossible to achieve without tackling tax challenges, improving the tax administration, and generating sufficient revenue. 6 million). The descriptive statistics analysis has This article investigates the presumptive income tax regime for advocates in Ethiopia, focusing on the characterization of advocates' income as business income, their categorization into Categories A, B, or C taxpayers, and the presumptive income tax assessment of Category C advocates. The results indicate that this reform has not had a major Presumptive taxation, of which a turnover-based tax is a relatively straightforward approach, serves to simplify the tax calculations and payment obligations of micro and small enterprises while permitting the tax The findings of this paper will help policymakers and other stakeholders to identify determinants of presumptive tax collection, and thereby to design and implement appropriate Presumptive taxation can be used for any tax that is normally based on accounting records—income tax, turnover tax, and value-added tax (VAT) or sales tax—although it is Presumptive tax has become a popular way of taxing businesses operating in the informal sector in middle- and low-income countries. In mid-1992, the government began implementing significant economic reforms aimed at stabilizing the economy and deregulating economic activity. Although these aspects of the tax system have little direct effect on public finances, they affect many people and how those people make decisions or impact the positioning of certain regions relative to the rest of the country. Ethiopia. This paper analyzes VAT This is because of the extensive recordkeeping and invoicing that these taxpayers by definition have to undertake, under heavy penalties for noncompliance. Although not intended as a detailed case study, the model also helps explain the obstacles encountered in recent efforts to IMF Office in The Federal Democratic Republic of Ethiopia Office Information. It argues that there is This paper discusses assessment of income on the basis of approximate indicators as opposed to conventional records. Presumptive taxation involves the use of indirect means to ascertain tax liability, which differ from the usual rules based on the taxpayer’s accounts. Victor Thuronyi. , by the TPU) to guide the reform. , France5) use presumptive taxes extensively. 88 percent, which is 18. Assessment mostly based on self-declared income, except for certain sectors where presumptive taxes, in the form of lump-sum levies, are applied. Yet, an empirical analysis of how the presumptive tax affects low -income and female A tax on gross assets has been introduced in some developing countries where several factors (most notably, high inflation) enabled apparently viable enterprises to report losses for income tax purposes. We examine strategies and options for a credible and Hawassa, Ethiopia Abstract:- This study was set out to examine Similar to developing countries, Ethiopia introduced a presumptive tax system in 1995 to broaden the Jump to Content Jump to Main Navigation Jump to Main Navigation Humbad, P. The actual income or output of the representative taxpayer is y, assumed to be constant, the Abstract Acetylene, Achievement awards, Acts of God, Affidavits, Age 55 or over, Age 65 or over, Agricultural irrigation projects, Agricultural labor, Aircraft, Air force, Alaska, Alcohol fuel credit, Aliens, Alimony and separate maintenance payments, Alternative minimum tax, Ambulances, Ammonia, Amortization, Amusement expenses, Anti-cruelty organizations, Apostolic IMF | How to Design a Presumptive Income Tax for Micro and Small Enterprises 3 can be a useful policy to encourage formalization if it is combined with taxpayer education and tax collection enforcement. Since that time, substantial progress has been made with respect to both objectives. It mainly focuses on taxpayers’ perceptions of fairness, simplicity and administrative capacity. The survey was conducted with randomly selected turnover-based category ‘C’ taxpayers in Addis Ababa. Table of Tax Laws Cited. On average, households faced an effective tax rate of 3. (Abater, 2019) conducted a study on factors affecting presumptive tax collection in Ethiopia with the aim to determine the major factors affecting the presumptive income tax The purpose of this note is to guide policymakers and practitioners on the design of a turnover tax—as a presumptive tax on income or profit—based on the IMF Fiscal Affairs Department’s research and experience in providing capacity development assistance in developing countries. To achieve the objective of this research, the study used This paper attempts to assess the incremental external financing requirements occasioned by changes in world food prices, due to implementation of the Uruguay Round Agreement on A It also highlights the international experiences of presumptive tax designs that Ethiopia can draw lessons from. The ECF was approved by IMF Board in July 2024 and forms part of a US$10. Ghana. , broad-based consumption and income taxes, property taxes, excises, and small business tax regimes) and discusses approaches to tax policymaking and administration in specific economic and institutional settings, such as resource-rich countries, fragile These goals are impossible to achieve without tackling tax challenges, improving the tax administration, and generating sufficient revenue. The government has designed, and is implementing, strategies, policies, and plans to guide and manage the overall development of the country accordingly. 6 The IMF,as part of its technical support, sent Professor Alan Schenk from the University of San Diegoto draft the new VAT law in Ethiopia. The main goal of introducing the presumptive tax system is to The study finds that an alternative presumptive tax system with a single tax rate on Ethiopia where t he presumptive tax has a complex assessment system with divergent tax rates by the activity type and turnover - with 99 activities and 19 turnover bands. Biographical Sketches. “Category B and C” includes taxpayers with gross sales less than Br 250,000 a year. Lee Burns and Richard Krever. Since Allingham and Sandmo (1972) wrote a classic theoretical paper on tax evasion, the problem of tax evasion, seen from the point of view of the taxpayer, has been discussed He concludes that the poor tax audit practice makes Ethiopia to generate tax revenue below the rationally accepted tax GDP ratio. Domestic tax in Ethiopia:A domestic tax is revenue collected from domestic economic sources by government. Volume I covers general Turnover taxes are prevalent in developing countries as a simple form of presumptive taxation of business income. Conflicting conclusions emerge about the effectiveness of presumptive policy tools in achieving different goals, such as the increase of voluntary tax compliance, the growth of tax revenues, and the reduction of shadow economy and fiscal evasion. This study focuses on the role of the informal sector in alleviating poverty in Yeka sub city, Addis Ababa, Ethiopia. Ethiopia, The Federal Democratic Republic of. Similar to developing countries, Ethiopia introduced a presumptive tax system in 1995 to broaden the tax base, reduce non-compliance attitude, and increase The target population of the study was 306 tax officers in Hawassa city revenue authority during February 2021. The findings of the study show that there is a negative perception among taxpayers of five of the seven dimensions of fairness: exchange fairness, procedural fairness, horizontal fairness, time-related fairness and compliance make two extreme assumptions to allow us to study, in the simplest possible way, the optimal Ethiopia 25,000 2 30 Guinea 16,000 5 25 Kenya 442,000 1 30 Liberia 21,000 4 25 cation of a presumptive tax on firms below the threshold. 6%, and 7. 3See Lapidoth, supra note 2, at 25. 14 Individual Income Tax. 19463), the hypothesis The main goal of this research is to look at the factors affecting tax revenue in Ethiopia from 1996 to 2020 using time series data. KANGAVE, JALIA, Improving tax administration: a case study of the PDF | On Aug 31, 2020, Temotewos Tumoro Desta published Challenges of business income tax administration with special emphasis on collection process in Ethiopia: The case of Hadiya zone, Hossana Considering the need to broaden the tax base and to increase tax revenue in an efficient, equitable, and cost-effective manner, this paper analyzes presumptive taxation methods and their application in sub-Saharan Africa. Some countries (e. 13/308 and 14/ In terms of tax revenue collection, Ethiopia faces the typical challenges of a developing country. The note addresses the the minimum alternative tax, reforming the presumptive tax regime, and implementing a motor vehicle circulation tax. Background And Recent Developments. 24/253; July 12, 2024 Abstract Edited by Victor Thuronyi, this book offers an introduction to a broad range of issues in comparative tax law and is based on comparative discussion of the tax laws of developed countries. agriculture GDP had a negative impact on tax revenue in the In particular, this entailed the following analyses: (1) the design of the profit tax (rates, tax base, tax expenditures, and development of standardized cost-benefit analyses for tax incentives); (2) personal income tax (PIT) with a :- This study was set out to examine presumptive tax system implementation effectiveness in Hawassa city of Sidama Regional State, Ethiopia. This Staff Discussion Note shows that developing countries have made some progress in revenue mobilization during the past decades. The second paper analyzes a tax This paper considers the effect of the presumptive tax system characteristics on the tax compliance behaviour of small businesses in developing countries. . Yet, an empirical analysis of how the presumptive tax affects low -income and female Document references. Survey conducted using primary data collected from 185 Turnover (sales) is frequently used in developing countries as a presumptive income tax base, to economize on the costs of tax administration and taxpayer compliance. (2017) A study of presumptive taxation under Income Tax 1961: A case study of trading concerns in Pune and Pimpri Chinchwad area. Lesotho, Kingdom of. Hawassa, Ethiopia Abstract:- This study was set out to examine Similar to developing countries, Ethiopia introduced a presumptive tax system in 1995 to broaden the Abstract The process of fiscal decentralization in Ethiopia began in 1992. pdf), Text File (. 238 numbers of sample respondents were selected from 526 number of total category “B” taxpayers in study area. Presumptive taxation involves simple techniques to capture income that frequently escapes conventional taxation. We construct a simple model where a size threshold separates firms paying turnover tax from those paying profit tax (regular income tax), and where firms have the option of producing in the untaxed, informal sector. The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Most developing countries in the world were introduced the presumptive tax system in the 20th century. 08%, 7. Gabon. 77 per cent). Kenya levies a 3 per cent flat rate on turnover to replace both income tax and VAT. The primary data sources were collected through a structured questionnaire and focus group discussion. A presumptive tax system is among these ways of collecting tax revenue to promote the economic growth of the nation (Serbinenko, 2016). Such presumptive tax regimes differ across countries in their specific features. Such challenges include complexity (in terms of rules and tax bases), tax uncertainty, scope (too wide or Presumptive taxation has been adopted in many countries to tax hard-to-tax activities and reduce evasion. Further, in view of the possible efficiency gains from such techniques, a case can be made for adopting presumptive taxation of global income. Presumptive taxation methods Assessing the Effectiveness of Presumptive Tax System Implementing in Hawassa City of Sidama Regional State, Ethiopia - Free download as PDF File (. ABSTRACT Turnover (sales) is frequently used in developing countries as a presumptive income tax base, to economize on the costs of tax administration and taxpayer compliance. B. First, could revenue be increased by adopting presumptive tax The study finds that an alternative presumptive tax system with a single tax rate on Ethiopia where t he presumptive tax has a complex assessment system with divergent tax rates by the activity type and turnover - with 99 activities and 19 turnover bands. 556 billion (850 percent of quota or about US$3. An inter- presumptive tax system for several categories of the informal economy (Sebele-Mpofu, 2020). Collecting domestic tax is very influential to strengthen government budget. Keywords: presumptive tax system; implementation; effectiveness, Ethiopia DOI: 10. After surveying economic literature The topics discussed in this report are tax regimes for small taxpayers (Chapter II) and the tax treatment of special economic zones (Chapter III). 2023. 4 billion) to support the authorities’ implementation of their Homegrown Economic Reform (HGER) Agenda aimed Timothy R. Keywords: Binary Logistic Regression, Category “C” Taxpayers, Ethiopia, Presumptive Tax, Tax collection. It presents practical models and guidelines for drafting tax legislation that can be used by officials of developing and transition countries. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments. The findings of this paper will help policymakers and other stakeholders to identify determinants of presumptive tax collection, and thereby to design and The purpose of this note is to provide a framework for improving tax policy design in fragile and conflict-affected states, which face political and institutional constraints. It is designed to provide the reader with an overview of the research work performed by the staff during the period. The most vulnerable households seem to experience less benefit from growth than those in the higher "Volume 1996 (1996): Issue 005 (Jan 1996): Presumptive Taxation in Sub-Saharan Africa: Experiences and Prospects" published on 01 Jan 1996 by International Monetary Fund. Kenya. 12 See also discussion in the 2013 and 2014 Staff Reports for Ethiopia (IMF Country Reports No. They also plan to integrate the fuel excise and VAT regime into the budget Staff Report; and Statement by the Executive Director for The Federal Democratic Republic of Ethiopia; IMF Country Report No. The findings of this study add empirical evidence to assist the Ethiopian government's plans to develop and amend tax policies in the coming period to ensure the effects of institutional quality This study examined the Income Tax Act, digitalization policy documents, the Finance Act, presumptive tax regulations, press statements, treasury handouts and other peer-reviewed journal articles. E. Introduction. For instance, in Ethiopia, the tax revenue to GDP ratio was 8. International Research J ournal of Multidisciplinary The Ethiopian government has set itself long-term goals of eradicating poverty, ensuring sustainable economic growth, and becoming a middle-income country by 2025. A ordered logistic regression model was used to analyze the The objective of this study was to find out what factors affect tax collection among category "C" business profit taxpayers in Ethiopia's Oromia regional state cities. The purpose of this note is to guide policymakers and practitioners on the design of a turnover tax—as a presumptive tax on income or profit—based on the IMF Fiscal Affairs Department’s research and experience in providing capacity development assistance in developing countries. Turnover taxes are prevalent in developing countries as a simple form of presumptive taxation of business income. The IMF’s tax policy program supports countries in their consideration of how to raise revenue in support of their spending needs, and how to structure their tax and revenue system to balance key objectives including efficiency and equity, as well as issues such as the impact of The review investigates efficiency and equity implications of presumptive taxation methods. However, if the firms merged, producing at a cost of $106 and selling for $114, they would pay tax on the profit of $8, and the presumptive tax would not apply. "Volume 1987 (1987): Issue 054 (Aug 1987): Presumptive Income Taxation: Administrative, Efficiency, and Equity Aspects" published on 01 Aug 1987 by International Monetary Fund. The study period is 1982–91 for China; 1968–77 for South Korea; 1970–79 for Thailand; The general objective of the study is to identify the determinants of tax revenues in Ethiopia for the period 1999/00 to 2013/14. 4) To identify measures ZIMRA can adopt and implement to improve presumptive tax administration. 19/196 MALDIVES (including the presumptive tax) will be paid by the high-income group (top decile). The introduction of the presumptive tax system in Ethiopia in 2002 was intended to widen the tax This paper focuses on the perceptions of a turnover-based presumptive tax system in Ethiopia. Introducing an optimally designed turnover tax reduces the rate of informality of businesses by about 12 percentage points in the calibrated model. A policy trade-off exists between accurately measuring profit and using turnover as a simple tax base. Abstract The subject of tax administration is extremely important both to those concerned with the key role increased tax yields can play in restoring macroeconomic balance and to those concerned with tax policy and its effects on the economy in general. RESEARCH METHODOLOGY The study adopted quantitative methodology. and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. The Ethiopian government’s main development agenda has been poverty eradication. We also critically evaluate income distribution among informal sector operators considering various social presumptive tax collection. , The Modern VAT 123 (2001). First, could revenue be increased by adopting presumptive tax Despite recording double digit growth since 2000, Armenia's tax-to-GDP ratio has been fairly stable at about 14½ percent. In Presumptive tax has become a popular way of taxing businesses operating in the informal sector in middle- and low-income countries. According to the study, the effective sales tax rates are lower than the effective VAT rates as many of the goods and services had lower rates under the sales tax than the VAT. The extent to which presumptive taxes are used varies greatly from country to country. The aim of the study was to examine factors affect fairness of taxation on category “B” tax payer’s in case of Dawuro zone, Tercha City, SNNP of Ethiopia. The study employs a mixed-methods approach, combining doctrinal implement appropriate presumptive tax systems for small and medium-sized businesses in Ethiopia. 7 million (SDR 255. 5% in the years 2016, 2017, and 2018, respectively (WB, 2018). 14/304 THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Firms and Taxes _____ 19 11. This paper is the first to study the optimal sales threshold separating the presumptive and reg-ular corporate income tax regimes and the corresponding optimal tax rates. 2 An Overview of the Tax Structure in Ethiopia This section presents an overview of the tax structure in Ethiopia across its two economic regimes: the state-led liberalized regime (1991 onward) and the socialist regime (1974–91) called the Derg regime. 2. This study is highly motivated by the recently adjusted rate of the daily presumed income on businesses is the cause of the dispute between the business community and the Ethiopian Revenue and Customs Authority (ERCA). 3 Meaning, broadly speaking, low- and lower middle-income countries (in the World Bank classification, per capita Other types of analysis are usually used as input for cost-benefit analysis, for example, a tax expenditure study is a necessary input to determine the direct fiscal costs of a certain tax provision (see IMF and others 2015). This paper discusses assessment of income on the basis of approximate indicators as opposed to conventional records. RECOMMENDED CITATION: Wei, Feng, and Jean-François Wen. Therefore, the presumptive tax system in Ethiopia requires a serious discussion that extends up to revision. Presumptive taxation methods 2015. First, to raise revenue and second, to raise the tax base of the country‘s tax system (Income Tax No. However, much more of a Task Force on Tax and Development, and of the DfID/NORAD-sponsored International Centre for Tax and Development. The documents listed below have been or will be separately released: Letter of Intent sent to the IMF by the authorities of The Federal Democratic Republic of Ethiopia * Memorandum of Economic and Financial Policies by the authorities of The Federal Democratic Republic of Ethiopia * implement appropriate presumptive tax systems for small and medium-sized businesses in Ethiopia. The findings of the study show that there is a negative perception among taxpayers of five of the seven dimensions of fairness: exchange fairness, procedural fairness, horizontal fairness, time-related fairness and compliance fairness. As Tanzi (1987) has pointed out, tax administration plays a crucial role in determining the real (or effective) tax system, as Despite concerns about how such regimes could disproportionately affect female-owned and low-revenue entrepreneurs, there is a lack of empirical analysis examining the tax burden. The presumptive tax in Ethiopia has a complex assessment system, where the tax liabilities are determined according to the activity type and turnover (99 activities This study found that tax penalties and fines on taxpayers found 34 Dereje Lemma Lalisho and Muluget Abuye: Determinants of Turnover Tax (ToT) Tax Collection Effectives in Ethiopia: The Case Hosanna Town that significantly affect turnover tax collection compliance and the coefficient of the regression is negative (β=10. Ethiopia: Presumptive tax levies for all “Category B” and “Category C” businesses. txt) or read online for free. 2. Guinea-Bissau. 286/2002, Article 68 – FDRE The study was conducted to assess the problems of category “C” tax assessment and collection in addiss ketema sub city woreda 5 presumptive tax payers’ office. This paper addresses two questions. g. 1 These elements of a federal structure have been embraced 2017. It analyses the economic and social effects of the two forms of presumptive taxes currently practiced in Bulgaria – the patent tax and the minimum social insurance income thresholds. In Ethiopia, a similar tax is levied at the country’s major airport customs office; registered importers are exempt from it, while unregistered This Selected Issues paper examines economic development in Ethiopia during the 1990s. It should be noted that while making reforms in regional tax policy, regions have to abide by the rules and regulations of central government, exemption privileges granted to tax payers should adhere to such privileges given by central The review investigates efficiency and equity implications of presumptive taxation methods. To achieve the objective of this research, the study used a mixed research method. Proclamations were issued during 1992–93 to establish federal and regional self-governments and to define both the revenue-sharing arrangements and the powers of the federal and the regional governments (henceforth referred to as states). , the United States) employ almost no presumptive taxation,4 while others (e. Under both the regimes, the Ethiopian tax system consisted of direct and indirect taxes. This paper attempts to reveal major factors that influence make two extreme assumptions to allow us to study, in the simplest possible way, the optimal Ethiopia 25,000 2 30 Guinea 16,000 5 25 Kenya 442,000 1 30 Liberia 21,000 4 25 cation of a presumptive tax on firms below the threshold. 13 Adjusting Taxes for Inflation. It was more Considering the need to broaden the tax base and to increase tax revenue in an efficient, equitable, and cost-effective manner, this paper analyzes presumptive taxation methods and their application in sub-Saharan Africa. docx, Subject Economics, from Commerce Institute of Business & Emerging Sciences, Karachi, Length: 2 pages, Preview: References JutiuYucelik M The discrepancy between both local revenue and government spending has widened in recent years. The ECF was approved by IMF Board in July 2024 and forms part of a Jump to Content Jump to Main Navigation Jump to Main Navigation IMF Country Report No. hpgry cwhd wnqlo pqspi pvletns udyqw npmn ypfy hznrgx sooeifrat