Home Business & Economy Somali government introduces 5% sales tax to boost revenues

Somali government introduces 5% sales tax to boost revenues


The Somali government has launched an aggressive tax collection campaign as part of efforts to win billions of dollars in international debt relief. However there are concerns on whether the country’s powerful businessmen pay up.

The move has put tax collectors at the heart of a showdown with the country’s most powerful businessmen.

But government in Mogadishu is desperate for revenue to pay staff and provide essential services.

Its efforts have worked so far. Domestic revenue was up to $141 million in 2017 from $110 million in 2016. However more needs to be done.

“Many challenges, many challenges, number one, on our side, the Somalia side, the capacity and the skills to put good systems across the nation, across the nation, that is a challenge. The ability to give everybody a tax identification number. That is a challenge that we are struggling with. The challenge of stopping corruption and abuse of office that is a challenge that we are struggling with. Now if you identify the challenge then you have the possibility of putting a stop to it and we are working on that.” Abdirahman Duale Beileh, the finance minister said.

Somalia’s government is seeking to be self-sufficient, a key step toward accessing about $4.6 billion in international debt relief.

However, some citizens are reluctant to pay up to an administration they consider corrupt and inefficient.

“Taxes are good when the government taking from the people and giving back public services but if the tax is being taken from the people and there are no public services available like health, schools, water and electricity – then it is very hard for us to pay tax because nothing will come out of it in turn. We always see the government taking tax from the people but nothing has come back yet.” Ilmi Mohamed a resident said.

A huge portion of Somalia’s budget goes to paying its politicians and civil servants. The criticism has not gone down well with the government

“It is very unfair statement, very unfair statement to any country, even to Somalia. You cannot say money is stolen, money wasted or stolen. There are some stealing, some thievery and there is some being wasted because of the nature of how the country is – a totally destroyed nation, a country that had no system for many years.” Beileh said.

In an effort to romp up revenues, last year, the government reached tax agreements with airlines and telecoms companies.  It has also reversed an income tax exemption for parliamentarians.

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