The House of Peoples' Representatives' Standing Committee on Planning, Budget and Finance recently held a public hearing on the proposed Federal Tax Administration Amendment Bill, where it was reported that the draft law encountered significant opposition and strong criticism from the business community.
During the public consultation traders and various stakeholders openly expressed their concerns regarding several provisions of the draft bill.
The most contentious issue raised was the mandate allowing tax authorities to conduct retrospective audits for tax fraud cases up to 10 years into the past, with participants labeling the proposal as deeply troubling.
In their critique, attendees argued that implementing such a long "lookback" period is inherently unjust, particularly in the current environment where modern technology capable of verifying the authenticity of invoices has not yet been fully implemented.
They stressed that holding businesses accountable for a decade’s worth of records under these circumstances, coupled with the threat of heavy penalties, is inappropriate and burdensome.Beyond the audit period the discussion highlighted several other critical challenges facing taxpayers.
Specifically, the persistent instability of network infrastructure was identified as a major operational bottleneck. Furthermore, participants expressed concerns that the provision allowing tax disputes to be resolved through negotiations could inadvertently create loopholes for malpractice and corruption. Issues regarding current tax rate structures were also brought to the floor as primary points of contention.
In response to the grievances, the Standing Committee Chairperson, Ato Desalegn Wedaje, explained that the 10-year audit provision was included to establish a clear legal boundary, noting that the previous legislation lacked any defined time limit for such investigations.
He assured the participants that the objective of the new provision is to provide clarity, and pledged that technical issues related to invoice issuance would be resolved through the modernization of tax administration systems.
State Minister of Tax Operations at the Ministry of Revenues, W/ro Yasmin Wahabrebbi, emphasized that the existing tax law has been in effect for a decade, making this amendment essential to align the legal framework with the nation’s ongoing economic reform initiatives.
She noted that the draft law is designed to clearly outline the rights and obligations of taxpayers and will serve to streamline the overall efficiency of tax services.
Furthermore, it was noted that the draft bill aims to resolve long-standing issues faced by taxpayers. In particular, the Standing Committee pledged to ensure that the "Mediating Body" proposed in the bill is established as an independent entity operating under its own autonomous procedures to guarantee fairness.
In their closing remarks, participants urged that businesses failing to declare taxes on time should not be subject to automatic penalties without a thorough investigation into the underlying causes.
They also called for a revision of the current timeframe for submitting appeals, requesting that the window be extended to ensure due process. It was ultimately concluded that the amendment is being treated as a priority to address pressing issues currently hindering the tax administration process.
