In reaction to the economic crisis, triggered by the coronavirus pandemic, Ethiopia has offered tax relief to companies affected by the outbreak.
According to a report from Bloomberg, this was disclosed by the state television station, which cited Ethiopia’s Minister for Finance, Eyob Tekalign.
While citing the Finance Minister, the Ethiopian Broadcasting Corporation reported that companies with interest payment and penalties on outstanding taxes due between 2015 and 2018 would have them cancelled and the underlying tax due could be paid in instalments.
In addition, companies affected by the coronavirus pandemic would get relief for four months of income tax. The Ethiopian Government would also grant a one-month grace period on payment of value-added and turnover tax payments.
The television station announced that companies that paid their taxes in lump sums would receive 10% discounts, and those that were donating to the COVID-19 response fund would get 20% discount.
Meanwhile, in a similar situation, Nigeria’s Federal Inland Revenue Service (FIRS), a few days ago, had offered a waiver on interests and penalties for tax debtors, if they paid the outstanding tax arrears in full, on or before May 31, 2020.
Also, some weeks ago, Nigeria’s Finance Minister Zainab Ahmed said that the Federal Government was considering giving tax relief to corporate organizations that made donations to the COVID-19 intervention funds. She added that the Government was considering the option of tax deferral, rather than tax reduction.
However, there were mixed reactions, when the FIRS Chairman asked corporate organizations in sectors that were booming during this lockdown, occasioned by the coronavirus pandemic, to make payments of their annual returns before the due date.
A lot of critics of that directive felt that it was insensitive of Government, who rather than give tax reduction, are asking companies that might be going through hard times to pay taxes upfront.
Some others supported the Government’s idea, as they felt that some sectors were making extraordinary income during this lockdown period, and as such, should bail out Government during this time of financial crisis.
In all, whether the government would emulate the Ethiopian government, no one can tell but it is generally believed that companies, especially the SMEs deserve tax relief to ease their burdens.