The Addis Ababa city administration has launched a crackdown on traders in the city's Mercato area who fail to issue receipts and collect Value Added Tax (VAT) from consumers.
The move is aimed at ensuring compliance with tax laws and regulations, and preventing tax evasion. Traders who do not issue receipts and fail to collect VAT will face consequences, officials warned.
Some traders in Mercato had taken to social media to express their concerns, claiming that their properties were about to be confiscated and their stores were on the verge of closure. However, officials clarified that the crackdown targets those who are not complying with tax laws.
"We urge traders to issue receipts and collect VAT from consumers as required by law," said a statement from the city administration.
However, some traders argue that the crackdown does not address the root cause of the problem. They claim that importers are issuing receipts with understated prices, which makes it difficult for wholesalers and retailers to accurately calculate their taxes.
"If we issue receipts based on the actual selling price, our profit margins will appear inflated, which is not the case," said one trader. "The importers are charging us a higher price, but putting a lower price on the receipt. If we don't accept this, they won't give us the goods we want to sell."
Traders say that this practice is widespread and that they are being forced to participate in order to stay in business. "We are caught in a difficult situation," said another trader. "If we issue receipts based on the actual selling price, we will be paying a tax much higher than what we should pay, and for revenue that we didn't make. But if we don't issue receipts, we will be shut down by the city administration."
The city administration emphasized that the crackdown aims to promote transparency and accountability in the informal economy, and that all businesses will be held accountable for tax evasion. Those found guilty of tax evasion may face up to five years in prison.
The Mercato area is one of the largest markets in Addis Ababa, with thousands of traders operating in the area. The crackdown comes at a time when authorities are pushing to generate more taxes to finance government expenditure, which has seen a drastic increase lately as a result of policy changes.
