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Somalia Seeking To Enforce Tax Regime, With Int’l Support

Somalia Seeking To Enforce Tax Regime, With Int’l Support

The Government of Somalia has reported on the tax system reform and tax administration improvements it is introducing with support from international agencies.

In its yearly consultation with the International Monetary Fund, the Somalian authorities said they had implemented a number of key policy measures in 2017. These included concluding discussions with telecommunications companies to pay their tax obligations in line with existing laws, retroactively to October 2017. Under the agreement, telecommunications companies have started paying sales taxes based on self-reported sales figures, which local authorities will audit to ensure accuracy.

Authorities said “the agreement also clarifies that there will be no more negotiated payments of taxes; instead, compliance with the income tax (personal and corporate) law and the sales tax law will be enforced.”

Somalia has also concluded an agreement with an airline for it to pay in full its sales tax and arrival and departure fees.

Somalian authorities told the IMF: “We are determined to strengthen tax collection. A significant increase in domestic revenue remains an important target under the program. We are pressing ahead with the implementation of the recently agreed-on tax measures as well as improving compliance. We will continue discussions on the harmonization of customs with federal member states and draft a common customs strategy roadmap for Somalia. We expect the large and medium taxpayer office (LMTO) to start enforcing tax compliance with the identified taxpayers in early 2018.”

In addition, the country has said it will look to establish a more effective audit program by March 2018.

In concluding comments, Somalia sought technical assistance in a number of fiscal areas, including tax policy, revenue, and customs administration; budget preparation and execution; and reforms in cash management and forecasting.

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