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Shaebia Interview
The People of Eritrea Have a Culture of Paying Their Taxes Regularly: Mr. Kibrom Dafla
The Department of Internal Revenue is introducing a new receipt procedure to replace the old taxation system. Our reporter has interviewed Mr. Kibrom Dafla, General Director of the Department of Internal Revenue, regarding the purposes and implementation of the new system. Excerpts:
To start with, how do you evaluate the Eritrean people as far as tax payment is concerned?
The people of Eritrea have a culture of fulfilling their obligation, and in terms of tax payments, there has been awareness and cooperation. However, our working procedures were not updated to satisfy the demands of the business community. This can be seen as one of the shortcomings of our department.
What percentage remains uncollected out of the expected income through taxation?
It is difficult to give an exact figure. But due to the systems or procedures of tax payment that we were pursuing, the government was getting less income than it should. Hence, we can say that the cause here is the inefficient taxation system we followed rather than the unwillingness of the people to pay taxes.
So, what action is the Department of Internal Revenue taking to improve the collection of taxes?
We are now in transition period of taxation system—from presumptive receipt to regular and other receipt systems. When we say presumptive receipt, we mean that taxation is done by mere assumptions. And, 98 percent of the businessmen paid their taxes according to the rough estimation of the Office of Internal Revenue. As it is difficult to proceed in this way, we are now introducing the internationally accepted receipt system. According to the new receipt system, businessmen have a legal obligation to present receipts for the equipment or any other material they sell and are taxed accordingly. To facilitate this we have prepared different types of receipts.
Can you tell us the different types of receipts?
We are introducing three types of receipts. The first one is regular receipt; businessmen who use this type are obliged to give invoice to customers when they sell any merchandise. The second one is fiscal receipt. The ones who use this type are retailers. This one is not that much difficult; the receipt is prepared in two copies: one kept with the shopkeeper and the other one is given to the buyer. The third type is the so-called cash register receipt. This means that all sales must be entered into the cash register. The receipts are then given to each buyer. Restaurants, bars, tearooms and the like use this type. The other kind of receipt system is the presumptive receipt, which we used earlier.
If that is the case, how are street vendors going to give receipts?
Street vendors do not have legal permission, and they are out of our taxation system. However, the responsible bodies of the government have to stop such illegal activity.
Much is said about the cash register receipt system. What advantages does it have over the other systems?
Cash register system helps businessmen to run their business efficiently. At the same time, it helps us to tax businessmen appropriately and according to the amount they sell. So, here there is no over- or under-taxation.
Do you have the human and material resources to help you implement the new system?
We are introducing equipment that helps us facilitate our job. Computerizing and networking our works is one aspect of it. The different units of our department have already started compiling information in database, but as this requires huge currency and manpower, it cannot be performed at one time. In addition, to implement the new system, we need trained manpower, and to that end we have organized more than 10 workshops.
If some people do not follow the new instructions, what actions will you take against them?
Well, such people will be penalized severely. The punishment may range from revoking licenses to imprisonment. Some businessmen may try to deceive us one or two times but not all the time. And, when they are caught, they will get appropriate punishment.
What do you expect from the general public for the success of the new programs?
Whenever people buy any merchandize, they have to ask for receipts. The public need to cooperate by informing the department if they discover any illegal action. To the success of our new system, the participation of the public at large is crucial.
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