Two parliamentary committees say new sales tax illegal

The newly introduced sales tax which saw traders in Mogadishu boycott business is unconstitutional, two parliamentary committees have said noting the government failed to seek parliamentary approval before implementing the new tax measures.

Finance and Budget and Trade Committees said in a statement Wednesday the 5% sales tax popularly known as VAT (Value Added Tax) is illegal and runs counter to constitution. The lawmakers pocked holes at the government’s move to impose the tax on traders.

Sales tax cannot be collected upfront. It is tax levied on consumers of goods and not sellers,” the committees noted. Finance Minister Abdirahman Beileh this past week defended the decision to collect taxes directly from importers observing that the government did not have the capacity to collect the taxes from individual traders.

“We lack the capacity to put good systems across the nation. We do not have the ability to give everybody a tax identification number,’ said Beileh in a media interview. The minister also added the tax was not optional.

But the parliamentary committees dismissed the decision noting sales tax should be collected at the tail end of the sale.

The committees said government must table the new regulations before the House on April 30 adding the current measures violated article 125 of the Provisional Constitution.

The article stipulates parliament shall enact a National Reserve law which shall among others ‘determine legitimate revenue collection and expenditure disbursement relating to institutions at all levels within the Federal Republic of  Somalia’.

Traders in Bakaro market boycotted business this week for two days protesting the new tax but later resumed.

Goobjoog News