Somalia steps up tax collection despite challenges

By Hassan Isilow

JOHANNESBURG (AA) - The Somali government is steadily ramping up tax collection efforts despite the challenges of doing so in a volatile environment, said a senior Finance Ministry official.

‘‘When I assumed office in August 2014, there was no effective office. We were only collecting about $30,000 per month in domestic taxes in the capital, Mogadishu,” Muhudin Hassan Jurus, director of Somalia’s Inland Revenue Department, told Anadolu Agency in an interview.

He said in a bid to raise revenue and provide social services to the Somali population, the Finance Ministry met with businesses and convinced them of the benefits of paying taxes.

‘‘We then reinforced our tax laws, which were previously ineffective. We introduced road tolls for trucks and commercial vehicles,’’ he said, adding some transporters were opposed to the tolling system but later complied.

‘‘Currently, we collect between $7 to $9 million in taxes in only the capital Mogadishu,” Jurus said.

He said the Inland Revenue Department works with a special police unit that helps them collect taxes from businesses around the city.

It is estimated that hundreds of companies, both local and foreign, have set up businesses in Mogadishu, and their staff members pay taxes deducted from their monthly salaries.

The taxes collected in the capital are sent to the Finance Ministry, which allocates funds to pay the salaries of civil servants, build roads and equip hospitals and schools.

-Challenges faced by tax collectors

Despite the steady progress that Somalia is making, tax collectors in the country are sometimes targeted by members of the Al-Shabaab terrorist group, which also at times demands taxes from businesses.

“Sometimes tax collectors are targeted or killed in bomb explosions as they go about their duties, but the number of such incidents has declined,” Jurus said.

He said the Somali government is currently holding talks with its federal states to unify revenue collection.

“If the discussions succeed, then all taxes collected in different federal states will be forwarded to the central government, which will allocate resources to each state,” he said, adding discussions are ongoing.

He noted that Somalia provides good tax incentives to investors setting up businesses in the country.

Jurus also praised the current Somali government, saying it has played a major role in convincing businesses and workers about the benefits of paying taxes.

Somalia’s overall revenue from tax collection totaled nearly $141 million in 2017 compared with $110 million in 2016, media reports quoted Finance Minister Abdirahman Duale Beileh as saying.

Somalia, which has been wracked by civil war for over two decades, has been grappling with a lack of cash and is now determined to collect more tax revenue from its vast ports and other sources to pay civil servants' salaries and provide services.