Program

With the aim of broadening the tax base and facilitating the overall development of the economy, the government of Ethiopia has undertaken an overall tax and customs reform program. The reform measures are intended to encourage investment, trade and development in the country, broaden the tax base, and increase government revenues so as to support social and economic development programs and thereby alleviate poverty and strengthen the enforcement capacity of the tax and customs administrators to promote equity in the tax system.

Because of the weaknesses in their tax and customs systems in general, most developing countries are currently dependent on external sources to finance their development endeavors. Consequently, their budget problem is exacerbated from time to time. To change this situation and accomplish the aforementioned measures, the countries need to exploit and strengthen their domestic resource base to bring about sustainable development. Owing to their uncertainty and instability, external sources could not be taken as a major source and could not bring about profound growth in the country. As a result, it is necessary to strengthen the country’s tax and customs administration to exploit domestic resources so that internal sources of government revenues take the largest share for the development of the country. In order to exploit domestic resources the country needs professionals who can administer tax and customs, perform tax and customs audits, and confront all related challenges.

Ethiopia has made a major economic policy shift to reduce poverty. In line with this change, a tax and customs reform has been undertaken. The reasons for this reform were outdated tax and customs administration, less incentive for the tax and customs regime to attract investment, facilitate trade and generate sufficient revenue to cover current and capital expenditures, enhance development geared and poverty reducing projects. In order to solve the problems mentioned above, the Ethiopian government has introduced various tax and customs policies and procedures and administrative measures to enhance compliance with the policies and procedures, encourage investment, and improve efficiency and effectiveness of the tax and customs administration and facilitate the tax and customs reform programs.

Thus, the success of the tax and customs reform programs depends largely on building the capacity of civil servants who deal with tax and customs administration. As a result, education and training programs in the tax and customs administration become necessary, because such programs are essential to assist in raising more government revenue to meet the ever expanding public expenditure.