August 9, 2012 ·9 Comments
In my opinion the VAT concept in Somaliland is wrong and too early to adopt, it is a burden to the Somaliland citizens and the taxation legal framework for the VAT is not yet established and published.
To increase the revenue is a good idea, but I believe it is important to concentrate the collection of the existing taxation and safeguarding those been collect to make sure it reaches to the treasury instead of introducing to new tax. Many believe the current taxation system is already unfair where poor are heavily taxed. This is the incubator of the well-known illegal evading taxes in Somaliland. Tax collection varies depends on who the collector is and who are the tax payer, which gives the tax collector the full authority on who much tax is to be collected.
What are the reasons of the VAT concept may never work in Somaliland
The VAT concept has a root to modern and developed courtiers especially the UK, where I have worked as taxation and auditing expert in the past 15 years.
And here are some of the reasons to fail the VAT implementations in Somaliland.
Therefore the VAT has many important laws to consider eliminating the possibility of failure, also the public awareness of its import ants. As far as the current tax collection system concerns and how the recording systems are, there are many deliberately created loop holes and caused confusion. It is also inevitable to prevent a fraud and misuse on public money.
VAT is the only taxation system where the UK government has lost a billion of pounds even though the most perfect system is in place, which has become very challenging to prevent a fraud. Therefore I would advise to decision making team to reconsider the VAT implementation and make sure that there is a consultation to all stakeholders, without this I can see a failure waiting to strike.
In conclusion VAT can only be currently introduced on some specific products and services which ca easily be verified, such as telecommunication, fuel, remittance and Qat.
Or it is most appropriate to introduce an Employers national Insurance Contribution of 1%, I am sure this will generate more secure revenue for the government and it be safe to collect, our public who earns very little salary and wages pays 1% of stump Duty and 5% Income Tax, why the employers are not paying any tax?
Revenue, taxation and Auditing Expert, Somaliland
By goth Mohamed