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05/02/2016

An Ethiopian Tax Delegation Travels to Germany: Learning About Best Practices in Modern Tax Administrations

An Ethiopian Tax Delegation Travels to Germany: Learning About Best Practices in Modern Tax Administrations
Dr Robert Heller, President of the Federal Academy of Finance (3rd from right), and the members of the delegation at the Federal Ministry of Finance in Berlin. (Photo: Federal Academy of Finance)

 

The government of Ethiopia is pursuing a range of economic and social reform programs to increase levels of public investment and higher social expenditures. To achieve these goals, the government has launched a tax reform program at national level to strengthen revenue administration since the revenue productivity performance has not kept track with the overall growth of the economy mainly due to the weakness in capacities of administrations. With this background, a high ranking delegation from the Ethiopian Revenue and Customs Authority (ERCA), including the Director General of ERCA initiated a study tour to Germany in February to March to discuss good practices of modern tax administrations.

 

The regional “Good Financial Governance (GFG) in Africa” programme, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Union was approached by GIZ Ethiopia to assist in organising and accompanying the study tour. The German tax system was chosen mainly due to its overall similarity of federalism practices to the Ethiopian tax structure. German tax administrations are well-known for their tax administration ICT systems, well-educated civil servants and high tax compliance rates.

 

The study tour started off in Munich with a two day workshop at the city Tax Office and the Tax Office of the Free State of Bavaria. The participants showed special interest in topics like joint tax audits of German states and transfer pricing issues, among others. In Bonn the delegation visited the BMZ where Germany’s engagement in development cooperation in the field of tax in Africa was discussed. The Federal Central Tax Office presented its responsibilities within the federal German tax system and ways of fighting tax fraud on the Internet. The discussions at GIZ with members from the International Tax Compact (ITC) and the GIZ sector programme “Good Financial Governance” comprised of the Tax Administration Diagnostic Assessment Tool (TADAT), GIZ’s good financial governance approach and the Addis Tax Initiative.

 

The next stop took the delegation to the Federal Ministry of Finance in Berlin, where the Head of the Directorate General Tax, Mr Sell, explained the German tax structure. Dr Heller, President of the Federal Finance Academy presented the educational training of German tax officials. At the Ministry of Finance of the State Berlin, the Ethiopians were introduced to German “Revenue Forecasting” and “Inter-State Fiscal Flows”. The latter seemed to be interesting for the members of the delegation as the economic and fiscal disparity across states in Ethiopia is quite high.

Lastly, at GIZ’s Berlin office an overview of GIZ’s approach to tax reform was given as well as an introduction to the Executive Master’s in Taxation (EMT) for African tax officials, jointly organised by GIZ and the African Tax Administration Forum (ATAF).

 

The study tour fulfilled its expectations of providing a platform for discussions and exchange between Ethiopian and German tax officials. The results of this knowledge exchange may contribute to a more efficient and sustainable tax administration in Ethiopia and the idea of the development of an Ethiopian tax academy.

 

For further information on the GFG programme please visit the webpage or click here to view our video (Contacts: Dr Michaela Ungerer, michaela.ungerer(at)giz.de or Tobias Fleckenstein, tobias.fleckenstein(at)giz.de).

 


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