Tax reform discourse and its implication on development: evidence from the VAT introduction in Ethiopia

Tax reform discourse and its implication on development: evidence from the VAT introduction in Ethiopia

The contemporary tax reform projects in the world, especially in developing and transition countries, are under the sway of international institutions, theories and experts influenced by developed countries. The repercussion of such tax reforms on development endeavours of a nation can be quizzed from different angles. Ethiopia is not an exception to this influence as it can be learnt from the 2002’s comprehensive tax reform that has also introduced Value Added Tax.

This paper indicates that the tax reform was a hurried moment and VAT was untimely introduced in Ethiopia. The paper tries to demonstrate that the existing VAT practice is fenced with variety of teething troubles including administrative and fairness issues, which are critically related to the poverty reduction efforts of the nation. This paper concludes by providing legal, administrative and policy recommendations.

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