(ERGO) – A new system of registering businesses for the payment of tax in the central Somali regional state of Galmudug is causing controversy among local traders.
The Galmudug state finance ministry has registered 2,800 business premises in Galkayo, Adado, Dhusamareeb and Guriel towns over the past two months, using a computerized system that will enter the details into a database.
Omar Hassan Haji, the ministry’s director, said 12 officials were conducting the registration process, which is ongoing and aims to strengthen the state’s tax collection systems.
Ali Mahad Abdi, a trader in Dhusamareeb town in Galgaduud region, told Radio Ergo that the registration process would mean the finance ministry needed to explain the strategy for using the resources they would collect in taxes and to be more transparent.
He said the traders also wanted to know the exact criteria being used to calculate the tax base for different sized businesses.
“I was told to pay $150 dollars per year. I am not rejecting this, but I want to know what the money will be used for,” Ali stated.
Ali transports foodstuff from Bosaso town in Puntland. He noted that his shop was registered by the ministry two months ago.
Omar Hassan noted that the administration intended to use tax revenue to boost security as a priority. He said they do not have capacity to rebuild the infrastructure.
He said the shops and small businesses registered would pay between $5 and $50, depending on their size, to the finance ministry of Galmudug state. Wholesalers and larger business such as Ali’s go up to $150.
Previously, the district level administration rather than the state had been collecting the taxes from the traders.
Abdullahi Moalim, who owns and runs a business in Guriel, told Radio Ergo he was ready to pay the taxes but expects improvements in security, health and education sectors as well as rebuilding of roads.
This registration process is the first of its kind conducted in major towns. Each business is having to pay a registration fee of 5 million Somali shillings ($28).
