Tax row holds as talks between government and traders in Mogadishu fold

Talks between traders in Mogadishu and the government over the new sales tax have collapsed as traders point fingers at the Finance Ministry for what they termed as intransigence.

Addressing the media Tuesday in Mogadishu, Abdullahi Abubakar Mursal who among the 7 member committee representing the traders in the talks said the two parties did not agree on a way forward urging President Mohamed Farmaajo and PM Hassan Khaire to intervene.

The traders stuck to their position terming the tax as illegal as the ministry too maintained an unflinching stand noting its decree on payment of sales tax upfront at the port of Mogadishu was not subject to negotiations. Sources privy to the talks told Midnimo News the government is not about to bend to the whims of the traders noting, ‘the government wants the money badly and it cannot budge’.

“The taxes introduced by the government at the airport and the sea port are illegal,” the traders said in a statement. Without elaborating, the traders said they are only supposed to pay taxes to the government and not any other entity. The government imposed a 5% sales tax on imports this month to be collected at the port of entry in Mogadishu.

In a separate interview with Midnimo News, one of the importers, Abdi Shidane Guuled said they the traders had concerns over the manner in which the government was managing the taxes it collects. “There are middle men who benefit from these taxes instead of it being utilized to build schools, hospitals and other services for the people.” Guuleed said besides the taxes, traders in Mogadishu contribute immensely to building roads and other public amenities in Banaadir region.

“We agreed as importers of vehicles to set aside $70 from each car as part of social responsibility. These money helps to build and maintain the roads and other services in Banaadir region.


But Finance Minister Abdirahman Beileh has variously indicated payment of taxes was not negotiable as it was critical to support the government operate and provide public services. “The payment, collection and budgeted utilisation of these funds is a must for Somali development. We must finance our future. This is the bottom line,” Beileh said early this month.

Traders have been up in arms questioning the rationale the government is deploying to boost its domestic revenue mobilization.

Former Finance Minister and current MP Mohamed Nur accused the government of engaging in illegalities by imposing taxes outside the law. “There is no legal basis for these taxes. The government has intentionally failed to bring the necessary revenue bills to Parliament despite being urged to do so severally by parliament,” Nur told Midnimo News.

Nur also noted it was wrong for the government to collect taxes upfront adding, ‘there is no excuse at all for not collecting the taxes at the tail end of the sale as it should be.”

Trades in Bakaro market boycotted business for two days last week protesting the new taxes which the government said must be paid at the port. They later resumed business as the government maintained it would not stop collecting taxes. “Some traders were forced to comply to keep their businesses afloat,” said Nur.

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