SANA'A -- The General Director of the Tax Authority, Ahmed Ghaleb, told journalists on Tuesday that the private sector does not pay the full obligatory tax and that traders pay only 20 percent of required taxes.
He called this act by merchants a crime of embezzlement. He also warned that the law will take action against such crimes starting on August 21.
He said that many businessmen do not pay the tax and that, in the best case scenario, they pay only 30 percent of what should be paid.
However, he predicted that tax revenues would increase to three times the current figure after the implementation of the sales tax law. Tax revenues in 2009 reached about YR 130 billion.
Ghaleb made this statement during a training workshop for journalists on the sales tax law organized by the Studies and Economic Media Center.
The final draft of the sales tax law was approved in 2006 after a long dispute between the government and businessmen. It was supposed to be implemented earlier, but due to disagreements between the state and businesses it was delayed until July of this year.
"If the sales tax law had been applied earlier, we would not have reached this bad phase in the economy," he added.
Businesses often do not like to reveal their real transactions and records in order to avoid paying the full income tax. The application of the sales tax law would mean that the businesses would have to record each and every transaction.
Tax evasion is a problem that harms the national budget, now suffering from an acute revenues shortage.
Dr. Mohamed Jubran, professor of economics at the University of Sana'a, told the Yemen Times earlier that tax revenues are being wasted.
He explained that before Yemen explored for oil, the government used to rely on tax revenues for expenditures and it was able to cover those expenditures with money left over afterwards.
Jubran accused the General Investment Authority of being an agent able to grant customs and tax discharges for traders not granted in any country.
In addition, telecommunications companies and banks in Yemen do not pay taxes or customs fees because they have obtained illegal discharges from taxes and customs from the General Investment Authority, according to Jubran.
Since 2001, businesses have been opposing the sales tax law. As many officials are themselves businessmen they have refused to apply the law for ten years since its issuance, according to Jubran.
By Ali Saeed
© Yemen Times 2010
