Millions Lost in Taxes: Somaliland Economy


If the central bank and ministry of finance had diligent and skilled academics, the government revenue would have increased by two folds. $550 million of taxes are not collected statistically.

Nicholas Kay— the former UN envoy to Somalia, said in an interview he gave to the USA institute of Peace in 2014, generalizing Somalia, including Somaliland —departmental governments do not have the talent that would have lifted their people out of extreme poverty. He was speaking in his capacity — the UN mission roles in Somalia including Somaliland is to help economic development and good governance.

In my curiosity about the ineffectiveness of taxation system in which companies and businesses both large and small avoid paying taxes, I came across yesterday a Toyota Land Cruiser driver who appeared to be a better-off person. I asked if he would kindly allow me to ask a question about our economy. I said to him that his tax disc had expired in December 2019 and why he had not taxed his vehicle? He said He would tax it soon and in response, I said to him he would have taxed in January 2020. I further elaborated that, if he were to tax it tomorrow, the government would lose two months of tax dues as tax disc would not be normally backdated from January, but the day he pays it. The guy at that point was so irate and said that he works for the finance ministry and became aggressive towards me, and I had to end the conversation.

Nevertheless, six out of ten vehicles in Hargeisa do not display a valid tax disc based on my study. Tax disc for six months is only $20, and a year is $40 respectively. Motorists in Hargeisa avoid paying $10 million a year — that will fix potholes, construct new roads and also create employment opportunities for thousands of unemployed.

Large companies avoid paying taxes of more than $300 million per annum. Small and larges businesses also are estimated to avoid paying more than $200 million based on my data.

Finally, economic growth that would see us through the end of mass unemployment and reduction in extreme poverty is not plausible while enfeeble institutions have not got the capacity to manage the economy.

Ahmed Abdi Isse
Social Scientist


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