Power of Taxation over Income of Employees of Public Enterprises Owned by the Federal Government of Ethiopia: A Case Comment

Abstract

According to the Amharic version of Article 96(3) of the FDREConstitution,8 the Federal Government of Ethiopia has the power to levy and collect income tax on employees of the public enterprises it owns. Despite this, there are sometimes misunderstandings regarding the message conveyed by this article, probably due to the fact that there is no parity between the Amharic and the English versions of this provision. Such a misunderstanding manifested itself in a case that cropped up between Fidelitu WoredaFinance, Economic Development and Revenue Office, Liben Zone, Somali Regional State (hereinafter cited as the respondent) and the Federal WaterWorks Construction Enterprise (a public enterprise hereinafter cited as the applicant), owned by the Federal Government of Ethiopia. In this case, courts of all levels10 in the Somali Region decided that income tax collected from the employees of this enterprise belonged to the Somali National Regional State. The case was finally submitted to the Cassation Division of the Federal Supreme Court of Ethiopia (hereinafter cited as the Cassation Division), which reversed the decisions of the regional courts. As we will see below, the Cassation Division handed down a correct and acceptable decision, supported by the relevant provisions of the FDRE Constitution.