Posted by The Ethiopia Observatory (TEO)
Capital Ethiopia: Investment Commission reaches an agreement with Auditor General
The Ethiopian Investment Commission (EIC) disclosed that it reached an agreement with the Federal Auditor General Office’s (FAGO) audit finding, while the office stated that the commission and its board is providing incentives without strong follow-up.
Fitsum Arega, Commissioner of EIC, told Capital that the commission has provided clarification as per the demand of the Auditor-General. “We have discussed it with the Auditor General and now we are also ready to sit for further dialogue,” Fitsum said.
He explained that the commission had approved incentives as per the law and both sides have agreed.
“We clarified that the incentive approval is given by the board,” he added. The recent meeting on restructuring of the investment board is chaired by Prime Minister Hailemariam Dessalegn.
“The commission has also identified that there was a gap in terms of approving incentives under regional investment offices,” the Commissioner said.
He indicated approval of incentives for star rated hotels in regions at the regional administrations level has been provided. The directive for hotel licensing has different meanings in Amharic and English versions, according to the Commissioner.
“The directive in the English version stated that the star rated hotel investment shall be given by the federal government, while the Amharic one did not have similar meaning. EIC’s proclamation has also clearly stated that the star rated hotel investment license and incentives is only given by the federal investment office,” he added.
“We identified this problem before the Auditor General came and with the Ethiopian Revenue and Customs Authority, we have also taken measures on the companies who got incentives and misused it,” he explained.
“Their concern on this is acceptable, and we have also clarified this issue to Auditor General,” he added. He said that this was the only concern that FAGO’s auditors stated about the commission.
The commission has also written circulars for Ministry of Trade and regional offices that indicated the Federal Commission is the appropriate office for licensing and incentives for star rated hotel investments.
“If they have any additional concerns, we are ready to clarify further because the board has approved the investment incentives. But we respect their report,” he added.
On his report, last week, Gemechu Dubiso, Auditor-General of FAGO, told the parliament that the investment incentives proved by EIC and board are not undertaken properly with lack of clear legal benchmarks.
He stated that details are lacking on the directive on incentives for capital goods and that the law does not have limitation, leading to investors securing incentives that they ask for.
The audit report stated that the duty free incentives approved by EIC and regional investment bureaus to import machineries, goods and accessories is given without a cross check that the imported items are related to the actual investments.
“Against the 270/2012 article 13 sub article 1 of the Council of Ministers regulation, the investment board is providing duty free incentives for capital and construction goods,” Gemechu told the parliament.
On the other hand, the Auditor-General stated that the commission is approving incentives under Investment Incentives and Investment Areas Reserved for Domestic Investors 270/2012 regulation article 13 sub-article 4. The article stated that an investor eligible to a duty-free incentive pursuant to this article, shall be allowed to import spare parts the value of which is not greater than 15 percent of the total value of the capital goods within five years from the date of commissioning of his project.
The Auditor-General’s report indicated that the commission is approving incentives meanwhile projects are not start their operation. “The commission, however, is allowing investors to import capital goods and spare parts without investigation,” the report added.