Taxation Of Audiovisual Works In Ethiopia: Problems And Prospects

Abstract

The purpose of this paper is to examine the problems in taxation of audiovisual works in Ethiopia. In order to investigate the problems the writer has employed both doctrinal and non-doctrinal research methods. Tax laws, Copyright and Neighboring Rights Proclamation and other primary sources such as interview & questionnaire as well as review of different literatures were used in the research. The analysis of laws, other primary data and literature review disclose that there are several problems in taxation of audiovisual works. There is no royalty system to collect income tax from the use of audiovisual works. The royalty system provided in the amended Copyright and Neighboring Rights Proclamation No. 872/2014 should be made applicable thereby royalty income should be collected and tax could be imposed on the income accordingly. In addition, there is no deduction and exemption rule in taxation of audiovisual works particularly for those independent producers. In this paper the writer argue that the Ethiopian Income Tax Law should at least provide general tax rules for deduction of research and development costs and exemption of a certain level of income in audiovisual industry. Indirect taxes such as VAT, TOT, custom duty, excise tax and Sur tax is imposed in taxation of audiovisual works. The imposition of high amount of indirect tax on audiovisual industry has a negative impact on the industry. The findings of the research shows that indirect taxes imposed on production materials in audiovisual industry are high. Consequently, the writer argues that it should be reduced. There is also amusement tax imposed on the entertaining activity applicable only in Addis Ababa city administration. Imposing entertainment tax in one parts of the country and reliving the other parts without viable economic reason could create economic imbalances among producers of those works. In order to receive the right amount of tax from the sector the country should adopt a well organized taxation system.