Telecom, education transactions in question
The Attorney General’s Economic & Tax Crimes Directorate has pressed charges against the Ethiopian branch of Chinese multinational company ZTE (H.K.), and its two former General Managers. At the Federal First Instance Court Lideta Division, prosecutors argued that the company evaded income taxes, failed to pay Value Added Tax (VAT) and used illegal receipts.
ZTE is alleged to have evaded 128.5 million birr in taxes between 2009 and 2012. During that time they earned 941.1 million birr from transactions. They also are being accused of failing to pay 28.8 million birr in VAT collected from their customers.
During four fiscal years of the company’s transactions, the former Ethiopian Revenues & Customs Authority (ERCA) which is now the Ministry of Revenue (MoR) established 34 audit irregularities and demanded payment of 857 million birr.
The company appealed to the tax appellate bench of the authority and started to pay after the amount was reduced to 412 million birr, last year. Even though the company began making payments the former ERCA reported illegal activities to police who conducted further investigations.
The company’s communication officer declined to comment on the matter or to say if the company paid the remaining amount on time.
The investigation which involves, ZTE Corporation, was related to its project contract with Ethio telecom. The company was accused of abusing the duty-free privileges granted for projects worth billions of birr. In addition, its contractual relationships with the Ministry of Education have come under scrutiny and have irregularities which appear to be illegal.
The prosecutors presented ten counts against the multinational company.
They said the company and its affiliate ZTE Corporation had various Mobile Network installations and related projects in the country starting from 2009 but they failed to declare some of their income and used illegal receipts to collect payments.
The first count also alleged that the accused evaded income generated by providing trainings in Ethiopia and internationally.
In counts two through five prosecutors alleged that ZTE H.K. attempted to deceive tax authorities to get out of paying profit taxes by making phony receipts and claiming they made less money than they actually did. Over four years they apparently took in 2.9 billion birr but failed to pay 28.8 billion birr in VAT that they actually collected from customers. They would use illegal receipts to collect VAT but would not send that money to the government coffers.
The charges list two former people employed as General Managers at the time the infractions occurred as second and third defendants.
Jiyang Yung Jun, who was the General Manager of ZTE H.K. from December 28, 2006 up to January 16, 2009, and Zan Yan Ming who served from January 16, 2009 up to November 22, 2012 are accused of failing to protect the company from committing crimes and using illegal documents. They are not in custody.
Responding to Capitals inquiry, Teka Mehari, the company’s lawyer, said they hadn’t been served any court warrant and that he had no knowledge of any development in the case, other than the Attorney General’s long lasting investigation into the mater.