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Turkish company finally pays nearly 2.1 billion birr in tax

The Turkish multinational construction company, Yapi Merkezi, which is building the 389km long Awash-Kombolcha-Hara Gebaya Railway, agreed to pay 2.1 billion birr in tax levied by the Ministry of Revenue (MoR).
They forked over a down payment of over 471.5 million birr. The company is expected to finish paying off its debt in the next three months.
The Ministry negotiated with the company to resolve the controversy that began over disagreements involving a loan provided by the Turkish Export Import (EXIM) Bank and Ethiopia. The Bank provided Ethiopia a loan worth USD 300 million for this project. It is the largest loan that Turkey has ever given to another country. Another USD 1.4 billion needed for the railway was covered by European financers such as Switzerland’s Credit Suisse.
Both the Ministry of Finance and the Ministry of Foreign Affairs took part in the negotiations, which went on for quite a while. The company argued that they were being double taxed.
At first Ethiopia wanted the Yapi Merkezi to pay 2.4 billion birr but it was reduced to 2.1 billion birr by the tax appeal bench. In October 2018 it had its assets frozen in Ethiopia and the Ethiopian Railway Corporation was ordered to deposit any payments owed to the company to the government instead.
As the first and largest company of the Yapi Merkezi Group, Yapi Merkezi Construction and Industry Inc, founded in 1965, has realized the design and construction of a wide variety of buildings, heavy construction and railway projects both in Turkey and abroad, especially in United Arab Emirates, Saudi Arabia, Sudan, Algeria, Morocco and Ethiopia. The group has now nine holding companies including the Prefabrication Group and real-estate.
“As always, Yapi Merkezi has fulfilled all of its obligations regarding tax issues, according to the set-rules of the Ethiopian Tax Authority,” Murat ÖCAL Country Manager of Yapi Merkezi told Capital via email. “We are glad to inform you that the grievance Yapi Merkezi had with regard to the tax assessment made by the tax authority is properly addressed.”

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