By Muluken Yewondwossen
Hoarding is being blamed for the sudden closing of at least 50 shops in Merkato. The Addis Ketema Sub City Trade and Industry Development Bureau closed the shops in the biggest market center of town on December 21, 2010.
The distressed shop owners told Capital that it is their stocks of goods that caused their demise.
“The notification paper posted on the sealed shop doors indicated that the bureau closed the shops due to illegal hoarding,” a shop owner told Capital. “But we did not hide away commodities in any other areas,” one trader said.
The bureau officers notified the traders that they had to bring their trade licenses and required documentation by Thursday Dec. 23 afternoon.
In an organized raid, the bureau officials stormed the shops equipped with video cameras to film the whole process and the stocks they found in the shops.
Sources also say that the traders are being accused by the bureau of having larger transactions which exceed the amount permitted by their license.
The traders on their part say that their capital is indeed not big at all. Instead they say the problem is with the large wholesalers.
“We receive different types of goods on credit from big wholesalers and producers,” they say explaining their stockpiles. “It’s true that the goods are sold at a profit but a lot of it goes to the mega distributors,” they claim.
Still, the city is accusing them of conducting large transactions with their own capital, traders working in Shema Tera say.
Traders with licenses for 5 to 10 thousand birr capital were not required to register for VAT collection and payment as their revenue are considered small.
Traders say the bureau called them to discuss the situation on Friday. The administration is attempting to clarify tax policy with regard to trading which has led to investigations in the area.
Recently, the Revenue and Customs Bureau of the Addis Ababa City Administration merged with the federal authority.
An official at the Revenue and Customs Authority (ERCA) told Capital that ERCA’s campaign in Merkato is related to tax and VAT issues.
The official indicated that there are big business communities in the largest market center of the country which have not paid much in profit tax and have not had their businesses VAT registered.
“To encourage the retailers and other traders in Merkato to get their businesses now registered for VAT, we are extending the registration period for three months, until February 22, 2011,” an official at ERCA legal office told Capital.
He said that even though they are giving the businesses the opportunity for registration, they are still not allowing illegal activity in the sector. “The closed shop owners did not have a receipt for their commodities they bought from mega dealers, producers and importers, for instance. This is one of the major factors that caused us to take this measure,” he explained.
But traders Capital talked to said that goods distributers and other mega dealers, who are VAT registered, did not give a receipt for their transaction. “The authority should ask those big suppliers about the receipt, otherwise what can we do?” traders complained.
ERCA officials said that the authority has information about retailers’ complaint on goods suppliers but they should ask for a receipt from suppliers for their transaction.
At the time of printing the shops remained closed. Traders said no one from relevant offices has talked to them so far.