Power of Taxation over Income of Employees of Public Enterprises Owned by the Federal Government of Ethiopia: A Case Comment

Abstract

According to the Amharic version of Article 96(3) of the FDRE
Constitution,8 the Federal Government of Ethiopia has the power to levy and
collect income tax on employees of the public enterprises it owns. Despite
this, there are sometimes misunderstandings regarding the message conveyed
by this article, probably due to the fact that there is no parity between the
Amharic and the English versions of this provision. Such a misunderstanding
manifested itself in a case that cropped up between Fidelitu Woreda
Finance, Economic Development and Revenue Office, Liben Zone, Somali
Regional State9 (hereinafter cited as the respondent) and the Federal Water
Works Construction Enterprise (a public enterprise hereinafter cited as the
applicant), owned by the Federal Government of Ethiopia. In this case, courts
of all levels10 in the Somali Region decided that income tax collected from the
employees of this enterprise belonged to the Somali National Regional State.
The case was finally submitted to the Cassation Division of the Federal
Supreme Court of Ethiopia (hereinafter cited as the Cassation Division),
which reversed the decisions of the regional courts. As we will see below, the
Cassation Division handed down a correct and acceptable decision, supported
by the relevant provisions of the FDRE Constitution.