Introduction

The Ethiopian Revenues and Customs Authority (ERCA) is the body responsible for collecting revenue
from customs duties and domestic taxes. In addition to raising revenue, the ERCA is responsible to
protect the society from adverse effects of smuggling. It seizes and takes legal action on the people and
vehicles involved in the act of smuggling while it facilitates the legitimate movement of goods and
people across the border. The ERCA traces its origin to July 7, 2008 as a result of the merger of the
Ministry of Revenues, the Ethiopian Customs Authority and the Federal Inland Revenues into one giant
organization.

Background

According to article 3 of the proclamation No .587/2008, the Authority is looked upon as "an
autonomous federal agency having its own legal personality". The Authority came into existence
on 14 July 2008, by the merger of the Ministry of Revenue, Ethiopian Customs Authority and
The Federal Inland Revenue Authority who formerly were responsible to raise revenue for the
Federal government and to prevent contraband. Reasons for the merge of the foregoing
administrations into a single autonomous Authority are varied and complex.
Some of those reasons include:
To provide the basis for modern tax and customs administrations
To cut through the red tape or avoid unnecessary and redundant procedures that results delay and
are considered cost-inefficient etc.
To be much more effective and efficient in keeping and utilizing information, promoting law and
order, resource utilization and service delivery
To transform the efficiency of the revenue sector to a high level.
A long process of study called "Business Process Re-engineering" had taken place before any
steps were taken to effect the merger of the foregoing administrations. The study was undertaken
for a year and half beginning from November 2007 by teams of officials selected from within the
administration.

The study has looked into the selected key business processes and has come across inefficient
organizational structure and unnecessary complicated procedures that permitted insufficient
service delivery. The study has also indicated that there was corruption within the
administrations and that smuggling and tax evasion were serious problems. These problems have
depressed the attempt of the foregoing administrations to be successful in achieving their
objectives. Owing to the depressing problems that worked against efficiency, the former
administration has failed to deliver efficient service to its customers such as importers, exporters,
taxpayers, the federal government, the society etc. For instance, international trade participants
(importers, exporters) were unable to deliver their goods to domestic and international market on
time.

Every import or export goods and their documents must be processed through the former tax and
customs administration and due to the inefficient procedures, these goods were subject to delay
at exit or entry points of the former customs Authority. Owing to it, importers or exporters
viewed the former customs procedure with disfavor or as an impediment that blocked the
movement of international trade. The former tax and customs administration also has long been
criticized for lack of efficient system to control tax evasion.

The administration had inefficient system to control taxpayers who fail to declare their actual
income in order to reduce their tax bill and the federal government's revenue. The former
administration was also far behind in protecting investors from adverse effects of contraband. It
was a daily occurrence to see contraband goods displayed on and being sold in the streets of
major towns of the country. These and other myriad problems call for solutions or significant
change and in response to them, the study team has made problem-solving proposal.
In its proposal, the team has suggested merger of the foregoing three administrations. The team
could not see the necessity for three entities or administrations as long as their purposes are
indistinguishable i.e. collecting tax for the government and preventing smuggling. The study
team believes that it would be better if the three administrations merged, forming a single large
powerful organization so that a base for modern and equitable tax and customs administration
system, effective resource utilization and quick service delivery can be laid down. The merge
was eventually put into effect with the knowledge, participation and approval of the employee
and senior management members and taxpayers. The pre-merger project such as the pilot
program, carried out for six months beginning from November 2008, has revealed that all the
newly designed tax and customs procedures test have been carried out to everyone's satisfaction
i.e. it was successful and has produced very beneficial effects to both the authority and its
customers or stakeholders. Presently, the Authority is exercising the powers and duties that were
granted to the Federal Inland Revenue Authority and the Customs Authority by other existing
laws.

Objective and goal of the organization

The ERCA has the following objectives:
To establish modern revenue assessment and collection system; and provide customers with
equitable, efficient and quality service,
To cause taxpayers voluntarily discharge their tax obligations,
To enforce tax and customs laws by preventing and controlling contraband as well as tax fraud
and evasion,
To collect timely and effectively tax revenues generated by the economy;
To provide the necessary support to regions with a view to harmonizing federal and regional tax
administration systems.

Structure of the organization

The ERCA has its headquarters in Addis Ababa. It is led by a Director General who reports to
the Prime Minister and is assisted by five Deputy Director Generals, namely D/Director General
for Program Designing of Operation and Development Businesses; D/Director General for
Branch offices' Coordination and Support; D/Director General of Enforcement Division;
D/Director General, Corporate Functions Division; Change Management and Support Sector;
and Enforcement Sector. Each deputy director general oversees at least four directorates. Both
the Director General and the Deputies are appointed by the Prime Minister.
Directorates at the head office level

The ERCA, at the headquarters level, has 23 directorate, (see 23 Business_Processes) . One for
the list of the directorate. As shown on the organizational chart, the directorate report to the
deputy director generals and a director heads each of them. Law Enforcement Directorate is just
one of the directorate ERCA has. To carry out its duties, the directorate is entrusted with broad
powers. It investigates customs and tax offences, institute and follow up criminal proceedings in
courts and this has resulted in the arrest and trials of hundreds of offenders and smugglers. The
directorate works in close collaboration with the federal police to prevent criminal offences
committed in violation of customs and tax laws.

Besides, the headquarters has the office of the director general which is led by a director and
comprises three positions, namely Tax and Customs Affairs, Strategic Intelligence Affairs, and
Communication and Human Resource Development Affairs.

Branches
Apart from the foregoing directorates, the ERCA has 32 field offices, of which two of them are
coordination offices located outside of Ethiopia at the port of Djibouti and at the port of Burbera,
Somalia. The primary function of the foregoing coordination offices are affording/ providing
transit service for the goods imported into or exported from the country. However, the latter
coordination office is presently not operational. The 30 branch offices in Ethiopia comprise 22
Customs Control stations, 50 Checkpoints and 153 Tax Centers. Tax Center means a tax
collection station administered under a branch office and located in the vicinity of taxpayers
while Customs Control Station means a station administered under a branch office where
customs formalities are complied with and collection of taxes and duties take place on imported
and exported goods; checkpoint is a place where customs examination is conducted by machine
and/or manually for the purpose of ascertaining that there is no variation between the goods to be
imported-exported and the goods specified in the customs declaration.

Each branch office is directed by a manager who is accountable to the D/Director General for
Branch offices' Coordination and Support Sector. For the list of branch offices see (see Branch
Offices) .

Vision - To be a leading, fair and modern Tax and Customs Administration in Africa by 2020
that will finance Government expenditure through domestic tax revenue collection.

Mission - ERCA will contribute to economic development and social welfare by developing a
modern Tax and Customs Administration that employs professional and highly skilled staff who
promote voluntary compliance amongst individuals and businesses, and take swift action against
those who do not comply.
Values - ERCA will understand its customers and their needs, treat them with trust and respect
and help them meet their obligations. We will act with integrity, transparency and
professionalism, and enforce customs and tax related laws. We will work closely with stake
holders and ensure the participation of women.

Strength of the organization

 Enables to collect revenue that is 80% of the budget of the country
 Enforce law
 Enables to control smuggling
 Enforce to implement cash register
 Implement modern tax system
 Achieving 100% of its plan

Weakness

 Still unable to avoid lack of good governance

 High turnover of employees

Opportunities

 Cooperativeness of federal police

 Having law department and intelligence department
 Having foreign direct investment and grand projects that have great
advantage in achieving its plan
 Dire dawa dewele road construction that improves dire dawa branch more
accessible
 The construction of train road

Threats

 Employee turnover
 Hard currency
 Global conditions
 Famine
 Lack of good governance etc
Duties and responsibilities of the organization

 Law enforcement
 Tax collection and enforcement
 Implementing of cash register
 Controlling of smuggling
 Tax avoidance and fraud
 Modernizing tax system
 Investigation of smuggling and tax avoidance and fraud related
action…..
 Ensuring smooth trade and investment taking facilities.
 Ensuring having healthy social welfare.
 Protecting the society from illegal weapon trade.

Suggestion

 Working with people

 Ensuring good governance
 High commitment of the top management to solve turnover of the
employees
 Harmonizing the organization with diradawa administration.
 Working in cooperate manner with those third parties having an
interest.

Conclusion

Since the organization is backbone of government the government has to take

care of facilities given by the organization. And every citizen has the responsibility
to pay tax in order to facilitate our countries development and welfare of our
society.