Somalia: Somaliland Cuts Gst Rate, Moves to Digital Collection

Hargeisa, June 7 (Horn Diplomat) — Somaliland's Ministry of Finance and Economic Development on Sunday announced a sweeping reform of the Goods and Services Tax (GST) system, cutting the tax rate by 50% while broadening the tax base in a move aimed at modernizing revenue collection and strengthening domestic finances.

Under the new measures, the GST rate will be reduced from 5% to 2.5%, a step authorities said is intended to ease the tax burden on consumers and businesses while maintaining the government's ability to fund public services and development projects.

The reform was officially announced by Finance Minister Abdillahi Hassan Aden, accompanied by the State Minister, Director General Mohamed Hassan Suleiman and the Accountant General of Somaliland.

"This reform is intended to reduce the tax burden on our citizens and businesses while creating a broader, fairer and more efficient tax system," Finance Minister Abdillahi Hassan Aden said during the announcement in Hargeisa.

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"By lowering the GST rate from 5% to 2.5%, we are supporting economic activity and encouraging greater compliance, while ensuring that all eligible taxpayers contribute fairly to national development," he said.

The ministry said the tax reduction would be accompanied by a broader restructuring of the tax system to ensure that all goods and services legally subject to taxation contribute fairly to national revenue collection.

Officials said the new framework seeks to eliminate disparities in tax collection by expanding the taxpayer base and ensuring that tax obligations are shared more evenly across different sectors of the economy.

Under the new framework, GST will be collected through an electronic system integrated with digital payment platforms and other modern payment methods. The ministry said the move is intended to simplify tax collection, reduce tax evasion and improve transparency and efficiency in Somaliland's financial administration.

The government plans to implement the revised GST regime through digital payment technologies and other electronic collection systems, a move intended to improve efficiency, reduce tax evasion and enhance transparency in the country's financial administration.

According to the ministry, the reforms are part of a broader strategy to modernize Somaliland's tax system, reduce revenue leakage and create a more sustainable source of domestic income to support public services and national development projects.

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"Our objective is not simply to collect more revenue, but to build a modern taxation framework that promotes fairness, accountability and sustainable economic growth," Aden said.

"A stronger domestic revenue base will enable Somaliland to invest more effectively in public services, infrastructure and other development priorities that directly benefit our people."

The Ministry of Finance said the new system would be implemented once technical preparations and administrative procedures are completed. The ministry added that public awareness campaigns and detailed guidance would be provided to businesses, financial institutions, service providers and taxpayers ahead of the rollout.

The Ministry of Finance described the reform as a significant step toward building a modern, transparent and equitable taxation system capable of supporting Somaliland's long-term economic development goals and increasing domestic revenue mobilization.

(Reporting by Mohamed Duale; Editing by Horn Diplomat Desk)