The Federal Government of Somalia has announced that starting Sunday, August 18, 2024, it will begin directly deducting sales tax. The government has stated that this 5% tax will be automatically withdrawn from business accounts at the time of purchase when a customer makes a transaction, with the sales tax being charged to citizens.

“The Ministry has successfully implemented a system where sales tax is automatically deducted from merchant accounts during every transaction made by businesses and their customers,” stated a press release from Somalia’s Ministry of Finance. The ministry also mentioned that the funds collected from this tax would be deposited directly into the government’s central treasury.

The Ministry further informed all businesses that starting from August 18, 2024, they must ensure that every transaction made by their customers includes the 5% sales tax to avoid the tax being deducted from the merchant’s own funds. This measure is intended to prevent merchants from bearing the tax burden on transactions.

The announcement comes just days after a meeting between business leaders in the capital and the Minister of Finance ended without an agreement regarding the implementation of the sales tax. The merchants had raised concerns about the recently introduced 5% sales tax, requesting a delay in its implementation until a resolution could be reached through further discussions. However, the government’s decision to proceed with the tax deduction from business accounts highlights the ongoing tension between the government and the business community, adding additional pressure on the citizens of the capital, who already face challenges in accessing government services.