On December 8th, The Ministry of Finance Development in Somaliland, Taiwan’s only diplomatic ally in northern Africa submitted the 2021 Budget to the parliament for approval, and officials including the Minister Dr. Sa’ad Ali Shire have now appeared before the parliament to discuss the budget and its components as well as the various sources that generate taxes.
The 2021 Budget was previously approved by President Bih’s cabinet on December 5th.
According to the budget, the Somaliland government expects to take in more than 171 billion Somaliland Shillings, a 9% increase from 2020, by fully implementing GST, income and payroll taxes, rolling back tax breaks on basic food and medical necessity imports, one of the steps implemented as a response to the COVID-19 pandemic.
In addition, the Ministries of Employment and Technology are expected to contribute significantly through employment licenses for foreigners and telecommunication fees.
Another tax the Ministry of Finance Development proposed in the budget is a 200 SLSH or 0.023 US dollars levy per kilo on ‘khat‘ imports intended to develop programs for mental health issues.
Although National Mental Health is included in the priority areas for 2021, the budget does not state the rate of the proposed levy and exactly how it will be used to curb the rampant mental health issues in Somaliland.
Its widely believed that khat consumption contributes significantly to health issues.
Somaliland imported 30,594,705 kilograms of khat from Ethiopia from January to September 2020, and has assessed nearly US$35 million in import taxes.
Although there was a month-long moratorium on khat import during the month of Ramadan as part of the COVID-19 pandemic response, it remains one of Somaliland’s top imports.
Despite a positive outlet for 2021, 96% of the 2021 budget is expected to come from traditional sources of customs and the Inland Revenue Service.
Although the 2021 budget is only 2.6% higher than the previous year, there are major differences where resources have been heavily deallocated from certain ministries such as the Ministry of Commerce and Tourism which seems to have lost 52% of its nearly 6 million dollar budget in 2020.
This article first appeared in the Somaliland Chronicle and is republished with permission.