On December 8th, The Ministry of Finance Development has submitted the 2021 Budget to the parliament for approval, and officials including the Minister Dr. Sa’ad Ali Shire have appeared before the parliament to discuss the budget and its components and the various sources that generate taxes. The 2021 Budget was 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 necessities import, 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 a 200 SLSH or 0.023 US Dollars levy per kilo on Khat imports intended to develop programs for mental health issues. Although a 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 has imported a whopping 30,594,705 kilograms of khat from Ethiopia from January to September 2020 and has assessed nearly 35 million US dollars in import taxes. Although there was a month-long moratorium on khat import during the month of Ramadan as part of 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.
