Somaliland Introduces New Sales Tax

The self-declared Republic of Somaliland has officially enacted a sales tax, marking a significant move to strengthen its economic structure. This new measure, expected to impact businesses, corporations, and consumers across the region, was ratified during an extraordinary session of the Cabinet of Ministers.

Directly collected into Somaliland’s treasury, the approved sales tax ensures a more structured financial system to support ongoing and future development projects. It applies to all transactions made using modern payment systems, including mobile money, mobile banking applications, and other digital financial services. Additionally, utilities and internet service providers will be required to comply with this new taxation framework.

Mobile money, a pivotal component of Somaliland's digital economy, has shown remarkable growth over the years. In Somalia, mobile money services are used by approximately 73% of the population, facilitating daily transactions that surpass the total volume of transactions handled in traditional banks. This extensive usage highlights the critical role of digital financial services in the region's economy. The introduction of a sales tax on these transactions is expected to significantly increase state revenues, which can be channeled into further economic development and public services.