The Ethiopian law of tax enforcement experienced a drastic change following the tax reforms of the 2002. Introduction of self-executing tax enforcement mechanisms was among the grand shifts in the country’s tax system. Previously, the only means of ensuring prompt and certain collection of delinquent taxes was through the time taking judicial proceeding. The disapproved judicial means of enforcing delinquent taxes is now replaced by a self-executing enforcement scheme called ‘tax foreclosure.’
Tax foreclosure is by and large an out of court means of recovering delinquent taxes by seizing and selling the asset of delinquent taxpayers’ property. It involves a series of legally inscribed condition precedents that need to be followed in the foreclosure processes. In this article, an attempt is made to closely look at the legal regime governing tax foreclosure in Ethiopia.
Owing to its novelty in the Ethiopian tax system, this article seeks to shed light on the rules governing the foreclosure processes in Ethiopia slightly informed by comparative law. In this respect, the US practice is selected on account of considerable commonalities with the Ethiopian law of tax enforcement.
The very fact that tax foreclosure is a self-executing enforcement scheme could also be a legitimate reason to write about it as both the judge and the enforcer is the tax authority. Undoubtedly, there might be some interest of taxpayers that may be mishandled in the course of foreclosure processes. In this context, the article will draw attention to some lacunas in the foreclosure rules that might be areas of concern. The other aim of this article is to question the constitutionality of tax foreclosure in Ethiopia with respect to some constitutional rights of taxpayers. Since the practice of foreclosing delinquent taxpayer’s property is yet undeveloped, the article is unfortunate to review the implementation of the tax foreclosure regime on the ground.
Accordingly, the article is categorized into five sections. The first section is an introductory part that introduces the various forms of foreclosure followed by a brief discussion on the meaning and nature of tax foreclosure in the second section. In the third section, it will discuss the series of procedures that are involved in tax foreclosure proceedings. The Last section of the article will endeavor to test the constitutionality of the tax foreclosure regime. Finally, a brief conclusion and recommendations will ensue.