ERCA Claims 3.5m Br in Unpaid Tax on Film Camera

The camera was imported into the country, with the owner claiming it to be a cheaper model

The customs authority is preparing to take Tewodros Teshome, of Sebastopol Cinema, to court over the next two weeks. This comes after allegations of tax cheating, which could have saved him over a million Birr, when he imported an expensive Red One camera and allegedly passed it off as the cheaper Scarlet version.
Officers of the Ethiopian Revenue & Customs Authority (ERCA) raided the Lulu Guest House, around Meskel Flower on Ethio China Street, on July 6, 2014, and took possession of the equipment following a tip off from an informant, long after Tewodros claimed that he had repatriated the equipment. The seized equipment included the camera and accessories in four large bags and one smaller bag, as well as a tripod, lighting equipment and a camera stand that could be fitted onto vehicles.

Tewodros, who came into the film business as the writer, director and producer of Gilbit Alem, through Teddy Studio – the first company he established- is already facing a suit by an author, Atenkut Mulugeta, who claimed that the film Sost Maezen was based on a book he had written, Fiqer Sibeqel. After Gilbit Alem, Tewodros established Sebastopol Entertainment Plc, through which he produced eight more movies, including Kezkaza Wolafen, Fiqer Siferd (2005) and Key Sihtet (2006) – a film about the Red Terror. His last films, Abay Vs Vegas and Sost Meazen, were shot using the Red One camera now in question.
The camera was imported in 2009, with five items, including an Apple laptop, printer and scanner, which were registered as accessories. The camera did not have serial number and model written on it, according to Zeru Getnet manager of the Addis Abeba Airport Customs branch office. The price Tewodros had given to the authorities at the time was 2,392 dollars, or 21,243 Br by the then exchange rate, for which the ERCA demanded a tax of just 32,678 Br. The ERCA’s tax official involved in this estimation is also under investigation, says Zeru.
Later on, it emerged that Tewodros may actually have bought the equipment for 65,000 dollars, or 577,000 Br – a figure he gave in a number of interviews with the media, including state television, and which he has repeated to The Ethiopian Reporter newspaper. According to the ERCA’s allegation, Tewodros also didn’t import the equipment with just five accessories, but 31 – a figure that the ERCA discovered in a lease document when Serawit Multimedia rented the camera to shoot Hiroshima in 2010, said Mintesenot Getu, higher investigator at the Addis Abeba Airport Customs Branch Office.
“When Tewodros imported the camera to the country, he presented an invoice for Red Scarlet, which is cheaper than the real brand of Red One, a brand which is used in Hollywood,” said Mintesenot.
The products should also not have entered the country simply with a passenger declaration, but by opening a Letter of Credit (LC) and following the formal import procedures. This would have made the tax amount of the camera 1.166 million Br, said Zeru.

The ERCA first contacted Tewodros in 2011, when it had information about the camera’s type. Gebrewahed Woldegiorgis, deputy director general, and Markeneh Alemayehu, former deputy prosecutor of the Authority, now both in prison facing corruption charges, told him that they were convinced that what he had imported was the Red One and not the Red Scarlet, and the price was 69,000 dollars, which, including all 31 accessories, would have required 1.16 million Br in tax. The administrative measure they decided to take at the time would have avoided legal proceedings, forcing him to pay three times more – 3.5 million Br.

The officials rejected a new narrative Tewodros came up with at the time, according to Mintesenot. He had claimed that the equipment he had imported first was the Red Scarlet, for which he had presented an invoice for 2,392 dollars. But he had then travelled back for other business, carrying the equipment with him, and the Company that sold him the camera told him of availability of a better version, the Red One, which he claimed cost him 25,464 dollars, or 226,000 Br, in cash and kind, as he had to return the Red Scarlet as part of the payment.

He could not afford to pay the 3.5 million Br tax levied on him, Tewodros said to Fortune.
He was then instructed to hand over the equipment, but he responded in writing that he had returned the camera to where he had bought it from, because, as a new technology, people were not aware of it and he could not rent it much. However, his film, Sost Maizen, which finished shooting in 2013, was recorded with the very same equipment, but he told the ERCA that he had re-imported it for that purpose; he also said the same in an interview with Fortune.

Tewodros claims that the ERCA took the camera based on wrong information, but the Authority’s prosecutors say they are finalising collecting information to take the case to court.

Source Addis Fortune