The rate
The standard rate in Somalia is 5%. Some goods and services carry reduced or zero rates and others are exempt. The difference matters: zero-rated sales still let you reclaim the tax on your purchases, exempt sales do not.
The federal sales tax is 5% for most goods and services (Sales Tax Law No. 2 of 1984, art. 4), but the Revenue Directorate lists 15% for telecommunications, 25% for banks and money-transfer services and 10% for supply-chain service companies. It is the federal rate, collected mainly in Mogadishu; Somaliland and Puntland levy their own taxes independently.
Who must register
Registration becomes compulsory once taxable turnover passes the threshold Inland Revenue Department, Ministry of Finance sets, measured over a rolling period. Below it, registration is usually voluntary, which makes sense if your customers are registered businesses that can reclaim what you charge.
How to register
Sales tax registration is done on the Ministry of Finance's tax registration form, Part C, which is filled in together with the general taxpayer details and submitted to the Inland Revenue Department.
Part C asks for the date from which you need to be registered for sales tax, your expected annual turnover from taxable goods or services supplied in Somalia, whether you supply goods, services or both with a short description, and the storage address in Somalia if you hold goods.
The form's closing notice says sales tax returns must reach the IRD on or before the 15th day of the following month. The Manual gives no registration threshold or processing time, so ask your local revenue office.
How to register
Register with Inland Revenue Department, Ministry of Finance using your TIN. Once registered you receive a Sales tax registration number or certificate, and from that date you must charge Sales tax on taxable sales, issue compliant invoices and file returns even when nothing is due.
Charging Sales tax on an invoice
Show the net amount, the Sales tax rate, the Sales tax amount and the gross total, with your registration number in the header. Prices quoted to consumers should include Sales tax; prices quoted to businesses usually exclude it and say so. The Somalia calculator adds or removes Sales tax and shows the arithmetic.
Filing and paying
Returns are periodic, most often monthly or quarterly, and report the Sales tax you charged less the Sales tax you paid on purchases. The difference is paid to Inland Revenue Department, Ministry of Finance by the return deadline; a repayment is claimed when purchases exceed sales.
Penalties for getting it wrong
Late registration, late returns and late payment each attract penalties and interest with Inland Revenue Department, Ministry of Finance. Charging Sales tax while unregistered is an offence in most countries. If you missed the threshold, register now and declare the back period.