Somalia has approved legislation establishing a National Revenue Authority (NRA), paving the way for sweeping tax administration reforms aimed at increasing domestic revenue, improving public financial management and reducing the country's dependence on foreign donor funding.
The proposed law, approved by the Council of Ministers, will create a single national institution responsible for administering and collecting government revenues.
Officials say the reforms are designed to modernise Somalia's tax system, enhance accountability and support long-term fiscal sustainability.
The move follows the adoption of Somalia's new Constitution, which introduced fiscal federalism structures and clarified revenue-sharing responsibilities between the Federal Government, Federal Member States and local governments.
Once operational, the National Revenue Authority will become the country's central tax administration agency, coordinating revenue collection across different levels of government and harmonising existing tax systems.
According to the Ministry of Finance, the authority will consolidate designated revenue streams under one institution, replacing fragmented collection mechanisms with a unified framework.
Officials said the reforms are expected to improve transparency, accountability and efficiency through the adoption of modern digital tax administration systems.
The authority will also standardise tax procedures, strengthen oversight, improve taxpayer services and provide a comprehensive legal framework for the collection of taxes and other government revenues.
Economists have welcomed the move, describing national revenue authorities as critical institutions for strengthening domestic resource mobilisation.
They argue that such agencies help minimise tax leakages, broaden the tax base, improve compliance and generate sustainable revenues needed to finance public services. They also create a more transparent and predictable tax environment for businesses.
For Somalia, the reforms are expected to bolster the government's capacity to fund key sectors including education, healthcare, infrastructure, water, security and other national development priorities using locally generated resources.
Finance Minister Bihi Iman Egeh said the government remains committed to establishing a modern, accountable and efficient revenue administration capable of financing the country's development agenda.
"The government is committed to building a modern and accountable revenue system capable of financing national priorities through domestic resources," Egeh said.
He noted that draft regulations establishing the authority had already received Cabinet approval and would be submitted to Parliament when it reconvenes.
According to the minister, the new institution will improve coordination among government agencies, strengthen public confidence in tax administration and ensure that revenues are collected fairly and efficiently.
Following Cabinet approval, the legislation now awaits parliamentary debate and approval.
If enacted into law, the Somali National Revenue Authority will become the country's principal domestic revenue agency, marking a significant milestone in Somalia's ongoing economic reforms and efforts to build stronger, more accountable and financially sustainable state institutions.
