Somaliland to Launch Reduced GST System to Support Public Services

Haatufonline,July 5,2026

Somaliland is set to implement a new Goods and Services Tax (GST) system aimed at improving the financing of essential public services while easing the tax burden on businesses and consumers.Under the new framework, the GST will apply to government-related commercial transaction services. The tax rate has been reduced from 5% to 2.5%, a move the government says is intended to lessen the financial burden on both the public and the business community.

Speaking on the issue last Wednesday, Somaliland’s Finance Minister, Abdillahi Hassan Adan, said revenue generated through the GST on commercial transactions will be placed into a dedicated fund to finance key public services, including healthcare, education, water supply, and security. He said the new mechanism will enable citizens to clearly see how their tax contributions are being invested and to track the allocation of public funds.

Although the GST system had originally been scheduled to take effect on July 1, its implementation has been postponed by 10 days due to technical considerations. The new launch date has been set for July 11, 2026. Explaining the delay, the finance minister said the primary reason was that some businesses had not yet completed the technical preparations required to integrate with the new system.He stressed that the GST does not introduce a new tax or increase existing taxes. Rather, he described it as a tax reform designed to reduce the tax rate, broaden the tax base, and modernize revenue collection through a more efficient and transparent system.

The minister added that the postponement would provide additional time to standardize, verify, and prepare all businesses for the transition, ensuring that tax collection is conducted fairly, transparently, and under uniform rules.

The GST system is expected to integrate with Somaliland’s modern digital payment infrastructure, particularly mobile money platforms such as Zaad and eDahab, as well as account-to-account payment services offered by financial institutions including Premier Bank, Amal Bank, and IBS Bank, among other electronic payment systems.

With a 2.5% GST rate, Somaliland is expected to maintain one of the lowest goods and services tax rates in the region. By comparison, the equivalent rates stand at 15% in Ethiopia, 10% in Djibouti, 16% in Kenya, and 18% in Uganda.