Al-Shabaab Threatens Financial Institutions Over Somalia's New 5% Sales Tax

MOGADISHU, Somalia - Al-Shabaab militants in Somalia have shifted focus to financial institutions including mobile money transfer firms and banks, following the latest government fiscal policy targeting to collect 5 percent taxes from businesses.

For the last couple of weeks, business owners and the youth have been protesting over high taxation and unemployment, after the government imposed a 5% tax on businesses, a move which could lead to unprecedented closure.

Through Ali Dheere, the group’s spokesperson, Al-Shabaab maintains that should financial institutions implement the government directives, they will be subject to Islamic law-based action. The group terms the direct 'betrayal of public trust'.

Al-Shabaab also gives private citizens until August 26 to withdraw money from those institutions. For some time, these financial institutions have been accused of being conveyor belts of terrorism through money laundering activities by the group.

In 2022, the government of Somalia closed down over 200 bank accounts and 70 money mobile transfer firms over links to Al-Shabaab. The affected businesses were directly linked to financing the group which is seeking to overthrow the fragile UN-backed federal government of Somalia.

Similarly, the government warned business owners working with the group of the possibility of losing their licenses should they be found guilty of assisting the group. Al-Shabaab uses the proceeds to pay fighters besides purchasing weapons.

A report by the United Nations projects that the group collects up to $120 million annually, using $24 million for the purchase of sophisticated weapons from abroad. The group is also believed to be sponsoring terror groups across the country.

Speaking to an Italian think tank following the Italy Africa summit, Somalia's President Hassan Sheikh admitted that Al-Shabaab raises more taxes than his UN-propped administration in Mogadishu whose budget is funded by the West to the tune of 80%.

The imposition of 5% taxes on businesses comes at the time shop owners and traders speak about the toll on their businesses following the weekend's terror attack and fire, which reduced their property to ashes.

Although no deaths were reported, businesses are now counting losses worth millions in goods, property, and equipment in the two main markets, Safa and Marwa, in the Ceelasha Biyaha area. The market was first established following the war of 2007 in Mogadishu, during which over two million people fled the city and settled in Ceelasha Biyaha.

"We have lost documents for land property of over 300,000 plots," said one businessman.

Another added, "Around a.m. local time, we heard a huge blast rocking the area. They say it was a bomb explosion. Then there were huge fireballs in the sky, followed by gunshots. Nobody could come here."

GAROWE ONLINE