As one of the longest standing centralized independent nations in Africa, Ethiopia has a long history of levying taxes against its population.
The most notable of those reforms are: the reassignment of the Ethiopian Revenues and Customs Authority, consequently turning into the Ministry of Revenues; the establishment Tax Appeal Commission, with the goal of evaluating appeals; the increase in tax brackets, alongside other reforms addressing the issues of inflation and economic changes.
[3] However, these changes have yet to address the fall in the tax-to-GDP ratio, which fell from 12.4% (2014/15) to 10% (2018/19),[3] making the 10-year plan harder to realize.
Hence, self-employed workers usually pay disproportionately higher taxes as opposed to those who receive monthly salaries.
[6] As opposed to the taxes on employment income, taxation from rent is levied on a yearly basis.
Other direct taxes include taxes on dividends, lotteries, undistributed profit, income of non-resident entertainers, repatriated profit, royalties, interest income, rural land use fee, urban land leases etc.
[3] Schedule "E" - Exempt incomes Certain incomes sources are excluded from previously mentioned categories, such as: travel expenses (including transportation costs, food and accommodation), costs of medical treatment which are covered by the employer, as well as hardship allowances.
[7] Zero rates are only applied to exports, gold that is supplied to the National Bank of Ethiopia and to international transportation.
Items taxed under Stamp Duty include: memorandum, bonds, contract agreements, security deeds, collective agreement, contract of employment, leases, notarial acts, power of attorney, and documents of title to property.
Fossil fuel and food taxes are levied, with certain studies claiming their effects are regressive.
[12] Ethiopia's tax revenue is three times as large as the amount it receives in foreign aid; studies have shown that "aid in Ethiopia positively affects tax revenues, particularly through technical assistance and policy advice rather than conditionality.
[12] The system has also faces criticism from the taxpayers themselves, labeling it as "emotionally draining, includes hours of waiting, and being humiliated and threatened by tax officials.