Ethiopia Ends 22-Year Tax Exemption on Water, Electricity, and Transport Services

Date:

Share post:

The Ethiopian government has announced a new directive aimed at revising the existing subsidy framework for water and electricity services. For the past 22 years, low-income households in Ethiopia have enjoyed water and electricity services exempt from additional value-added tax (VAT). This exemption was initially intended to alleviate the financial burden on low-income households. However, it has come to light that a significant portion of the population, with the financial means to pay for these utilities, has been the primary beneficiary of this tax-free status.

The new directive, to be issued by the Ministry of Finance in the coming days, will redefine the eligibility for tax exemptions on water and electricity services. The revised framework will focus on exempting only the average monthly consumption per household, ensuring that households consuming beyond this threshold will be subject to VAT. This adjustment is intended to create a more equitable distribution of resources and ensure that subsidies truly benefit those in need.

In parallel, the government has also revised its approach to transport services. Similar to the water and electricity sectors, transport services have been VAT-exempt for the past 22 years to support low-income households. However, this exemption has only applied to public and freight transport services. The government has decided that it is no longer appropriate to extend this support to other types of transport services.

Moving forward, the exemption will continue for public transport services, particularly those utilizing vehicles with a seating capacity of less than eight passengers, excluding three-wheeled vehicles. These vehicles, which are crucial for public transportation in Ethiopia, will remain VAT-exempt to ensure affordable transport options for the broader population. However, private transport services using vehicles with a seating capacity of eight passengers or more will now be subject to VAT.

Addis Insight
Addis Insighthttps://addisinsight.net/
Addis Insight is Ethiopia’s fastest growing digital news platform, providing consumers with the latest news from Ethiopia and its diaspora. We provide marketers with innovative opportunities to leverage our stories and overall brand with a fiercely curious and highly engaged audience.

1 COMMENT

  1. When I come to realize that this fire-spitting patriot H.E. Ahmed bin Shide is in charge of the financial affairs, I’m assured more than ever that the old country is an extremely capable hands. He has brought grace to the ministry.

    Go get’em tiger!!!!

Comments are closed.

spot_img

Related articles

Commercial Bank of Ethiopia to Adjust Loan Interest Rates and Service Fees

Addis Ababa, Ethiopia – The Commercial Bank of Ethiopia (CBE) has announced its intention to implement adjustments to...

Awash Bank Announces Pre-Tax Profit of Nearly 11 Billion Birr

Awash Bank, Ethiopia’s first private bank, held its 29th Annual General Meeting (AGM) today and announced plans to...

Ethiopia’s Government Bans Two Prominent Human Rights Organizations

The Civil Society Organizations Authority (ACSO) confirmed on Wednesday that it has banned two organizations known for their...

ADvTECH Expands into Ethiopia with $7.5 Million Acquisition of Flipper International School

In a significant move to expand its presence across Africa, JSE-listed private education provider ADvTECH Group has announced...