Ethiopia expects 47% tax revenue increase this year


The total tax income of Ethiopia for the current year will increase by 47% compared to the previous year, says Ethiopian Revenue and Customs Authority (ERCA).

“By strengthening our enforcement and expanding the tax base, we expect to meet our target of increasing the tax revenue of the country by 47% this year as compared to year,” said, Sisay Baharu, Director of Planning and Performance at ERCA.

The Authority plans to collect a total of close to 199.4 billion birr (close to $7.4 billion at the prevailing exchange rate) at the end of this fiscal year that will be concluded July 7, 2018.

To meet the target the Authority aims to collect 88.6 billion birr (around $3.2 billion) from import tax. While close 110.5 billion birr is expected to be collected from domestic taxes, which includes, salary, dividend, consumption tax such as 15% VAT, excise and turn over taxes, according to Mr. Sisay.

In addition, nontax revenue sources such as, from windfall incomes that come from banks as a result of devaluation, from court cases and auctioning contraband goods and imported goods the importers failed to approach the Authority and claim, among others, are also expected to generate around 2.3 billion birr (around $850 million) in the year.

Meanwhile the four months tax collection performance of ERCA (from July 8, 2017 – November 9, 2017) shows that it has collected 57 billion birr (around $2.1 billion), while the target for the period was 68 billion birr (around $2.5 billion).

The previous budget year (July 8, 2016 – July 7, 2017), ERCA has collected a total revenue of 135.53 billion birr (around $ 6 billion at the then exchange rate). It has achieved 78% of its target for the year.

Last June, Ethiopian Parliament has approved $13 billion national budget for the current fiscal year. Meanwhile the last October 15% devaluation of Ethiopia birr against U.S. dollar is likely to stress this budget by increasing the cost of import items by government institutions such as, capital goods as well as major goods like fertilizer and fuel, among others.