Members of the business community oppose the newly revised house tax applied by the Addis Ababa city administration citing gaps in the implementation and rate adjustment.
In light of the situation, the Addis Ababa Chamber of Commerce and Sectoral Association (AACCSA) held a meeting on June 22, 2023 with the presence of members of the business community and representatives of city administration revenue bureau and Addis Ababa property tax coordination office to deliberate on the issue.
As Mesenbet Shenkute, president of the AACCSA states, taxes are a backbone for the development of cities and it is necessary to consult and involve all the relevant stakeholders both before and after the issuance of proclamations and regulations related to taxation.
The Addis Ababa city administration applied the infamous revised house tax rate in April 2023, to which members of the business community at the time lamented that the reform was inconsiderate of the current economic status of the country.
The business community underscored that the rate adjustment was not clear and for some was higher than the rent rate. Participants argued that the city administration didn’t delve into the negative outcomes of the decision. Looking past the living situation of the society and not consulting the resident or all stakeholders, was also deemed by the business community as being negligent by the authority.

To make a sense out of this, Adem Nuri, head of the city administration revenue bureau gave a presentation at the discussion. As he highlighted, the decree in use was issued in 1968 and was known as an urban land rent and house tax 47/68. As the revenue head clarified, there was a gap in updating the rate since the one on hand did not consider condominiums, villas and real estates that did not exist at the time, “We did just a simple rate reform.”
As Adem explained the former rate was insignificant, “It was not possible to collect taxes that keep pace with the growth of the city and the current lack of infrastructure needs and growth.”
As he indicated, in the previous proclamation, 96 percent of the residence of the city paid less than 500 birr in house tax. “Now, when the property tax regulation is amended, this house tax will be included under the property tax regulation,” he elaborated.
The city administration is planning to generate 5 billion birr from house tax per year.
In a legal observation presented by Yohannes W.Gebriel, Director of the Arbitration Institute at the Chamber argued that proclamation no.47/1968 was amended by the Derg regime to go with the communist ideology. As he showed, rather than revising the whole proclamation the city administration revised only the rating method combining both the communist and the current market lead ideology just to full fill the income shortage which is dangerous.
“This is law breaking,” the legal director underlined.
The head of Addis Ababa property tax coordinating office, Asmamaw Mulugeta on his part stated that the house tax distribution was updated based on value of the current rate of the house rent market, the kind of the house, width, services and area level.
As he put across, there are more than 185,000 tax payers in the city, and the tax collected in the city when compare to other countries is low, “Nairobi’s house tax is 20 percent of the total tax while Lusaka the capital of Zambia collects 74 percent. However, Addis Ababa collects less than 1 percent.’’
The investment consultant, Yared Hailemeskel said that the reform of the house tax rate was ill-timed and could create socio economic crises arguing against the adjustment.
“Citizens who can’t afford to pay will get exempted from payment for one year if they can confirm that they can’t afford it,” said the head of the revenue bureau, in response to financial drawbacks.
According to the bureau, government offices, non-government organizations, embassies, religious places are said to be free from the tax.
“It is clear that since the system has not been revised for several years, it may cause a lot of dissatisfaction and confusion when it is implemented. Therefore it would be appropriate to work on creating awareness before the tax payer commits to breaking the law,” said Asmamaw, indicating, “Based on decree no.80/1968 which stipulates that if the taxpayers has a complaint they can go until the criminal code and if they are found breaking the law they will punished based on the criminal code and will pay a penalty of 5 percent of the tax each month for a delay which will be implement accordingly.”