The Ethiopian government budget for the current fiscal year 2022-2023 anticipates spending Birr 787 billion (11% of GDP), which will be paid for by Birr 439 billion in tax collections, Birr 39 billion in grants, Birr 43 billion in foreign borrowing, and Birr 266 billion in domestic borrowing.
Cepheus Growth Capital recently conducted research on Ethiopia’s trade performance and ranked all government tax revenue sources across 17 categories and 163-line items to arrive at a total revenue of Birr 438.8 billion using data from the Ministry of Finance Budget Document and the Parliament website.
According to the report, revenue outturns in FY 2021-22 show an overall 87 percent performance achievement relative to the set budget, with tax revenues faring much better (88% of the budget) than non-tax revenue (73% of the budget). External grants were 42% of expected levels, well below budget.
Here is a list of all 17 categories of government domestic tax revenue sources, ranked based on amount by the Cepheus research report.
- Direct Taxes on income
- VAT On Domestic Goods
- VAT on Services
- Excise Tax on Domestic Goods
- Turnover Tax: On Domestic Goods
- Turnover Tax: On Services
- Stamp Sales and Duty
- Customs taxes on Imports
- Excise tax on Imports
- VAT on Imports
- Export Tax
- Surtax on Imports
- Government Fees & Charges
- Sales of Public Goods & Services
- Non-tax income: Investments
- Miscellaneous Revenue
- Capital Revenue
From the estimated result for the previous fiscal year of Birr 320 billion, the revenue for the recently started fiscal year is predicted to increase by 37% to Birr 439 billion. As stated in the report, the inflation rate is currently at 37% but is expected to fall to 22% annually, so this is not as extreme as it might initially seem.
A widening of the VAT and excise tax base, new fuel excises, different tax administration initiatives, and a new property tax regime (for which a proclamation is anticipated this fiscal year though full implementation is likely to occur only in FY 2023–24 are all examples of new tax policy measures that are currently being implemented), based on the report, are additional examples of new tax policy measures that are currently in place.
Source: Ethiopia’s 2022-23 Budget
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