Addis Ababa, Ethiopia (24 May 2023)
The recent comprehensive study conducted in Addis Ababa to reform the city’s house tax rates reveals significant figures that provide valuable insights.
To begin with, it is estimated that there are approximately one million houses in Addis Ababa. Out of this vast number, only around 183,000 houses are subject to house tax.
Interestingly, a considerable portion of house owners, around 2,500, pay an annual tax amounting to less than a single birr. The data also indicates that 12% of house owners pay less than 10 Birr in tax. This reveals that a significant number of homeowners have been subject to a minimal tax burden under the previous tax structure.
Furthermore, about 84,000 houses, which represents 46% of the total number of houses in Addis Ababa, pay less than 100 Birr in taxes.
In terms of revenue generation, the house tax collected from these properties amounts to 47.7 million birr. Although this figure may seem substantial, it accounts for only 8% of the total income of Addis Ababa.
In an effort to encourage compliance and strike a balance between tax burden and affordability, the recent house tax reform has introduced changes in the tax rates. Homeowners will now pay 50% of what they would have paid under the new rate, providing them with some relief in the transition period. However, homeowners utilizing office space are expected to pay 75% of the new rate this year, recognizing the differential impact of property usage on tax liability.
Source: Ethiopia Insider
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