Two weeks ago Abiy Getachew, an accountant at Novis Import & Export Plc, a company that has exported pulse crops and imported Sino Trucks for the past two years, was at the Western Addis Abeba Taxpayers’ Branch Office.

Abiy was at the tax office to pay his company’s monthly income tax amounting to around 30,000 Br collected from the employees.

His company pays income tax on a monthly basis at one of the four federal taxpayer offices, i.e. Western Addis Abeba Taxpayers’ Branch Office located at Sierra Leone Street nearby Global Hotel.

The office where Abiy was beginning this month has collected 1.9 billion Br in income taxes in the last fiscal year from the employees working in the city.

The city’s revenues office collects tax mainly from three sources: direct taxes, indirect taxes and municipality taxes.

Direct taxes are collected from the salary of employees of private and governmental institutions, as well as trade profits. Indirect taxes which are consumption taxes paid by the consumers in the form of value-added taxes (VAT), excise taxs and turnover taxes (TOT). Municipality taxes are collected from service giving institutions such as land management, municipality, water authority, hospitals and schools.

In the past fiscal year, the city’s tax authority was able to collect 32.3 billion Br from direct, indirect and other taxes. The value was less by 2.2 billion Br from the target.

The revenue was collected through the 15 branch offices under the city’s tax authority and the four branches under the federal tax authority.

Out of the total tax revenues of the City Administration, 22.8 billion Br of it was collected by the city’s 15 branches. Arada District tops the branches with revenues of 6.4 billion Br, while Addis Abeba Large Tax Payers office sits on the bottom with 798 million Br in tax revenues.

Having a total of 341,517 taxpayers, the city’s tax authority classified the taxpayers in three categories depending on their incomes.

About 68,626 of businesses fall under ‘category A’ with annual sales income of one million Birr and above. The 45,199 businesses with annual income between half a million Birr and one million Birr are classified under ‘Category B’ taxpayers.

‘Category C’ taxpayers, the majority in number are those that have annual sales below half a million Birr. These 227,692 businesses are managed by a presumptive tax valuation method, as they are not obliged to have a well-organized account of their income.

Western Addis Abeba Taxpayers’ Branch Office has four schedules for taxpayers, according to Yared Fekade, director of the Western Branch Taxpayers’ Office.

‘Schedule A’ taxpayers are those who collect monthly income taxes from their employees, while ‘Schedule B’ taxpayers pay taxes from income earned by renting buildings. Under ‘Schedule C’, taxpayers pay taxes from earnings of businesses and ‘Schedule D’ taxpayers pay taxes from temporary incomes.

Abiy has already reported the tax through the e-tax system and was at the branch to collect a receipt that confirms the payment.

The branch office has dedicated a separate window for loyal taxpayers as well as for those who pay more than 250,000 Br and above a month. It has a total of 7,000 taxpayers, of which 2,000 of them are classified as loyal.

Even though the city has 347,000 businesses registered by the City’s Trade & Industry Bureau, employees cover one-fourth of the total revenue.

In the past fiscal year, 62,730 people have applied for new trade licenses, while 26,876 people returned their licenses due to various causes such as property sale and changes of trade address and trade type.