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The Income Tax Bill Passes Without Major Changes

Jul 17 , 2025

Parliament has passed the Income tax bill with five legislators voting against it and 12 others casting abstention votes.

Several MPs raised their concerns on the salary income tax while members of the Standing Committee and officials from the Ministry of Foreign Affairs insisted on the harm caused if the bill fails to pass.

Desalegn Wodaje, chair of the Standing Committee on Finance, voiced his concerns of financial loss of untaxed income.

He pointed out that, according to the research presented by the Ministry, indicated that if the minimum untaxed salary were set at 1,200 Br, the annual revenue loss to the federal government would amount to 5.37 billion Br. If the minimum salary were raised to 1,600 Br, the loss would increase to 19.3 billion Br, and at a minimum salary of 2,000 Br, the annual loss would reach 38.4 billion Br. Even if the baseline had to be increased to 3,000 Br, the loss would be 70.1 billion Br.

According to Desalegn Chane (PhD), an opposition MP, the majority of low-income households being taxed, arguing that such taxation is unjustified considering the lowest income level at two dollars a day. He argued that the lowest threshold taxable income should be no less than 8,000 Br. He was vocal about his displeasure with the short time between the bill arriving at the legislative chamber and its passing into law.

Parliamentarians criticised the 2.5pc turnover tax, despite companies declaring losses, for contradicting "basic principles of taxation."

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