Fortune News | Aug 18,2024
Nov 29 , 2025
By NAHOM AYELE ( FORTUNE STAFF WRITER )
A sweeping directive from the Ministry of Finance requiring all lawyers and professional service providers to register for value-added tax (VAT), regardless of their annual income, has caused resistance within the legal community. The directive, published online and registered with the Ministry of Justice, was swiftly challenged in court by seven lawyers. The federal judges' temporary injunction applies only to these plaintiffs, unveiling the directive’s contentious rollout and the legal profession’s fractured response.
A federal Court has suspended the enforcement of a contentious directive from Ethiopia’s Ministry of Finance mandating all legal professionals and service providers to register for value-added tax (VAT), regardless of income level.
The temporary suspension followed a lawsuit filed by seven lawyers who argue that the directive distorts the nature of legal work and imposes undue financial burdens on practitioners.
The challenge was lodged at the Administrative Bench of the Federal High Court’s Lideta Division, on Chad St., following months of protest from members of the legal community. The directive, published on the Ministry of Finance’s website and registered with the Ministry of Justice, sought to eliminate the income threshold that previously exempted many professionals from VAT registration. Legal practitioners, however, contend that the rule misclassifies their profession as commercial activity and undermines both their financial autonomy and professional identity.
“This directive is unfair and misrepresents the nature of our work,” said one of the lawyers involved in the litigation.
Three months ago, tensions came to a head when hundreds of federal lawyers convened for a general assembly to air grievances over the directive. During this meeting, the Federal Bar Association formed an 11-member committee to lobby the Ministry of Finance for a solution. The Association warned that if no agreement were reached, the matter would go to court.
However, Association leaders later decided not to bring the case themselves, asserting that their role as watchdogs prevented them from advocating on behalf of individual lawyers. Instead, seven lawyers - Mebtayehu Alehagn, Mewal Berhe, Thomas H. Michael, Mesfin Beyene, Roba Tsegaye, Hailu Hasena, and Yonas Woldeyes - filed suit against the Finance Ministry. On November 6, 2025, the plaintiffs appealed to the judges, seeking a temporary suspension of the directive, arguing it would cause them “irreparable harm.”
The Court hearing was presided over by a three-judge panel. The plaintiffs contended that the Ministry of Finance lacked legal authority to issue the directive, which they argued violated the Constitution, the law that governs VAT, and administrative procedures. They called for the suspension of the directive pending a final ruling.
However, the plaintiffs appealed for an immediate injunction, noting the directive had already been registered with the Ministry of Justice and published on the Ministry of Finance website. They said that if not stopped, the order would become enforceable and their lawsuit would become meaningless. The plaintiffs asked the Court to act before formal deliberations began, stating that continued enforcement would cause them harm and undermine their case.
The Ministry of Finance, represented by Abraham Rega, objected in writing to the suspension. He claimed the directive had already been enforced and that suspending it would not serve the plaintiffs’ interests. According to Abraham, VAT is collected from clients who receive legal services, not from the lawyers themselves.
"The plaintiffs don't pay the tax out of their own pockets,” insisted Abraham, urging judges to keep the directive in place.
The Ministry's lawyer warned that suspending the directive would result in a loss of public revenue and, in turn, harm the public interest. He argued that the directive applied not only to lawyers, but to many other professional service providers. He also noted in his defence that the seven plaintiffs represented only a small fraction of those affected. The Ministry maintained that the new rule was part of a transition from the old turnover tax system to VAT and that it was necessary for effective tax management.
The Court ruled that the directive should be suspended only for the seven lawyers who filed the lawsuit, pending a final verdict. According to the judges, suspending the directive in its entirety could result in a loss of government revenue.
However, the ruling was not unanimous. A judge, Yusuf Mohammed, dissented, arguing that the directive should remain in effect. According to the Judge, since the directive had already been approved and lawyers were required to register for VAT, suspending it would not prevent its consequences unless it was fully revoked. Nevertheless, the majority - Abdisa Dashura and Kedir Endris - ruled in favour of the temporary suspension.
The Court scheduled opening arguments for December 24, by which time more lawyers are expected to join the lawsuit, asserting a vested interest in the outcome. As the legal battle unfolds, the case has drawn attention to the tension between government efforts to broaden the tax base and the concerns of professionals who say the new requirements fail to account for the realities of their work.
PUBLISHED ON
Nov 29,2025 [ VOL
26 , NO
1335]
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