House Legislates Excise Tax Law

Feb 15 , 2020

Lawmakers finally legislated the controversial excise tax law on February 13, 2020, with two opposing and seven votes abstaining. The new law, which aims at doubling the current excise tax contribution to GDP to 1.4pc, was legislated during an urgent parliament session that was attended by 320 MPs and was held after the members went for recess. The bill, which proposed a five percent minimum and a 500pc maximum excise tax, has been in the making for the past year by the Ministry of Finance. During the legislation, a number of changes were made from the first draft. The law imposed 30pc plus eight Birr a pack excise tax on cigarettes, an increase from 30pc plus six Birr. Imported cars that are between one and two years old are subjected to an excise tax of 55pc, whereas cars between two to four years old are subjected to 105pc excise. Cars that have served more than four years but not greater than seven years are subjected to a 205pc rate. Second-hand cars with over seven years are subjected to taxation of 405pc. The law also increased tax on beers with alcoholic content of up to seven percent to 40pc or 11 Br per litre, whichever is higher.