Addis Abeba's New Policy Makes Landlords Tax Watchdogs

May 23 , 2025.

A new measure from the Addis Abeba Revenue Bureau (AARB) makes commercial landlords partly accountable for their tenants’ unpaid taxes, an attempt to plug revenue leaks and prevent alleged tax evasion. But the move has raised a red flag for property owners who now find themselves thrust into a quasi-regulatory role, alarmed by murky legal obligations and strained relationships with tenants.

"Some business owners habitually evade tax obligations by relocating operations and re-registering under new licenses, often in the names of relatives," said Sewnet Ayele, head of communications at the Bureau. "When we investigate tax issues, we usually find the property owner, not the tenant."

According to Sewnet, the Bureau’s latest push seeks to recover more than 10 billion Br in outstanding taxes from the previous fiscal year. So far, only six billion Birr has been collected.

Sewnet stated the role of public participation in the enforcement effort.

"Failing to report tax evasion is tantamount to cooperating with a criminal," he said. "Offenders could face fines or even imprisonment under the tax law. Ultimately, property owners bear the responsibility. Property owners renting to businesses must ensure tenants settle their tax dues before vacating."

The policy shift, however, has ignited considerable concern among property owners.

Belayneh Desta, who owns about a dozen rental properties at various locations, regularly supervises his tenants to ensure the properties are clean and compliant with regulations. For him, cooperation with tax authorities is both a civic duty and a way to protect his financial interests. However, he does not recall issues with unpaid taxes, for his tenants have generally been reliable to him.

"I supervise the shop to ensure the safety of the premises," Belayneh told Fortune. "I pay my taxes on time, and so do most of my tenants, though there are a few exceptions."

Belayneh agreed that providing information to the Bureau is essential, but argued that monitoring taxpayers should remain the Bureau’s responsibility. While acknowledging the necessity of cooperation, he worries about the practical challenges landlords often face when tenants leave unexpectedly.

Others view the measures as burdensome and unfair.

Tedla Asmamaw, who manages a building with 20 tenants on Cameroon Street near Bole Brass, argued that the policy unfairly transfers responsibility from the Revenue Bureau to property owners.

"Tenants have an agreement with the Revenue Bureau, not me," Tedla told Fortune. "Until now, we were not expected to monitor their tax status. It places an undue burden."

He fears this measure could strain relationships with tenants who had never experienced such scrutiny.

Property owners often found themselves vulnerable when tenants failed to secure tax clearance, holding them accountable for liabilities they never incurred. The old system applied broadly to various transactions, including Code 2 vehicle transfers, unfinished residential or commercial properties, and vacating leased spaces. Criticism mounted over the years, citing the lack of transparency and the frequent disruptions to legitimate property and vehicle transactions.

Bureau officials issued a new circular last week to address these concerns and refined the tax clearance requirements. Under the updated guidelines, only taxpayers with tax obligations unpaid for more than a month will require clearance. While legal extensions are possible, compliance remains mandatory.

"This change is long overdue," said Dawit Kejela, a private tax advisor and former auditor at the Ministry of Revenues. "Expecting landlords to ensure tenants’ compliance was punitive and detached from how tax obligations are defined. Income generation, not tenancy, should be the basis."

To reduce manual bottlenecks and replace the outdated clearance system, the Bureau has started deploying an integrated digital platform working in partnership with the Land Development & Administration Bureau and the Driver & Vehicle Licensing & Control Authority. The new digital system links tax records directly to ownership and tenancy databases, allowing authorities real-time monitoring capabilities.

"This is not just a service tool, it’s a digital monitoring platform," Sewnet said.

Once a taxpayer falls behind by more than a month, the system flags them. Until dues are settled, services such as title deeds transfers or vehicle registrations will be suspended. However, Sewnet acknowledged that the previous setup had numerous shortcomings, including delays and technological inefficiencies.

"The updated system was developed rapidly to address these issues," he told Fortune.

However, small business operators remain sceptical.

Bisrat Temesgen, a café owner on Djibouti Street (near Awraris Hotel) who recently closed due to financial difficulties, questioned the system's responsiveness.

"I paid my taxes, but I’ve been waiting six months for a clearance," he said. "There is no transparency in the delay. Paying doesn’t seem to guarantee anything."

Biruk Nigussie, a tax expert with 15 years of experience at the Ministry of Revenues, attributed delays mostly to audits and the complexities of large asset transactions. He noted that individual taxpayer clearances proceed quickly unless complicated by arrears or corporate issues.

"The new system streamlines that," Biruk said. "But, its success will depend on enforcement."

Biruk believes clarity in policy enforcement is critical. He argued that people are more inclined to comply when obligations are clearly defined and enforcement encourages cooperation rather than coercion.

"The Bureau has legal grounds to involve landlords," he told Fortune. "But vague proclamations can overwhelm compliant taxpayers and invite unintended consequences."

PUBLISHED ON May 23,2025 [ VOL 26 , NO 1308]

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