Ad Firms Caught in Crossfire as City Bureaus Battle Over Billboard Fees

May 4 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

A bureaucratic spat between two bureaus under the Addis Abeba City Administration is causing frustration and financial strain for the capital's advertising industry. The Construction Permit & Control Authority (CPCA) and the City's Revenue Bureau squabble over the mandate to collect advertisement service fees.

The CPCA's Advertisement Department accuses the Revenue Bureau of charging fees exceeding approved rates and collecting payments for outdated advertising methods banned under new city regulations. Despite a recent regulation eliminating traditional advertising formats such as banners and sheet metal, the Revenue Bureau continues accepting payments for these platforms, confusing advertisers.

The Bureau classifies these collected fees as taxes rather than service charges, inflating costs through penalties that sometimes double the actual fee amount without clear justification. This irregular practice has caused widespread frustration among advertising agencies, which find themselves burdened by excessive and seemingly arbitrary charges.

A recent letter from the CPCA detailed several operational difficulties. The Authority cited inconsistencies, stating the Revenue Bureau applies uniform charges across different advertisement categories, inflating fees sometimes threefold compared to authorised rates. The Authority says this has complicated its ability to issue permits "fairly and effectively."

Demeke Kebede, an outdoor advertisement permit officer at the CPCA, expressed exasperation with the current arrangement.

"We would prefer to collect the fee oursevles" he said "CPCA could efficiently handle the fee collection."

Werkenesh Seboka, deputy director of the Revenue Bureau, has instructed all branch offices to resolve these discrepancies directly with the CPCA. However, despite multiple directives and repeated concerns raised by the CPCA, the issue persists, and advertiser complaints continue.

Over 300 licensed advertising agents operate in the city. This year alone, the CPCA collected approximately 15 million Br from issuing and renewing advertisement permits. Over the past nine months, it has issued and renewed 12,112 permits and upgraded 17,015 from traditional to digital formats, adhering to the new standards.

A sharp increase in permit fees instituted three years ago has worsened the regulatory and administrative issues. Billboard advertising costs rose dramatically from 800 Br to 5,000 Br, and digital advertisement permits surged from 5,000 Br to 15,000 Br. The increased financial burden has intensified pressure within the industry, leaving many companies financially strained.

Akiya Teshome, CEO of Akiya's Advertising and an auditor at the Ethiopian Advertising Association, blamed the Revenue Bureau’s rigid payment system. His company delays permit applications until after July 8, illustrating its frustration with a stringent payment structure that penalises those unable to meet fixed deadlines. Akiya stated the unfairness of the current system, noting how it overlooks advertising companies' varied operational calendars.

“They can be flexible when people pay in advance, but there’s no flexibility when we can’t pay on time,” said Akiya.

Increasing service charges have further strained advertising companies. Amidst unclear regulations, Akiya described the advertising market as undergoing one of its coldest periods despite growing demand.

Other companies have suffered even more severe setbacks. A local firm, 251 Marketing & Advertising, suffered a financial loss after making a 1.2 million Br advance permit payment. Soon after, 14 of their billboards were demolished without compensation due to a city corridor development project. The abrupt removal led to substantial financial distress, compelling the company to halt new advertisement projects and lay off several employees.

Temesgen Getachew, a marketing expert at 251 Marketing, described the situation as dire, stating they have been unable to recover financially. Despite seeking judicial intervention, the company failed to secure reimbursement or alternative billboard locations.

According to Temesgen, missing tax deadlines incurs hefty penalties of 20pc after a month, escalating to 40pc after two months, and reaching the total permit cost by the fifth month. The firm, founded by Addis Alemayehu, has had to improvise by making payments during tax season, irrespective of its cash flow situation.

Biniyam Mekru, head of the City Revenue Bureau, defended the current system, stating that advertisement payments are treated no differently from other taxes. Advertisers are thus required to meet strict deadlines, with a 35-day window provided at the fiscal year's end.

“They've to pay on time,” Biniyam told Fortune, urging the uniformity of treatment under existing tax procedures.

According to Biruk Nigussie, a tax expert and former Revenue Bureau employee, the system, established in the early 2000s, conforms to the tax laws but suffers from legal inconsistencies and insufficiently detailed regulations. These flaws contribute to complications like mishandling delegated service charges and inconsistent VAT reporting.

Biruk suggested establishing payment schedules aligned with the tax period rather than permitting issuance dates, with payments starting anew from the end of the tax period.

"Such measures would simplify procedures for the Revenue Bureau and advertisers alike," he told Fortune.

PUBLISHED ON May 04,2025 [ VOL 26 , NO 1305]

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