Fed Wants Cuts from Digital Creators

Dec 24 , 2025. By YITBAREK GETACHEW ( FORTUNE STAFF WRITER )

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The federal government is preparing to formalise the taxation of an emerging digital content economy, targeting influencers and content producers operating across platforms such as TikTok, YouTube, and Instagram.

A draft regulation from the Ministry of Finance outlines a comprehensive framework requiring content creators to register, maintain accounting records, and pay quarterly income tax, signalling the government’s intention to widen its tax net and modernise fiscal oversight. The proposed law requires content creators earning at least 100,000 Br annually to register with the tax authority, obtain a Tax Identification Number (TIN), and fully comply with income tax laws. Receipts should be issued for all earnings, and income disclosures are mandatory. Those who fail to register and declare income would be operating illegally under the tax law.

The draft forms part of an amendment to the income tax law, pending parliamentary approval. Revenue generated from digital content creation will be classified as business income. If annual gross income exceeds two million Birr, business income tax rules will apply, and creators will be obliged to keep accounting records, deduct expenses, and comply as if operating through an organisational structure.

Lawmakers are intent on strengthening oversight of digital content creators’ transactions, and the pending regulation is expected to address previously unresolved issues with greater clarity. Digital content creators who meet the income threshold will have to pay business income tax and are required to keep complete accounting records of all earnings, whether received in cash, in kind, or from domestic or international sources.

Documentation required will include statements from digital service platforms showing income from advertising, sponsorships, subscriptions, and similar sources. Contracts with sponsors and advertisers; bank statements showing payment receipts; and records of goods or services received in exchange for content, along with their estimated market value. The tax authority may also require additional supporting documents.

According to Finance Ministry officials, the draft regulation will soon be presented to the Council of Ministers for review and possible amendment. The process could result in further legislation specifically tailored to the digital economy.

“A separate regulation will be enacted for digital content creators,” an official said, declining to be named until the Council of Ministers concludes its review. “There is a possibility that digital content creators will be treated separately under the law.”

So far, the government has only collected limited tax revenue from digital content creators. In drafting the regulation, the Ministry reviewed digital taxation systems in countries such as Kenya and South Africa, with the intention of drawing on their experience.

Taxable income from digital content creation will be subject to a quarterly tax rate of 15pc. Payments should be made within 30 days of the end of each fiscal quarter, beginning in July. The quarterly amount due is calculated based on income earned in that period.

Officials have disclosed plans for a Payment Facilitation Company dedicated to supporting tax administration for digital content creators, though its details have not been finalised. The law will stipulate its establishment, and further information is expected to be released. This company will submit quarterly reports to the tax authority, listing digital creators’ names and addresses, amounts paid, and any other information requested, such as payment request addresses, SIM card and IP details.

The Tax Authority will monitor digital content creators’ activities, identify those liable for tax, and cooperate with domestic and international digital service platforms to obtain income data.

“They will've the responsibility to track them,” said the official.

This initiative is part of the federal government’s effort to expand its tax base. Anticipated tax revenues are set to increase by 129.4 billion Br, a jump of 110pc from the previous year, underpinned by a series of tax reforms. The fiscal year 2025/26 budget proposal projects total government revenue close to 1.51 trillion Br, with taxes accounting for about 73pc. This is expected to expand the tax-to-GDP ratio to 5.7pc, the lowest in sub-Saharan Africa. Total federal spending for the fiscal year is budgeted at 1.93 trillion Br, up from 971 billion in 2024/25.

Some creators, like Brook Shiferaw, see the policy as overdue recognition. A founder and CEO of Brook News Advertising & Events Plc and an accountant at the Ethiopian Content Creators Association, he has more than 2.1 million TikTok followers and over 34,000 YouTube subscribers. Having an income mainly from advertising and inconsistent, he considers taxation as a sign that the sector is now being formally acknowledged and integrated into the economy.

Brook supports taxation for national development but warns against overestimating its benefits and imposing excessive administrative burdens. He argued that requiring receipts for every transaction is problematic for creators focused mainly on content production, not complex accounting.

“Adopting new systems takes time, especially in this sector,” he said, voicing frustration with transaction tracking mechanisms.

Brook also worries about content classification, as some materials may appear promotional when they are not.

“The system used to track content creators needs time and proper procedures,” he said. “Some applications do not pay Ethiopian creators based on views. How will those incomes be taxed?”

Daniel Dessalegn, an artist with over 30,000 TikTok followers, shares these concerns. He supports improved tax collection but questioned how the rules will apply to creators with volatile incomes. According to Daniel, taxation works better with predictable income, but creators often rely on gifts and advertising, making revenue highly unpredictable. Some months, he earns over 10,000 Br; other months, almost nothing. On some days, he earns 150 dollars; in other months, 100 dollars. Deals are often arranged informally, complicating income tracking.

“How will they track the transactions?” he wondered. “I don’t know how tax would be paid on gifts.”

Kenya’s digital tax system is often cited as a reference, combining platform-based withholding taxes of five percent, digital services taxes of 1.5pc, and general income tax obligations. Kenya’s approach, which requires platforms to deduct tax at source and gradually integrate creators into the formal system, has boosted compliance despite limitations in traceability.

According to Daniel, who meets the annual taxable income threshold, many creators use foreign bank accounts to receive payments since Ethiopia lacks a domestic payment processing system.

Biruk Nigussie, a tax expert with more than a decade of experience at the Ministry of Revenues, argued that the current legal framework allows the taxation of digital content creators. Revenues classified under "Other Income” provide the government with a means to assess earnings outside traditional categories.

“The issue isn't the absence of a law, but how that law is interpreted and applied,” Biruk said.

The Finance Ministry distinguishes between turnover taxpayers and business taxpayers, with content creators potentially falling into either group, depending on registration. Businesses registered as such should issue receipts, while individuals are only required to do so if their annual income exceeds two million Birr.

“The income tax is based on source of income and residency,” Biruk said. “In principle, anyone must pay tax on income earned from any source. There is a legal obligation, but there is still a lack of clarity for content creators.”

Brook disclosed that discussions have already taken place between digital content creators and government officials on payment systems. Authorities acknowledged that the country is not yet integrated into international payment platforms, pushing some creators to rely on VPNs to access payments, often with limited returns. The Association is working to organise creators by category, with registration based on content type and quality.

"The numbers will be large," Brook told Fortune. "It's important to emphasise that the taxes we pay should not be imposed in a vacuum. The process must be transparent, structured, and based on clear tracking systems, not assumptions."

Biruk, the tax expert, warned against abrupt enforcement and the risks of retroactive taxes, advocating instead for gradual implementation and incentives to encourage voluntary compliance.

“Trust and voluntary cooperation are the most important enablers of effective taxation,” said Biruk.

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PUBLISHED ON Dec 24,2025 [ VOL 26 , NO 1339]

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