The Quiet Breakdown of Tax Fairness in Addis Abeba

The Quiet Breakdown of Tax Fairness in Addis Abeba

Jul 4 , 2026. By Eden Sahle ( Eden Sahle is founder and CEO of Yada Technology Plc. She has studied law with a focus on international economic law. She can be reached at edensah2000@gmail.com. )

The credibility of any tax system rests on consistent enforcement and equal application of the law. In Addis Abeba, many business owners say this balance is slipping. Some report harsh penalties for minor infractions, while others appear to bypass requirements altogether. Conversations around tax administration increasingly reflect frustration rather than cooperation. The perception of unfairness is becoming as damaging as the problem itself.

Tax is the lifeblood of any modern state. It funds roads, schools, hospitals, security and the services people rely on every day. Most business owners understand this. They do not resist paying their fair share. What troubles them is a system that appears to reward those who ignore the rules while placing a heavier burden on those who try to comply.

When honest taxpayers begin to feel disadvantaged for following the law, the issue is no longer only about revenue collection. It becomes a question of trust, fairness and the credibility of the institutions responsible for enforcement.

Across Addis Abeba, conversations with business owners often circle back to the same subject: the tax authority. Instead of focusing on growth, jobs or improving products, many find themselves preoccupied with audits, penalties and interest charges that can quickly exceed the original tax bill.

For many entrepreneurs, the biggest business risk is no longer competition or inflation. It is the uncertainty surrounding tax administration. That uncertainty is steadily weakening confidence in a system that depends heavily on voluntary compliance.

What frustrates many is the belief that enforcement is inconsistent. Businesses that issue receipts and file returns complain about heavy penalties and accumulating interest. At the same time, others appear to operate openly without issuing receipts or facing inspections.

Many in the business community believe there are effectively two sets of rules. Whether fully accurate or not, that perception alone signals a serious erosion of confidence in the system.

I experienced this myself while shopping around Bole. When I asked for a receipt, the shopkeeper replied without hesitation that none was available. There was no concern or attempt to hide it. The seller even offered to carry items to the car so no one would notice a purchase without a receipt. The ease of the response suggested this was not an exception but routine practice.

What struck me further was that the same shops continued operating without issuing receipts long afterwards, as though the requirement simply did not apply to them.

If such practices persist in one of the busiest commercial districts of the capital, it raises uncomfortable questions. Are inspections ineffective? Is enforcement selective? Or have some businesses simply concluded that compliance is optional?

These questions become more troubling because similar accounts surface repeatedly in conversations with business owners. Many insist it is an open secret that some businesses settle matters informally with individuals rather than through official tax channels.

Whether true or not, perception carries weight. Public confidence depends not only on integrity but also on the visible appearance of integrity. Once people begin to believe corruption determines who pays taxes and who avoids scrutiny, trust in the system begins to erode.

The experiences of compliant businesses tell a different story. Some entrepreneurs report heavy penalties for minor delays in issuing receipts. Others have reportedly spent months in prison over receipt-related offences. The law must be enforced, but enforcement must also be consistent. It cannot punish some businesses for violations while others ignore the same rules openly for years. Such contradictions weaken respect for the law rather than strengthening it.

Every tax authority relies heavily on voluntary compliance because no institution can monitor every business every day. Once that willingness begins to decline, enforcement becomes more costly, more confrontational and less effective. Fairness is therefore not only a moral principle but a practical necessity for sustainable tax collection.

Concerns also extend to administrative practices inside some tax offices. One example frequently mentioned is the tax branch known as the Totot Bole District Tax Office, where staff are often described by taxpayers as dismissive and overly confrontational.

Perhaps nothing illustrates the gap between modern tax administration and current practice more clearly than a tax officer manually calculating millions of Birr in taxes, penalties and interest using a pen and stacks of blank A4 paper. To many business owners, this resembles a school mathematics exercise rather than a professional financial process. When questioned, officials sometimes explain that penalties and interest have exceeded the capacity of the computer system, leaving manual calculation as the only option.

Modern tax systems rely on standardised digital platforms that ensure consistency, transparency and auditability. Manual calculations involving large sums introduce avoidable risks of human error, inconsistency and dispute. Some business owners who review handwritten assessments report finding mistakes that significantly reduce their liabilities.

Technology alone is not a cure-all. But transparent digital systems create traceable records, reduce discretionary interpretation and allow independent verification. They protect taxpayers from errors while reinforcing confidence that assessments are based on clear rules rather than individual judgment.

No country can develop without effective tax collection. Equally, no tax authority can function without public trust. People must believe that rules apply equally, enforcement is consistent and disputes are handled fairly and professionally. Businesses should fear breaking the law, not entering a tax office.

Entrepreneurs are not asking for special treatment. They want a system where every business is held to the same standard, receipts are mandatory, penalties are calculated accurately using reliable systems, corruption is investigated and taxpayers are treated with dignity. These are basic requirements of a credible tax administration. Until they are consistently applied, many honest taxpayers will continue to wonder whether they are carrying a burden others have learned to avoid.

PUBLISHED ON Jul 04,2026 [ VOL 27 , NO 1366]