Tax Bills Outrun the Metre, Stalling Taxi-hailing Drivers

Aug 1 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Ride-hailing drivers in Addis Abeba are facing tax assessments several times larger than they anticipated, arriving alongside rising fuel costs, mounting traffic penalties and scarce parking. With no association to represent them and no clear route to contest the bills, many are quietly reverting to manual street pickups, taking fares off the platforms and out of the tax net, reports BEZAWIT HULUAGER, FORTUNE STAFF WRITER.

Elbeletel Tilahun was among the ride-hailing drivers startled by this year's tax assessment.

Behind the wheel of a Vitz, he was told to settle 93,000 Br in income tax, more than double the 37,000 Br he paid the year before. The bill arrived without much explanation. But it has a “warning” that more would follow.

“They told me to pay this, and expenses will be deducted in the future,” he told Fortune. "I know that will not work.”

A 26-year-old friend of his, who doesn't want to be named, also received similar or heavier assessments.

He has a background in finance. He entered the taxi-hailing business this year. His tax bill of 35,000 Br was lower than those of his friends. However, this did not stop him from calling the tax “punitive” for a newcomer who had barely begun to earn.

Drivers like Elbeletel and his friends had expected to settle their taxes within three months of receiving their permits. Some anticipated paying about 3,500 Br in tax, close to the two instalments they had already made through the year.

By July, the assessments landing in their hands were several times larger. The gap between what they had budgeted for and what they owed became the talk of the trade.

Their alarm sits inside a wider grievance. Ride-hailing and taxi drivers across Addis Abeba claim annual tax bills, added with traffic fines and parking charges, have increased faster than their income. They have left many unable to cover operating costs or support their families.

The complaints come as the city's transport sector shifts away from buses and conventional taxis toward metred and app-based services.

Metre taxis were meant to offer a premium and individual service. The operators who provide it now say their viability is under pressure.

Mulatu Astateke and Getachew Mesfin, both in their third year working through Ride, one of the largest and pioneering taxi-hailing companies here, see the sector being squeezed from several directions all at once. Rising taxes, climbing fuel and spare-parts costs, and frequent traffic penalties made their service more expensive to drivers.

The annual payment tied to Mulatu's Ride work increased from about 48,000 Br last year to 66,000 Br this year. Getachew's bill climbed from around 57,000 Br to 72,000 Br.

The increases came on top of operating costs that have moved sharply in the same direction. The cost of gas jumped more than threefold to 9,000 Br, while tyres that once cost between 6,000 Br and 7,000 Br now sell for between 11,000 Br and 11,500 Br.

Part of that squeeze reaches back beyond the city. Ethiopia is a net importer of petroleum products; over five million tonnes last year, worth more than 300 billion Br. The war in the Middle East pushed global oil prices sharply higher through the middle of 2026 before they eased, feeding directly into the pump prices drivers pay.

Getachew argued that the charges have moved beyond what drivers can pay. For Mulatu, his tax bill has increased from year to year.

“We’ve not been able to sustain our lives,” he told Fortune. “We’re the ones supporting a family."

For both men, traffic enforcement and parking rules have become an even greater weight than the tax itself. According to Mulatu, drivers are repeatedly fined, with penalties ranging from 1,000 Br to 4,000 Br. Getachew saw tickets issued two or three times a day.

They face escalating penalties recorded electronically, which could eventually affect their driving licences. One of Getachew’s friends was told that a 700 Br fine would be sent by text message. The message never arrived, but the amount eventually increased to 72,000 Br.

Parking spaces are scarce and charged by the hour. A stop lasting only 10 or 20 minutes can cost 50 Br.

"It’s 50 Br an hour," Getachew said, describing Addis Abeba as a place where drivers have become unable to work and feed themselves. "We can’t keep paying that."

According to Mulatu, enforcement is so frequent that the entire sector feels it.  However, these drivers feel they have little room to contest the charges imposed on them regularly. Mulatu claimed there is no effective complaints mechanism, including at police stations. They do not find officials give “proper answers” to questions about taxes.

With no association to represent them, frustrated drivers increasingly vent on TikTok.

There are no fewer than 60 ride-hailing companies registered, although not more than 15- Ride, Feres, and Yango being the known ones- are visible in the city. Latest data is hard to come by, but close to 130,000 drivers are believed to be operating under them. They lack an association or a lobby body through which they can raise grievances.

Weak earnings have been made worse by a crowded market. According to Mulatu, the number of taxis and Ride cars has grown sharply as graduates unable to find jobs and others enter the sector, for they have few alternatives.

The pattern fits a wider labour squeeze. About two million people are estimated to join the labour market each year. Formal employment growth has been too weak to absorb them, according to the World Bank Group.

“The number of taxis is more than the demand,” Getachew told Fortune.

The drivers argued that the growth in operators has pushed fares down as companies compete on fees. According to Getachew, ride-hailing and taxi operators now face rising competition, higher costs and few places to stop or park. Mulatu called for a uniform taxation system, while Getachew urged the city government to set aside parking and stopping areas designated for ride-hailing operators.

“If there were a uniform system and we paid a uniform tax, that would be good,” said Mulatu.

The industry has expanded quickly since ZayRide launched its ride-hailing platform in 2016. Ride and Feres accounted for 87pc of industry bookings. The commission on ride-hailing was around nine percent, while most platforms charged between eight percent and 10pc.

The authorities see the dispute differently. Sewenet Ayele, head of communications at the Addis Abeba Revenues Bureau, attributed many complaints to drivers’ misunderstanding of how their taxes are calculated.

According to him, drivers registered with several applications may assume the assessment covers income from only one platform.

"They think the tax is calculated from only one company," Sewenet told Fortune. “It’s not. Complaints reaching the Bureau usually reflect this misunderstanding.”

However, the disagreement unfolds as city officials look for more revenue. The city's budget for the concluded 2024/25 fiscal year was 350.13 billion Br. A gap of nearly eight billion Birr between its revenue target and actual collection has left city officials under pressure to raise more.

For the current fiscal year, Addis Abeba’s Council has ratified a budget of 502.27 billion Br. Mayor Adanech Abiebie’s Administration expects tax revenue to increase by 58pc from the previous year.

Industry operators, such as Habtamu Tadesse, founder and board member of ZayRide, which has close to 30,000 registered drivers, warn that aggressive assessments could reverse the very shift the city has encouraged, from street hailing to digital platforms. He observed that mounting tax pressure is encouraging a growing "manual tendency" among drivers.

"We’ve noticed drivers focusing on street pickups, which risks both customers' safety and loss of revenue for both the government and us," he said.

He is referring to a growing trend across the city where taxi-hailing drivers act like legacy taxis. Lined up on major streets and roundabouts, they pick up three to four commuters at a time, splitting the fare between them. The fees they collect remain under the radar.

Habtamu cautioned that the revenue could evaporate if large numbers of drivers continue cancelling app-based trips and return to manual operations. He observed other places use benchmarked ranges for vehicle servicing and maintenance instead of demanding evidence for every minor expense.

He called for a collective lobbying effort by industry operators. He wants to see an automated system that recognises internet, fuel and parking as deductible operating costs.

“Without such changes,” he warned, “the formal sector could shrink and push drivers toward unregulated and untaxed manual operations.”

According to Habtamu, the reports sent to the Revenues do not reflect drivers' actual costs. Mobile data, parking fees and spare parts are treated as non-deductible expenses, which leaves drivers taxed on gross turnover rather than net income. He characterised the practice as "factually and practically flawed.”

However, the calculation, in his account, has changed the state's incentives. When drivers paid a fixed fee of about 12,500 Br, a base of 30,000 drivers generated 375 million Br for the state. Under current projections, taxing 50,000 drivers, including part-time operators, at an average of 60,000 Br could generate three billion Birr.

Biruk Nigussie, a tax expert, argued along similar lines that the tax framework fails to account for narrowing margins in a high-inflation setting.

Headline inflation reached 13.9pc in June 2026, according to the Ethiopian Statistics Service (ESS). Under the existing income tax regime, a driver reporting annual revenue of two million Birr faces a nine percent rate and an obligation of 119,000 Br, according to Biruk. An operator earning around 100,000 Br would pay about two percent, under the new regulation.

Revenue figures can mislead when operating costs are excluded. A driver may generate two million Birr in revenue in consecutive years, yet higher fuel and maintenance costs can sharply reduce take-home income. Biruk warned that assuming revenues will increase alongside costs could push operators toward insolvency.

Biruk warned that this could prove a one-off gain if the absence of deductions for internet data, parking and spare parts drives operators into a "black fleet" of manual, offline pickups beyond the platforms and the tax net.

Value-added tax adds another layer. According to Biruk, VAT in the sector applies to the platform's commission. On a 300 Br trip, a platform charging a 10pc commission receives 30 Br, on which VAT of 15pc is applied. This raises the user's cost or reduces the platform's margin.

He recommended an urgent sectoral review and macroeconomic analysis.

“The authorities should separate internal combustion vehicles from electric vehicles,” he said, “while allowing deductions for insurance premiums and providing depreciation allowances.”

Biruk estimated that the sector's multiplier effect supports between 150,000 and 300,000 people. For him and for Habtamu, preserving that reach requires a tax system that recognises the cost of earning the revenue it seeks to collect. Without it, they warn, the push toward formal digital transport risks reversing into an informal market that is hard to regulate and harder to tax.

For Elbeletel, Mulatu and Getachew, that argument is not a distant forecast but a daily calculation. It is weighed afresh each time a fine lands, a tyre wears down to the cords, or a fare comes in below the true cost of the trip that earned it.

Editor's Note: The story has been updated since its original publication on August 1, 2026.

PUBLISHED ON Aug 01,2026 [ VOL 27 , NO 1370]