Frustration simmered among business owners who gathered at the Inter-Luxury Hotel, on Guinea Conakry Tito St. to discuss the impact of tax policy on the private sector last week. The Addis Abeba Chamber of Commerce & Sectorial Associations (AACCSA) hosted the event, which exposed deep concerns about unclear regulations, bureaucratic hurdles, and alleged corruption.

Attendees lamented a complex tax code that left businesses confused and vulnerable. The National Tobacco Enterprise (NTE) urged authorities to investigate the impact of tax claims on business closures and unemployment. Yayehyirad Abate, director of corporate affairs & communications, expressed concern over 'unfounded' tax claims that have potentially forced companies to shut down.

"We need research to understand how many businesses have closed due to these claims," he said.

He criticised the misinterpretation of tax codes by officials, recalling a recent instance where authorities demanded that bank transactions could be considered taxable income, a requirement lacking legal basis according to Yayehyirad.

"Businesses need to first exist," he said.

The lack of coordination between the Ministry of Finance and tax authorities was also pinpointed as a source of confusion for taxpayers. This disconnect, Yayehyirad argued, creates confusion for taxpayers who struggle to understand their obligations. He said that better communication between government departments is crucial to ensure predictable tax regulations.

Ethiopia's tax system involves shared collection responsibilities between federal and regional authorities. A combination of 10 duties and levies currently contributes to the national tax revenues, which amounted to 612 billion Br last year. The government has plans to broaden the tax base in the coming year through new levies on property, the introduction of excise tax stamps, and the expansion of the Value Added Tax (VAT) category.

However, difficulties persist in efficiently collecting tax with business leaders questioning the government's approach to property tax. Arega Yirdaw (PhD), president of Unity University and former CEO of MIDROC, questioned the paradox of a growing government relying heavily on an already strained tax base. He argued that tax collection is increasing without a corresponding rise in citizen income, making it difficult to broaden the tax base.

A recent amendment to Addis Abeba's wall and roof tax through a letter from the Tax Bureau while the official property tax proclamation remains under review, was called by Arega. This lack of clarity creates confusion and burdens citizens, particularly pensioners facing new levies on their property.

Arega recommends tax incentives, such as small write-offs for married couples or homebuyers, as a more sustainable way to broaden the tax base. This approach, common elsewhere, could encourage wider participation in the tax system.

A sarcastic remark was made by local businessman Yihunlign Tigabu, who expressed widespread corruption issues as a fundamental impediment to the tax administration's efficiency.

"Tragically, the only incentives are bribes," he said.