Ethiopia Plans to Raise Nearly 79 Billion Birr by Scaling Back Tax Incentives

June 13, 2026

Mintesinot Nigussie

Ethiopia's government plans to generate an additional 78.9 billion birr in the 2019 Ethiopian fiscal year through a combination of reduced tax incentives, changes to customs duty exemptions and tighter excise tax administration, according to the draft federal budget submitted to parliament by the Ministry of Finance.

The measures form part of a wider effort to strengthen domestic revenue mobilisation as the government seeks to finance a growing budget and narrow fiscal pressures through tax policy and administrative reforms.

The draft budget shows that 22.5 billion birr is expected to be collected by ending customs duty exemptions that previously allowed selected goods to enter the country free of duty. Instead, those products will be subject to reduced customs tariff rates beginning in the upcoming fiscal year.

A further 22.5 billion birr is projected to come from revising income tax relief arrangements. Businesses and activities that previously benefited from tax incentives are expected to pay taxes at preferential rates rather than receiving full exemptions.

The government is also counting on a new digital excise tax stamp system to improve tax compliance and collection. The initiative is expected to generate an additional 33.8 billion birr, introducing a new revenue stream beyond conventional tax collection mechanisms.

Taken together, the three measures are expected to contribute nearly 79 billion birr in additional revenue during the fiscal year.

Several categories of goods have historically benefited from customs duty exemptions. These include washing machines and laundry equipment introduced under policies aimed at reducing domestic workloads for women, as well as selected medical and agricultural equipment. Various products designed to support people with disabilities have also been imported free of customs duties.

Beyond the immediate revenue measures, the draft budget indicates that the government is pursuing a series of longer-term reforms aimed at expanding tax revenue. These include tax policy adjustments, revisions to external sector policies, and changes related to fiscal deficit financing and public borrowing.

The Ministry of Finance plans to collect about 1.5 trillion birr in tax revenue during the 2019 Ethiopian fiscal year.

The ministry also intends to strengthen collection from non-tax revenue sources, including government service fees, penalties and returns from public investments.

According to the draft budget, total domestic revenue from tax and non-tax sources is projected to reach 1.6 trillion birr in the coming fiscal year.