Safaricom Ethiopia has opposed a controversial clause in Ethiopia’s draft income tax reform that mandates an “alternative minimum tax” on businesses, even those operating at a loss. The telecom firm, still in its early investment phase and yet to turn a profit, told Parliament’s Standing Committee on Planning, Budget and Finance that such a tax would unfairly punish long-term investors and jeopardize ongoing infrastructure development.

The draft amendment, designed to increase domestic revenue and close tax loopholes, introduces wide-ranging reforms. It shifts the country’s tax approach toward a more income-based model while expanding the scope of taxable categories — including digital earnings, cross-border transactions, and offshore asset transfers — to curb tax evasion and align with global standards.

Safaricom, which has invested more than 350 billion birr since entering Ethiopia under a 15-year license, says the provision could dampen investor confidence at a time when Ethiopia is seeking to restructure external debt and boost private sector participation. Dawit Fiseha, the firm’s representative, argued that forcing loss-making firms to pay a flat two percent of income contradicts both economic logic and the company’s legal obligations. “We are not allowed to exit the market even when in loss, so taxing us as if we’re avoiding our dues is misplaced,” he told the hearing.

Finance Ministry officials defended the clause, citing a pattern where more than 67 percent of registered businesses declare either losses or zero income annually. The law aims to close this gap while modernizing tax administration and simplifying compliance for small taxpayers. Still, Safaricom cautioned that such a flat tax might deter future large-scale investment and undermine Ethiopia’s efforts to position itself as a regional digital and business hub.