New tax law triggers protests in Ethiopia's Oromia

By Addis Getachew

ADDIS ABABA, Ethiopia

Thousands of businesses remained closed Thursday in Oromia, Ethiopia’s largest region, as shopkeepers protested against a new tax.

Small business owners across the region have shuttered their premises since Monday in protest at the tax, which targets businesses with an annual turnover of up to 100,000 Ethiopian birr ($4,300).

However, protesters say the government is overestimating revenue, leading to inflated tax demands.

A grocer who spoke to Anadolu Agency on condition of anonymity for fear of government retribution said his daily sales did not exceed 500 birr ($21) but the government had assessed his revenue at 5,000 birr ($214).

Businesses are taxed between 10 and 30 percent of their net profits.

Oromia, which covers much of central and southern Ethiopia, was at the center of anti-government protests in late 2015 that led to the deaths of 669 protesters across the country.

The country has been under a state of emergency since last October.

Ethiopia, like many other sub-Saharan nations, records relatively low levels of revenue from tax. According to the World Bank, tax revenues made up 15.2 percent of Ethiopian gross domestic product in 2015.

Misunderstanding

This week’s protests have seen towns across Oromia largely closed for business.

In Ambo, 98 kilometers (60 miles) west of capital Addis Ababa, protesters damaged two state-owned vehicles last week but demonstrations have been otherwise peaceful.

Towns such as Holeta, 30 km (19 miles) west of Addis Ababa, appear deserted. “A coffee vendor like me has been asked to pay 8,000 birr [$344] in taxes,” one woman said.

However, Addisu Arega, a spokesman for the regional government, said business owners had misinterpreted the new tax system.

“People tend to mistake daily income estimation for actual tax expected of them to pay to the government,” he told Anadolu Agency.

“Businesses are required to pay 10-30 percent of net income as tax under the new regulation and that is not too much.”

Government officials have said that businesses in Oromia have been undertaxed for years.

“There are 46,500 businesses that operate without permits,” Arega said. He claimed that tax returns from the region contributed just 17 percent to local revenue and added that the government would address the complaints filed by small businesses.