With the hope of initiating Electric Vehicle, EV adoption on the continent, Ethiopian taxation is turning out to be more interesting as the government recently decides to scrap the taxes on so-called new-energy vehicles.
The move doubles as part of efforts to liberate its economy and encourage competition through the exemption of all EVs from taxes.
Consequentially, the policy direction translates to an exemption of both imported and locally manufactured vehicles from taxes such as VAT, excise tax, and other surcharges. Also, traditional Internal Combustion Engines, ICE cars will pay high taxes.
Apart from making the industry more competitive, the government believes that this move will enable the local assembly of EVs and make these innovative and green earth vehicles more accessible to regular Ethiopians.
Recall that the heavy taxes imposed on vehicles has made it almost impossible for the local population to afford a car but that is about to change.
Ethiopian Taxation: Similar Development in Africa
On the flip side, South Africa’s department of trade, industry & competition faces intensifying pressure from motoring companies and motoring lobby groups to stop fining EV buyers with higher taxes than those that are applied to Internal Combustion Engines ICE vehicles.
With this development, South Africa becomes the major market in the world that imposes higher importation taxes on EVs than on petrol and diesel-powered cars.
According to Mercedes-Benz South Africa co-CEO Mark Raine in a recent interview, whether one has a sports car or an ordinary car, one pays 18% import taxes into South Africa.
He lamented that electric cars have it worse with a charge of 25%, which shouldn’t be so as this makes South Africa the only country where an electric vehicle is at a disadvantage in this manner, compared to an internal combustion engine or petrol car.
Juxtaposing the Developments in South Africa and Ethiopia
The contrast lies thus; while the South African government has refused to waive the high import duties it imposes on electric vehicles despite numerous protests, Ethiopia is working on scrapping the tax entirely.
