EASTERN AFRICA

Addis Ababa’s Revenue Surges 800% in Seven Years Without Tax Hike

- by Jeremiah Amosu - Leave a Comment
Addis Ababa’s Revenue Surges 800% in Seven Years Without Tax Hike

Mayor Adanech Abiebie has announced a staggering eightfold increase in Addis Ababa’s revenue over the past seven years, attributing the growth to improved tax administration and compliance rather than tax rate hikes.

Key Revenue Growth Figures

Speaking at the Addis Ababa City Council’s second regular session on February 19, 2025, Mayor Adanech highlighted that:

  • The city’s budget has expanded from 30 billion birr seven years ago to 111.5 billion birr in just six months.
  • 111.5 billion birr (90% of the target 125.5 billion birr) was successfully collected over the past six months.
  • Revenue collection increased by 37.2 billion birr compared to the same period last year, reflecting a 50% growth.

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Tax Policy Adjustments and Public Reaction

While no new tax rate increases were introduced, the revised tax on house roofs and walls implemented by the Addis Ababa Revenue Bureau sparked controversy:

  • In May 2024, the administration collected over six billion birr within a year of enforcing the new tax, a dramatic rise from the 300 million birr collected the previous year.
  • The Enat Party filed a lawsuit against the tax, which the High Court has accepted, questioning the validity of the two-year-old study that served as its basis.

Mayor Adanech defended the policy, clarifying that it was based on a 1968 proclamation and only involved revised per-square-meter rental rates, not additional charges. She also noted:

  • Residential properties can pay 50% upfront, while commercial properties must pay 75%.
  • Legal provisions exist to support pensioners and economically disadvantaged individuals, with efforts underway to monitor their implementation.

Boosting Tax Compliance and Market Regulation

To further enhance revenue collection, the city has intensified tax compliance measures, including:

  • 8,450 businesses newly registered under the Value Added Tax (VAT) system.
  • Stricter law enforcement in Merkato and other commercial hubs to ensure fair tax practices.

However, these measures have not been without resistance. In November 2024, Addis Standard reported a week-long shutdown at Merkato, as shop owners protested the mandatory receipt-based transaction system, citing operational difficulties.

What Next?

Despite public resistance to some tax regulations, Addis Ababa’s government remains focused on revenue expansion without imposing additional tax burdens.

The IMF-backed economic framework and the city’s digital tax reforms are expected to further streamline tax compliance and sustain financial growth.

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British American Tobacco Kenya (BAT Kenya) has denied claims of financial discrepancies amounting to KSh 9.6 billion (US$ 93 million) following a recent investigative report that scrutinized the company’s tax records. The report, titled Missing Millions: A Cross-Examination of British American Tobacco Kenya’s Tax Bill, was published by The Investigative Desk in collaboration with the Tobacco Control Research Group (TCRG) and Tax Justice Network Africa (TJNA). According to the findings, BAT Kenya may have underreported revenue between 2017 and 2018, potentially leading to a tax shortfall of approximately US$ 28 million. Allegations of Tax Discrepancies The report is based on an in-depth analysis of BAT Kenya’s financial disclosures over six years. Researchers cross-examined the company’s annual reports with production records submitted to the Kenya Revenue Authority (KRA), internal government documents, and market data on cigarette consumption and pricing. Investigators allege a gap of KSh 9.6 billion between BAT Kenya’s declared revenues and estimated earnings based on production and sales data. This shortfall suggests that millions of cigarette packs may have been either unaccounted for or underreported, raising concerns about possible tax avoidance or evasion. “This report should be a wake-up call for Kenyan authorities. If these discrepancies remain unexplained, they could indicate potential tax manipulation,” said Kennedy Waituika, a fraud and internal audit expert. Kenya Updates Tax Exemption Rules for Charitable Organisations BAT Kenya’s Response In a statement, BAT Kenya’s Managing Director, Crispin Achola, dismissed the allegations, asserting that the company fully complies with Kenya’s tax laws and financial reporting standards. “We have thoroughly reviewed the report and found it to be largely speculative, containing numerous errors and misrepresentations of BAT Kenya’s operations,” Achola stated. He emphasized that as a publicly listed company on the Nairobi Securities Exchange, BAT Kenya adheres to strict financial disclosure requirements and publishes audited financial statements in line with both local regulations and international reporting standards. Claims of Miscalculations BAT Kenya further criticized the report, arguing that the authors relied on incorrect assumptions when calculating the company’s revenues, profits, and tax obligations. The company claims the report failed to consider deductible costs, applied incorrect cigarette pricing, and disregarded applicable trade margins. Growing Scrutiny on Tobacco Industry Taxation The allegations come at a time when governments worldwide are increasing scrutiny on the tobacco industry’s tax practices, particularly in low- and middle-income countries. Tax experts argue that multinational tobacco firms often employ complex corporate structures and transfer pricing mechanisms to minimize tax liabilities, depriving governments of much-needed revenue for public health initiatives. As the debate continues, the findings of the report may prompt further investigations by tax authorities and policymakers into BAT Kenya’s financial practices. The outcome could have significant implications for corporate taxation and regulatory oversight within Kenya’s tobacco industry.

BAT Kenya Refutes KSh 9.6 Billion Tax Discrepancy Allegations

Kenya Updates Tax Exemption Rules for Charitable Organisations

Kenya Updates Tax Exemption Rules for Charitable Organisations

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