Ethiopia’s House of People’s Representatives has approved a new Property Tax Proclamation aimed at broadening the country’s tax base and enhancing municipal revenues.
The legislation, passed during Parliament’s 15th regular session with ten votes in favor and four against, introduces taxes on urban land, buildings, and land improvements. Initially proposed in June 2024, the law underwent detailed reviews by the Planning, Budget, and Finance Affairs Committee, alongside public consultations in December.
Key provisions of the new law include a taxable amount set at 25% of a property’s market or replacement value. Tax rates for land usage rights range from 0.2% to 1%, while taxes on buildings and land improvements are set between 0.1% and 1% of their taxable value.
Municipalities are now empowered to collect these taxes directly, giving them greater financial autonomy to fund infrastructure development and essential urban services.
While supporters highlight the law’s potential to strengthen local governments, critics have raised concerns about its economic implications and potential burden on taxpayers. The measure forms part of a broader government initiative to reform the tax system, including updates to value-added tax (VAT) and excise tax policies.