The Addis Ababa City Administration Revenue Bureau has announced a new tax assessment framework targeting professionals who operate solely with professional permits without holding formal business licenses.
The new rules cover lawyers, insurance agents, insurance loss assessors, and individuals in similar professional fields, aiming to close long-standing legal and operational gaps that occurred when practitioners failed to submit accounting records.
According to the Bureau, although these practitioners are legally required to maintain and submit proper financial records, most have routinely failed to comply.
To resolve this issue, the new directive establishes a clear assessment formula where 35 percent of total income will be deducted as operational expenses, while the remaining 65 percent will be treated as taxable income upon which taxes will be collected.
Officials noted that the framework is designed to curb tax evasion, enforce legal compliance, and strengthen accountability across the professional services sector.
The assessment formula will serve as a temporary mechanism applicable strictly to the 2018 Ethiopian fiscal year (2025/2026). Following this period, the Bureau plans to introduce corrective measures and formal oath-taking ceremonies to encourage professionals to maintain proper accounting records moving forward.
Under the directive, practitioners must fully meet record-keeping requirements to continue operating and delivering services.The initiative is part of a broader policy push by the Addis Ababa City Administration to broaden its tax base and boost revenue collection.
In recent years, the city has achieved significant revenue growth without raising tax rates by investing in tax administration, upgrading audit systems, and refining collection strategies.
Taxing the professional services sector has historically posed major challenges, as many practitioners work independently without formal business structures and handle transactions in cash, making income difficult to track.
This lack of visibility has contributed to widespread reliance on unverified estimated assessments, underreporting of earnings, and persistent non-compliance with record-keeping rules challenges the new directive seeks to address as professionals transition to keeping verified accounting records.
