Ethiopian Tax Research Network (ETRN)

Image credit: © ICTD, Rhiannon McCluskey

Discover the ETRN Library here: www.eldis.org/etrn   

The ETRN is dedicated to enhancing the generation and exchange of tax knowledge in Ethiopia. It is concerned with all topics related to taxation, ranging from tax policy to tax administration, and from academic papers to practical case studies. Stakeholders include tax practitioners and researchers from Ethiopian and international institutions, as well as donors and civil society organisation working on tax issues in Ethiopia.

The main objectives of the ETRN are to:

  1. Provide a platform for knowledge exchange and evidence-based debate on tax issues, through workshops, conferences, and publications.
  2. Support the production of high-quality, policy-relevant research, especially that led and undertaken by Ethiopian researchers, by providing funding and capacity development.
  3. Facilitate coordination and complementarity between existing projects and actors active in the area of taxation in Ethiopia.

The ETRN is hosted by the Policy Studies Institute (PSI), coordinated by the International Centre for Tax and Development, and funded by the Bill & Melinda Gates Foundation.

The ETRN is governed by a Management Committee, a consultative body with the responsibility to ensure the independence, relevance, and quality of the work undertaken by the Network. The Committee is composed of one representative from each of the following institutions: the Ministry of Finance, the Ministry of Revenues, the Addis Ababa University, the Ethiopian Civil Service University, and the Policy Studies Institute, as well as the Executive Secretary and the Research Director of the ETRN.

If you have questions or ideas, contact the ETRN at: etrn@ictd.ac

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News and Events:

November 2019
news
Researchers and policymakers to discuss reforms to Ethiopia’s tax system on Monday

Press Release The Ethiopian government recently unveiled an ambitious “Homegrown Economic Reform” agenda, which, as Prime Minister Abiy Ahmed said, “aims to propel Ethiopia into becoming the African icon of prosperity by 2030.” One of the agenda’s priorities is increasing domestic resource mobilisation to finance sustainable development. Although the Ethiopian government has undertaken several reforms…

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Publications:

October 2019
Tax Evasion and Missing Imports: Evidence from Transaction-Level Data
by Andualem T. Mengistu, Kiflu G. Molla & Giulia Mascagni

Tax evasion is typically very hard, if not impossible, to measure. In the case of trade flows however, it is possible to capture it thanks to “missing imports”: the difference between the total value of exports recorded by country A to country B and the total value of imports of country B from country A….

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September 2019
Tax Evasion and Missing Imports: Evidence From Transaction-Level Data
by Andualem T. Mengistu, Kiflu G. Molla & Giulia Mascagni

It is well documented in the literature that developing countries raise less tax revenue as a share of their economy than their developed counterparts. Part of this gap can be explained by the relatively higher tax evasion in the former. Recent literature shows that increasing the availability of information reduces evasion, by increasing the probability…

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Perceptions of VAT Compliance in Ethiopia
by Worku Tamrie Atnafu, Gebregziabhere Gebretsadik Kalayou & Assefa Gezae Huluf with Colin Anderson

Tax is a major source of government revenue. Many countries prioritise mobilising domestic resources to finance government spending. However, many factors influence the revenue generated by taxation, including the population’s level of compliance with tax expectations. A country’s ability to raise funds from tax depends on the level of tax compliance. Tax compliance refers to…

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Turnover-Based Presumptive Taxation and Taxpayers’ Perceptions in Ethiopia
by Abis Getachew

Why turnover-based presumptive taxation? The Ethiopian economy is cash-based and dominated by a large number of micro and small businesses. Hence, taxing this sector assists in raising government revenue and increasing the number of taxpaying firms. Turnover-based presumptive taxation provides a regime that simplifies the tax rules for small taxpayers and helps introduce them to…

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Perceptions of Value Added Tax Filing and Invoicing Compliance in Ethiopia: The Case of Three Federal Branch Offices in Addis Ababa
by Worku Tamrie Atnafu, Gebregziabhere Gebretsadik Kalayou & Assefa Gezae Huluf with Colin Anderson

African governments are increasingly seeking to improve tax compliance in the pursuit of domestic revenue sources. Despite this trend, there is limited understanding of value added tax (VAT) compliance in Africa. In Ethiopia, increased VAT compliance is essential for the government to meet its ambitious domestic revenue goals. Therefore, we surveyed 652 Ethiopian VAT-registered businesses…

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Practices, Challenges and Prospects for Public Sector Taxation in Ethiopia
by Ronald Waiswa, Sebsbie Fekade & Asnakech Lake

The tax compliance behaviour of the public sector has been largely neglected in the tax literature. Other than appearing in tax laws as taxpayers, in practice the compliance strategies employed by revenue authorities do not sufficiently cater to government agencies. Enforcement of tax payments on these agencies is generally perceived to be a difficult undertaking…

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Turnover-Based Presumptive Taxation and Taxpayers’ Perceptions in Ethiopia
by Abis Getachew

This paper focuses on the perceptions of a turnover-based presumptive tax system in Ethiopia. It mainly focuses on taxpayers’ perceptions of fairness, simplicity and administrative capacity. In this study, fairness has been assessed based on seven dimensions, namely exchange fairness, procedural fairness, horizontal fairness, vertical fairness, inter-group fairness, time-related fairness and compliance fairness. Exchange fairness…

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Presumptive Income Tax Assessment of SME’s in Addis Ababa, Ethiopia
by Amanuel Mekonnen Workneh & Endalkachew Mulugeta Baileyegn with Graeme Stewart-Wilson

At their most general, presumptive taxes seek to use indirect means to assess the liability of a specific taxpayer, which differ from the usual rules based on taxpayer accounts. Many countries use some form of presumptive taxation to simplify the rules for businesses and individuals that frequently escape taxation. Ethiopia uses presumptive taxation as a…

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April 2019
Where the Gap Lay: Presumptive Income Tax Assessment for Small and Micro Enterprises in Addis Ababa City Administration
by Amanuel Mekonnen Workneh & Endalkachew Mulugeta Baileyegn with Graeme Stewart-Wilson

This study is focused on the presumptive tax reassessment of small and micro enterprises (SMEs) in Addis Ababa City Administration that took place in 2017. The reassessment process was based on average daily revenue estimates calculated by teams of assessors and validated by a series of committees. The release of the reassessment results in 2017…

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Are There Any Reliable Data on Wages in Low-Income Countries? Observations and Lessons from Ethiopia
by Andualem Mengistu & Giulia Mascagni

Administrative data from tax returns have recently become available in many African countries thanks to the modernisation of revenue authorities and the digitisation of tax records. The availability of these data has opened new opportunities for policy-relevant analysis of real-life taxpaying behaviour. However, despite the increased availability of these data, a gap remains in many…

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Blogs:

July 2016
by Rhiannon McCluskey

Last week, the Institute of Development Studies hosted its 50th anniversary conference titled “States, Markets and Society“.  As part of the conference, the ICTD hosted a panel on the theme of taxation and fiscal contracts in Africa. The panellists were ICTD’s research directors Wilson Prichard and Giulia Mascagni, our Capacity Building Manager Jalia Kangave, and…

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Research Projects:

Current Project
The Myth of Gender Tax Compliance in Ethiopian Enterprises
Project Researchers: Seid Yimam Mohamed & Fissha Asmare Marye

This study will examine tax compliance differential between female-owned and male-owned business enterprises in Ethiopia, particularly located in Addis Ababa. Collecting survey data on 400 medium and large size firms, we will estimate the log-odds-ratios from a fixed effect logit model to describe the probability of being tax compliant and apply a generalized Oaxaca–Blinder decomposition…

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Past Project
What shapes tax morale in Ethiopia?
Project Researchers: Gebrelibanos Hadush Amare, Raya University, Nega Afera Reda & Gebremeskel Hailu Tesfay

Citizens’ tax morale can enhance actual compliance behavior and provide governments with the necessary revenue. This study aims to identify the various factors that shape citizens’ attitudes towards taxation and suggest ways to improve compliance through positive motivations. The 2013 5th round Afrobarometer survey conducted in Ethiopia is our main source of data. A sub…

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Current Project
The impact of intergovernmental transfers on fiscal behaviors of local governments in Ethiopia
Project Researchers: Dejene Mamo Bekana

This inquiry aims to examine the effect of intergovernmental fiscal transfers on fiscal behaviours of local governments in Ethiopia for the period 1992–2018. The empirical analysis shall follow the systems general methods of moments regression technique. The motivation for using this estimation technique is to provide special focus to the issue of endogeneity by estimating…

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Past Project
Where the Gap Lay: Presumptive Income Tax Assessment for Micro and Small Enterprises, A Case for Addis Ababa City Administration
Project Researchers: Amanuel Mekonnen, Addis Ababa University & Endalkachew Mulugeta, Addis Ababa University

The study focuses on assessment of presumptive taxation of small and micro enterprise in Addis Ababa City Administration. It will evaluate the standard assessment processes and procedures, the criteria used for assessment, and the equity of taxes imposed by the tax authority. Data will be collected through surveys and interviews.

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Past Project
Perceptions of Value Added Tax Compliance in Ethiopia: Filing and Invoicing
Project Researchers: Gebregziabher G. Tsadik, Ethiopian Revenue and Customs Authority (ERCA), Assefa Gezae, Ethiopian Revenue and Customs Authority (ERCA) & Worku Tamire, Ethiopian Revenue and Customs Authority (ERCA)

VAT, as a consumption tax, can contribute huge amount of tax revenue. But it does not play this role in generating tax revenue in Ethiopia because of low VAT compliance. This can be due to inadequate commitment and capability of tax officials, weak enforcement, low awareness of tax payers, limited application of laws and complex…

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Past Project
Practices, challenges and prospects of public sector taxation in Ethiopia
Project Researchers: Sebsbie Fekade, Ethiopian Revenues and Customs Authority (ERCA), Asnakech Lake, Ethiopian Revenues and Customs Authority (ERCA) & Ronald Waiswa, Uganda Revenue Authority

Ethiopia’s revenue collection performance remains low at 12.5% of GDP compared to the average for sub-Saharan Africa (17%). This is partly attributable to the failure of government entities to support tax administration. The public sector is vital in terms of withholding VAT payments and income taxes. However, these institutions experience little pressure from the tax administration…

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Past Project
An Assessment of ERCA’s Taxpayer Education Programs and How They Can be Improved
Project Researchers: Azime A. Hassen, Ethiopian Revenue and Customs Authority (ERCA)

This study aims to evaluate the taxpayer education programs used to aware and educate on the tax knowledge. It may be difficult to shift tax culture without education at an early age or without citizens voluntarily embracing tax payment. So we would like to examine the content and design of mass media in the TV,…

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Past Project
The Implementation of Presumptive Tax in Ethiopia
Project Researchers: Abis Getachew, Ethiopian Development Research Institute

This study is highly motivated by the recently adjusted rate of the daily presumed income on businesses is the cause of the dispute between the business community and the Ethiopian Revenue and Customs Authority (ERCA). The main goal of introducing the presumptive tax system is to provide tax payers with equitable, efficient, quality services and bringing…

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Past Project
Ethiopia’s Double Taxation Avoidance Treaties: A Quest for Policy Guide
Project Researchers: Tesafay Assefa

Ethiopia has undertaken various economic and foreign relations policy reforms especially after the country’s economic shift towards free market economic system since 1991. As part of such multidimensional reforms, the country has undertaken serious of tax reforms especially since 2002. This project aims at examining the policy back up of double taxation treaties in Ethiopia….

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