The Addis Ababa City Administration has enacted a new regulation introducing a five percent municipal tax on accommodation services across the capital. Signed into law by Mayor Adanech Abebe, Regulation No. 204/2018 (EC) took effect on June 19, 2026, with the primary objective of expanding public infrastructure and boosting the city’s revenue generation capacity.
The new levy applies directly to consumers, calculated on standard room rates before Value Added Tax (VAT) is applied. It encompasses all lodging facilities operating within the city administration’s boundaries, ranging from one-to-seven-star hotels and unstarred establishments to resorts, lodges, motels, guest houses, and pensions.
Under the directive, accommodation providers must register in person at the Revenues Bureau to officially log their total room count and daily rate structures. Depending on their taxpayer classification, Category “A” businesses are required to report and remit the collected taxes monthly, while Category “B” taxpayers must do so quarterly, depositing the funds into a designated bank account within 30 days.
To ensure compliance, businesses must clearly display the “Municipal Accommodation Service Tax” on all sales receipts, while the Tourism Commission will now tie annual business license renewals to tax clearance letters. Strict penalties have been established for non-compliance, including fines of up to 50 percent for delayed reports and interest charges on late remittances, though a structured 15-day grievance mechanism is available for businesses to appeal disputes.
City authorities noted that the regulation comes as Addis Ababa experiences a steady surge as a major tourism destination. The administration intends to reinvest the generated hospitality revenue directly into urban development projects, ensuring the expanding tourism sector contributes proportionally to the capital’s long-term economic growth.