The Addis Ababa City Administration Revenues Bureau has officially issued a special transitional directive to manage Category “A” and Category “B” taxpayers who are unable to present formal financial records for the 2018 Ethiopian Fiscal Year (EFY). According to the directive published in Meskerem 2019 EFY, the temporary protocol is designed as a one-time relief mechanism applicable solely to the 2018 tax assessment period.
The decision stems from systemic challenges and operational complaints voiced by local business owners regarding statutory bookkeeping obligations. Although financial record-keeping remains mandatory under the Revised Federal Income Tax Proclamation No. 1395/2017 alongside existing revenue laws, municipal authorities introduced these flexible guidelines to prevent compliance disruptions and ease tax administration across key service sectors.
Under the new provision, taxpayers operating under government contracts—including school catering providers, janitorial crews, solid waste collectors, and urban greening associations—can settle their liabilities based on annual payment documentation under Council of Ministers Regulation No. 410/2017 (Schedule “C”). Meanwhile, independent contractors such as loaders, excavators, security cooperatives, and transport marshals will be assessed via sector-specific profit margins. Furthermore, licensed professionals—such as lawyers, insurance agents, and assessors—alongside commercial and residential property landlords lacking financial records, will receive a standardized 35% expense deduction, with tax applied to the remaining 65% of gross income.
To address macro-economic shifts, Category “A” transport operators have been granted a 57% inflation adjustment allowance and will temporarily declare returns using the Category “B” formula. Additionally, taxpayers newly elevated to Category “A” under Proclamation 1395/2017 will be permitted to file under Category “B” guidelines for this fiscal cycle, offering a crucial buffer period for growing enterprises adapting to higher operational standards.
Revenue officials emphasized that this temporary arrangement applies strictly to the 2018 fiscal year. Beneficiaries must sign a binding pledge committing to maintain formal financial records for the upcoming tax cycle. Authorities cautioned that failure to implement proper bookkeeping following this transitional period will result in administrative penalties.