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Brief

ICTD Research in Brief 38

Presumptive Income Tax Assessment of SME’s in Addis Ababa, Ethiopia

Published on 26 April 2019

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 simplified method of revenue collection from small informal sector firms.

To implement its presumptive tax, the Ethiopian Revenue and Customs Authority (ERCA) carries out an assessment process to estimate the income earned by small informal sector firms. Defined as ‘Category C’ taxpayers—those with an estimated annual turnover less than 500,000 birr (US$17,500)—such firms are subject to a ‘turnover-based’ or ‘indicator-based’ presumptive assessment. Annual tax bills are then levied on the assessed income of Category C taxpayers.

Cite this publication

Mekonnen Workneh, A; Mulugeta Baileyegn, E. and Stewart-Wilson, G. (2019) Presumptive Income Tax Assessment of SME’s in Addis Ababa, Ethiopia, ICTD Research in Brief 38, Brighton, IDS

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Authors

Amanuel Mekonnen Workneh
Endalkachew Mulugeta Baileyegn

Editors

Graeme Stewart-Wilson

Publication details

published by
ICTD and IDS
language
English

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About this publication

Research themes
Inclusive Economies
Region
Ethiopia

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