Working Paper

ICTD Working Paper 94

Where the Gap Lay: Presumptive Income Tax Assessment for Small and Micro Enterprises in Addis Ababa City Administration

Published on 4 April 2019

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 led to widespread public outcry in Addis Ababa, suggesting possible shortcomings of the processes and procedures used.

To understand the challenges and opportunities of the reassessment process, the study employed a descriptive survey design; a taxpayer survey and accompanying key informant interviews (KIIs) with tax officials were used to gather data.

Stratified random sampling was applied in selecting respondents to ensure the representativeness of selected samples. Surveys and KIIs examined the overall processes and procedures of the reassessment, the indicators used for average daily revenue estimates, the fairness and equitability of results, and the underlying causes of taxpayer complaints.

The study finds that overall processes and procedures were opaque both to taxpayers and assessors, with insufficient public awareness campaigns and training sessions.

The indicators that were most commonly used to estimate average daily revenue lacked objectivity, and were thus unevenly applied by different assessors to businesses of the same type. As a result, average daily revenue estimates and the taxes levied thereon were not fair and equitable between businesses of the same type in similar locations.

The study also identifies some important weaknesses in the complaint resolution process, such as the fact that complaint hearing committees were not empowered to increase initial assessments if the evidence existed.

As a result, there was no cost to taxpayers for submitting complaints, which likely contributed to the overwhelming number of complaints received by the authority.

Although some important successes were recorded, such as limited perceptions of corruption and unethical behaviour by tax officials, the study identifies significant room for improvement. Based on the study findings, possible policy recommendations are forwarded to inform the next presumptive tax reassessment process.

Cite this publication

Mekonnen Workneh, A; Mulugeta Baileyegn, E. and Stewart-Wilson, G. (2019) Where the Gap Lay: Presumptive Income Tax Assessment for Small and Micro Enterprises in Addis Ababa City Administration, ICTD Working Paper 94, Brighton, IDS


Amanuel Mekonnen Workneh
Endalkachew Mulugeta Baileyegn


Graeme Stewart-Wilson

Publication details

published by


About this publication


Related content


Moving towards responsible gold mining in Geita, Tanzania

26 April 2024