Nearly a week after Ethiopia’s property valuation bill was ratified, parliamentarians spent Wednesday afternoon discussing the country’s first property tax proclamation, which is currently in the draft stage.
The bill sets foundational provisions for the levying of property taxes in urban areas with details left to be ironed out by regional states and city administrations based on their economic context.
Wasihun Abate, Senior Tax Policy Advisor at the Finance Ministry, explained that the tax would be calculated based on the market value added to a property as a result of the government-led urban area development.
While previous iterations of the bill suggested that the amount of taxable value would not exceed a quarter of a property’s value, the Advisor indicated that it would be adjustable according to deliberations between the ministries of finance and urban & infrastructure.
“It may vary according to economic circumstances,” Wasihun told the House.
Under the draft bill, buildings, homes, leased land, and property improvements would face a levy of 0.1% to 1%, calculated on 25% of the property’s valuation. The highest rates will be placed on property owners who have failed to develop their land despite an extended period with rights to it.
Low-income households as defined by respective regional states, properties of international organizations, land rights by religious institutions, and retired citizens who are cash-poor are exempted from the tax. However, retirees will be obliged to pay half a decade of retrogressive taxes if they sell or bequeath the property.
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