The Ethiopian government is preparing to roll out a new set of fuel and vehicle taxes as part of a broader fiscal reform aimed at boosting domestic revenue and easing pressure on state finances. The plan includes a 15% value-added tax (VAT) on fuel, a 15% excise duty, and a newly proposed vehicle circulation tax for fuel-powered cars.
While no formal launch date has been announced, the Ministry of Finance recently briefed members of parliament on the proposal. Officials say the move is essential to modernize Ethiopia’s tax system and reduce the country’s reliance on unsustainable fuel subsidies.
Toward a Post-Subsidy Economy
Since mid-2022, the government has been gradually scaling back its fuel subsidy program, citing mounting fiscal pressures and a desire to correct market distortions. The partial removal of subsidies has already caused diesel and petrol prices to rise by over 50%.
However, amid high inflation—currently at 13% annually—the government has retained some fuel subsidies, framing the new tax measures not as a substitute but as a complementary step in a long-term fiscal restructuring.
13 thoughts on “Ethiopia Plans to Unveil 15% New Fuel and Vehicle Taxes to Bolster Public Revenue”
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