Ethiopia Introduces Sweeping Tax Reforms Targeting Digital Creators, Consultants, and High Earners











Addis Ababa – June 4, 2025

The Ethiopian government has tabled a comprehensive amendment to its federal income tax proclamation, signaling a major shift in the country’s fiscal framework to align with digital economy realities and bolster domestic revenue mobilization. The newly proposed changes, referenced as the “Income Tax Amendment Proclamation /2017,” were submitted to Parliament late last month.

Key Highlights:

1. Taxation of Digital Content Creators: For the first time in Ethiopia’s tax history, digital content creators—including YouTubers, podcasters, influencers, and online platform earners—will be required to pay taxes on their earnings. The law defines “income from digital content” as revenue generated from:

Advertisements and sponsorships

Brand partnerships and affiliate marketing

Product sales, both physical and digital

Donations, crowdfunding, and fan subscriptions

Digital earnings exceeding a certain annual threshold will be classified as business income and taxed accordingly. Content creators will also be required to register for a tax identification number, keep financial records, and file annual reports.

2. New Classification of Taxpayers: The amendment introduces two taxpayer tiers:

Level A: Businesses or individuals with annual gross income exceeding 2 million birr.

Level B: Individuals with income below 2 million birr, excluding corporate entities.

3. Technical and Advisory Services Targeted: Consultants offering services in fields such as law, engineering, IT, architecture, auditing, and project management—especially foreign nationals operating in Ethiopia for over 91 days—will now be subject to stricter tax obligations. These services are recognized as taxable even if rendered digitally or remotely.

4. Rental Income and Business Profit Tax Changes:

Companies earning rental income will now pay a flat 30% tax.

Individual rental income will be taxed based on a revised graduated schedule.

The same 30% flat tax will apply to corporate business profits, while individuals will follow adjusted brackets.

5. Anti-Cash Economy Measures: The new law prohibits cash payments above 10,000 birr per day per individual, aiming to formalize the economy and enhance traceability. Transactions must now occur via banking channels such as transfers, cheques, or mobile money platforms.

6. Optional Presumptive Tax for Small Enterprises: Small businesses whose total tax liability falls below 2% of gross annual revenue may opt into a simplified presumptive tax regime. However, this does not apply to businesses under the broader simplified tax schedule or those already receiving tax holidays under investment laws.

7. International Workers and Digital Services: Foreign professionals working in Ethiopia or broadcasting content from abroad but generating Ethiopian-source income (e.g., through Ethiopian audiences or data) will now be taxed locally. The government has tasked the Ministry of Foreign Affairs and tax authority with developing new registration and enforcement mechanisms for such cases.

Implications for the Private Sector

These reforms come at a time when Ethiopia is pushing to diversify its tax base and digitize its economy. The formal inclusion of digital content creators and service providers into the tax net reflects both the growing size of the sector and the government’s effort to capture untapped revenue streams.

Businesses will need to improve their accounting practices and embrace digital payment tools to remain compliant. Meanwhile, the tech-savvy youth, many of whom generate income online, are urged to seek awareness about their new obligations under the law.

Industry Reactions

Early reactions among professionals and small business owners are mixed. While some praise the government’s move toward modernization, others raise concerns about enforcement challenges, especially among informal digital actors and self-employed consultants.

Analysts argue that successful implementation will require aggressive taxpayer education campaigns and incentives to transition into the formal economy.



If ratified, the Income Tax Amendment Proclamation could reshape Ethiopia’s tax architecture by broadening the base, modernizing definitions, and incorporating the digital and freelance economy. It also underscores the government’s shifting focus toward fiscal sustainability, equity, and technological adaptation in public finance.