The Ethiopian parliament has moved to tax online influencers and digital content creators, marking the first time the country’s tax code will include earnings from platforms like TikTok, YouTube, and Instagram.
Under a sweeping income tax reform passed by parliament on Thursday, all individuals generating income through digital platforms must now register with the tax authority, disclose their earnings, and pay applicable taxes.
The move is part of the government’s broader effort to modernise its revenue system, widen the tax base, and catch up with a fast-growing online economy.
The law represents Ethiopia’s first formal recognition of digital creators as taxable entities.
Influencers, vloggers, freelance consultants, and content producers monetising views, sponsorships, or advertising will now be held to the same tax compliance standards as traditional businesses and employees.
The Income Tax Proclamation, passed this week with a majority vote (five opposed, twelve abstained), represents the most significant overhaul of the country’s tax code in more than a decade.
The government says the reform is essential to modernise tax administration, broaden the tax base, and boost domestic revenue.
Opponents, however, argue that the changes will place new burdens on low-income workers and deter investment in key sectors.
What’s changing
At the heart of the reform is the introduction of an alternative minimum tax on gross income.
All businesses, regardless of profitability, will be required to pay a base-level tax aimed at curbing tax avoidance through loss declarations.
The personal income tax system has also been adjusted. The top 35 percent tax rate now applies to monthly incomes above 14,000 birr, up from 10,900 birr. The tax-free income threshold has been raised from 600 to 2,000 birr, its first adjustment since 2008.
The law further introduces a presumptive tax regime for smaller businesses, calculating obligations based on estimated turnover rather than formal records.
Electronic reporting will now be required for rental, self-employment, and professional income, as part of a broader push to improve compliance.
Opposition to the new tax law
The Ethiopian Trade Union Confederation strongly criticised the reform, arguing it does little to support workers grappling with rising living costs.
“Workers are taxed on what they need to survive, not on surplus income,” said Kassahun Follo, the union’s president. “This reform risks pushing people further into poverty.”
Follo urged parliament to introduce a more progressive structure, with increased tax relief for low-income earners and vulnerable groups.
Civil society organisations echoed those concerns, calling the reforms regressive and out of touch with Ethiopia’s poverty realities.
Foreign investors also pushed back. Safaricom Ethiopia, one of the country’s largest foreign investors, warned that the new minimum tax could stifle investment.
The telecom firm, which has invested over 350 billion birr since 2021, is still operating at a loss and called the flat tax “punitive” for long-term infrastructure projects.
A budget under pressure
The reform comes as the government manages a fragile economic recovery, marked by high inflation, conflict-related spending, and a weakening currency.
Last month, parliament passed Ethiopia’s largest-ever federal budget—nearly 2 trillion birr (US$15.4 billion) for the 2025–26 fiscal year. Due to currency depreciation, that figure is 30 percent lower in dollar terms than the previous year.
Under the G20 Common Framework, Ethiopia is restructuring $3.5 billion in bilateral debt and has pledged to increase its tax-to-GDP ratio, currently one of the lowest in the world.
Government defends the law
State Minister of Finance Eyob Tekalign defended the law as long overdue, arguing that it aligns Ethiopia’s tax regime with both local realities and international norms.
He said the reform followed wide consultation and comparative studies.
In response to concerns about the effect on public servants, Eyob also announced a government-commissioned study into housing conditions for civil service workers.