After reviewing the staff report, the Memorandum of Economic and Financial Policies, the structural benchmarks and the Debt Sustainability Analysis, the evidence indicates that three taxes are expected to be newly introduced or operationalised:

Motor vehicle ownership/circulation tax
Inheritance and donation tax
Real estate property tax

Several other measures—such as the minimum alternative tax, higher excise rates, full fuel-tax collection and removal of VAT exemptions—are important, but they are changes to existing taxes rather than entirely new taxes.

1. Motor vehicle ownership or circulation tax

This is the clearest new tax expected to be introduced.

The authorities report that a study on motor vehicle ownership tax reform has been completed. The reform is designed to generate revenue equal to approximately 0.2% of GDP.

The Council of Ministers is expected to submit a proposal to the House of Federation by the end of December 2026. The proposal will determine how the revenue will be divided between the federal and regional governments.

Because implementation requires legislation, the authorities expect collection to begin in FY2027/28.

The report does not specify:

the applicable tax rates;
whether the tax will be annual;
whether it will replace an existing vehicle charge;
the vehicle-valuation methodology;
exemptions;
treatment of commercial and public vehicles; or
collection and enforcement procedures.

These details therefore cannot yet be confirmed.

Evidence: MEFP paragraph 34, IMF staff report p. 60, PDF p. 64; Structural Conditionality Table 11, p. 42, PDF p. 46.

2. Inheritance and donation tax

The authorities state that they intend to introduce an inheritance and donation tax.

It would apply to:

inherited property or assets; and
donations received above the applicable threshold.

The proposed threshold is more than Birr 1 million per beneficiary or legatee. The tax would apply at a flat rate.

However, the IMF document does not state:

the flat tax rate;
the implementation date;
whether close family members will receive exemptions;
how inherited property will be valued;
whether the Birr 1 million threshold applies separately to each transaction;
how jointly owned property will be treated; or
whether agricultural land, family homes, businesses or pension assets will be exempt.

Therefore, the tax is a stated policy intention, but its final design cannot yet be confirmed.

Evidence: MEFP paragraph 34, IMF staff report p. 61, PDF p. 65.

3. Real estate property tax

A Real Estate Property Tax Proclamation was enacted in January 2025. Therefore, this is not merely a future proposal. The expected next step is its practical implementation.

The government plans a phased rollout covering:

property registration;
property valuation;
taxpayer identification;
billing;
collection procedures; and
taxpayer communication.

Initial implementation is expected to focus on large cities during FY2026/27, followed by gradual expansion.

The authorities expect the property-tax system to generate at least 0.3% of GDP over the medium term.

The IMF document does not specify:

applicable tax rates;
valuation bands;
treatment of residential and commercial properties;
exemptions for low-value properties;
treatment of owner-occupied houses;
responsibilities of individual city administrations; or
penalties for non-registration and non-payment.

These matters will depend on the proclamation, regional legislation and implementing regulations.

Evidence: MEFP paragraph 34, IMF staff report p. 61, PDF p. 65; staff report paragraph 29, p. 21, PDF p. 25.

Existing taxes expected to change

4. Higher specific excise taxes on alcohol and tobacco

The excise-stamp and digital track-and-trace system is expected to launch by the end of December 2026.

The excise stamp is not itself a new tax. It is an enforcement and product-tracking mechanism. However, its rollout will be accompanied by increases in specific excise-tax rates on alcohol and tobacco to reflect accumulated inflation.

The authorities have not provided the revised rates in the IMF document.

Businesses producing, importing or distributing alcohol and tobacco should therefore expect:

higher specific excise liabilities;
product-stamp requirements;
digital product tracking;
tighter inventory reconciliation;
stronger enforcement against unstamped goods; and
higher compliance and systems costs.

Evidence: MEFP paragraph 34, IMF staff report p. 60, PDF p. 64; Structural Conditionality Table 11, p. 42, PDF p. 46.

5. Broader excise-tax base and higher rates on selected products

The Debt Sustainability Analysis states that fiscal adjustment includes:

broadening the excise-tax base;
moving toward a specific excise-tax system; and
higher rates on alcohol, tobacco and fuels.

This indicates that excise-tax reform may extend beyond the introduction of stamps. However, the IMF document does not provide a complete list of additional taxable products or the new rates.

Evidence: Debt Sustainability Analysis, paragraph 10, PDF p. 106.

6. Minimum alternative tax

The minimum alternative tax is important, but it should not be presented as a tax that is still awaiting introduction.

It was already introduced through the 2025 Income Tax Proclamation amendment. Its implementation is continuing.

The tax is intended to ensure that businesses reporting low taxable profits or repeated losses still pay a minimum amount based on an alternative calculation.

The government expects the broader income-tax amendments—including the minimum alternative tax, increased withholding rates, presumptive-tax reform and personal income-tax adjustment—to generate approximately 0.3% of GDP.

Evidence: MEFP paragraph 34, IMF staff report p. 59, PDF p. 63; staff report paragraph 16, p. 12, PDF p. 16.

7. Higher withholding-tax rates

Withholding rates were increased through the 2025 income-tax amendments. This is an implemented change to an existing tax system, not a proposed new tax.

The IMF report does not reproduce the applicable rates. Those rates must be confirmed from the Income Tax Proclamation, regulations and Ministry of Revenue guidance.

Evidence: MEFP paragraph 34, IMF staff report p. 59, PDF p. 63.

8. Personal income-tax schedule adjustment

The personal income-tax schedule was adjusted to address bracket creep caused by accumulated inflation.

This is a modification of an existing tax, not a new tax. The IMF document does not reproduce the revised income bands and rates.

Evidence: MEFP paragraph 34, IMF staff report p. 59, PDF p. 63.

9. Presumptive-tax reform

The presumptive-tax regime has been simplified under the 2025 income-tax amendments.

This affects businesses whose tax liabilities are calculated through presumptive methods rather than complete accounts. It is not a separate new tax.

Evidence: IMF staff report paragraph 16, p. 12, PDF p. 16; MEFP paragraph 34, p. 59, PDF p. 63.

10. Quarterly corporate income-tax payments

Corporate taxpayers are expected to continue moving toward advance quarterly corporate income-tax payments.

This does not create a new corporate tax. It changes the timing and administration of existing corporate income-tax obligations and may affect business cash flow.

Evidence: MEFP paragraph 34, IMF staff report pp. 59–60, PDF pp. 63–64.

11. Full VAT and excise collection on fuel

All federal fuel taxes are to be collected at full statutory rates from early FY2026/27.

The authorities state that VAT and excise liabilities on fuel will be assessed using the applicable statutory base, without caps or discretionary adjustments that reduce effective collection.

The expected revenue is approximately 0.8% of GDP in FY2026/27.

These are not new taxes. They are existing fuel-related VAT and excise obligations that will now be collected fully.

Evidence: MEFP paragraph 34, IMF staff report p. 59, PDF p. 63; staff report paragraph 28, p. 20, PDF p. 24; Supplementary Information p. 1, PDF p. 127.

12. Reduction of VAT exemptions

The Debt Sustainability Analysis identifies removal of VAT exemptions as part of the revenue strategy.

This does not necessarily mean a new VAT rate. It means more goods, services or taxpayers may become subject to the existing VAT system.

The Fifth Review does not provide a complete list of exemptions to be withdrawn. Therefore, the affected products and sectors cannot yet be confirmed.

Evidence: Debt Sustainability Analysis, paragraph 10, PDF p. 106.

13. Changes to investment tax incentives

The new Investment Incentive Regulation makes several significant changes:

new tax holidays under the previous regime have ceased;
existing incentives remain valid until their legal expiry;
new incentives will use reduced income-tax rates of limited scope and duration;
incentives must be linked to measurable investment criteria;
broad customs-duty exemptions have been eliminated; and
exemptions are being replaced by reduced customs-tariff rates.

This is not a new tax, but it can increase the effective tax burden for new investments that would previously have received full exemptions.

The replacement of customs exemptions with reduced tariff rates is projected to generate approximately 0.2% of GDP annually.

Evidence: MEFP paragraph 34, IMF staff report p. 60, PDF p. 64.

Taxes and levies expected to be reduced or removed

The authorities also state that, as Ethiopia advances toward World Trade Organization accession, they will prepare to phase out:

the import surtax; and
the Social Welfare Levy.

The resulting revenue losses would be offset through other measures under the National Medium-Term Revenue Strategy.

The report does not identify the exact replacement measures. It would therefore be inaccurate to claim that a specific replacement tax has already been decided.

Evidence: MEFP paragraph 33, IMF staff report p. 59, PDF p. 63.

conclusion

The taxes most clearly expected to be introduced or operationalised are:

Motor vehicle ownership/circulation tax

Inheritance and donation tax

Real estate property tax

The other major measures are mainly reforms to existing taxes:

higher excise rates on alcohol and tobacco;
wider excise coverage;
removal of selected VAT exemptions;
full fuel VAT and excise collection;
minimum alternative tax implementation;
higher withholding rates;
revised personal income-tax bands;
quarterly corporate income-tax payments; and
reduced investment exemptions and tax holidays.