Strikes and other forms of signs of unrest reported in six cities of Ethiopia’s largest region Oromia in the past five days. The unrest is linked to an increase in the tax liabilities of medium and small size businesses.
Reports of incidents
Most business firms and local transport services were shut down on Monday in Ambo, Woliso and Ginchi cities.
The first sign of unrest was seen in Ambo last Thursday where two vehicles were attacked. Ambo city, located 120 km west of Addis Ababa, was the hotspot of the protests in 2014 and also in 2016.
Ginchi, 81 km west of Addis Ababa on the road to Ambo, is known as the beginning of the 2016 Oromo protests. Business firms were shutdown at least until noon on Monday, according to HornAffairs’ sources.
About 110 km southwest of Addis Ababa, in Woliso, another spot of last year’s protest, the federal police had to patrol vehicles passing through the main road on Monday. Businesses were shut down and local transport services deserted the roads.
In Burayu, a small town 18 km northwest of Addis Ababa, at least one business firm and a vehicle were hit on Saturday prompting businesses to close up early. Rumors of business shutdown on Monday did not materialize, however.
HornAffairs’ sources reported incidents in areas further south of Addis Ababa as well.
Vehicles were attacked in the outskirts of Shashemene on the main road to Bale, the southern zones of Oromia. Shashemene is 250 km south of Addis Ababa.
Further to the south, 270 km away from Addis Ababa, in Kofele, the police disband a protest attempted by a group of young people.
These two areas as well were hotspots of the 2016 Oromo protests.
Increase in tax liabilities
The trigger of the unrest is believed to be the latest tax assessment which increased the tax liabilities of medium and small size businesses.
The Ethiopian income tax system classifies businesses into three categories – A, B, and C – based on their annual turnover.
Businesses in Category C are not obliged to keep books and accounts. They are subjected to presumptive tax, based on a percentage of turnover.
Tax officers estimate the annual turnover of Category C businesses once in five years. The latest assessment was conducted in the past months and notified to business owners this month – which is the tax payment month for businesses in this category.
Business owners complained the newly assessed turnover is far higher than the previous one and their actual revenue.
The newly assessed amount would increase the annual income tax payable by the businesses. If their turnover is estimated above birr 500,000, they would be re-classified into Category B, which is subject to stricter rules such as keeping a cash register.
The highest rate of complaint appears among businesses re-classified into Category B. According to HornAffairs sources, about one third of businesses in Category B and C lodged appeals in some parts of the region.
The revision of the turnover was conducted across the country including Addis Ababa. In the past week, federal and regional governments started holding town hall meetings to reassure businesses that the estimate is subject to appeal. Officials also claimed that most business owners mistook the estimated turnover as their tax liability, which is perceived as an indication of the government’s intent to hang onto the new estimation.
* Read the follow up news here: Ethiopia: Days of strike against business tax subsides