Economy
Same Journey, Same Rules: The Debate Over Ride-Hailing VAT in Ethiopia
BirrMetrics · 12 hours ago · Read the Full Story on BirrMetrics
AI SUMMARY
Proposed full-value VAT on ride-hailing apps in Ethiopia threatens to distort the urban transport market and push drivers toward informal street operations.
- At least 60 ride-hailing companies are registered in Ethiopia, with close to 130,000 drivers working through them.
- Drivers have called for a uniform taxation system across both app-based and traditional transport sectors.
- Under discussion is a full liability regime where VAT would apply to the full value of every ride booked through a digital platform.
- Applying VAT to the full fare could make app-based rides significantly more expensive than traditional street-hails, creating a competitive distortion.
- A 2021 OECD report on the sharing economy advises that digital and traditional distribution channels should be treated equally for VAT purposes.
- Formal ride-hailing drivers in Addis Ababa contributed 341.79 million birr in income tax in 2024 through 33,450 registered drivers.
- Alternative approaches include taxing only the commission retained by platforms, similar to practices in Côte d'Ivoire and existing local sectors like telecoms and banking.
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