Ethiopia - The Local Government Revenue Initiative

In 2025, Ethiopia adopted a federal proclamation establishing the legal framework for the country’s first modern property tax system. Previously, the only urban property levy was a “roof tax” created under the 1976 Urban Land Rent and Urban House Tax Proclamation. Under the roof tax, buildings were assessed using a simple area-based approach that produced deliberately sub-market annual rental values, to which progressive rates were applied.

Beyond undervaluation, the roof tax suffered from low coverage, weak compliance and enforcement, and limited institutional coordination. Repeated reform efforts saw little traction. A 1996 Addis Ababa property census initially quadrupled tax bills, but opposition from property owners led to their reduction back to prior levels. A 2009 aerial mapping project similarly aimed to update property records, yet registration remained incomplete. The most successful initiative to date was launched in 2023. The Addis Ababa City Government updated rental values and expanded the tax net, achieving immediate revenue growth. However, the government’s reliance on manual administration and self-declared property measurements raises sustainability concerns.

The 2025 federal proclamation replaces the roof tax by mandating market-based valuation and broadening the tax base to include both building and land value. Implementation is led by the Revenue Reform Project Office in the Ministry of Urban and Infrastructure, supported by the Ministry of Finance. Day-to-day administration will be carried out by city governments under regulations set by the Regional Governments. Consultations are ongoing regarding the supporting IT system and the selection of pilot locations.

Learn More:

Delbridge, Victoria, and Tewodros Makonnen Gebrewolde. 2021. Considerations for a Commercial Property Tax in Ethiopia. IGC Policy Brief. London: International Growth Centre, March. PDF. https://www.theigc.org/sites/default/files/2023-05/Delbridge-and-Gebrewolde-Policy-Brief-March-2021.pdf.
Franzsen, Riël C. D., and William J. McCluskey. 2017. “North and Northeast Africa.” In Property Tax in Africa: Status, Challenges, and Prospects, edited by Riël C. D. Franzsen and William J. McCluskey, 531–550. Cambridge, MA: Lincoln Institute of Land Policy. https://www.lincolninst.edu/publications/books/property-tax-in-africa/
Goodfellow, Tom. 2015. “Taxing the Urban Boom: Property Taxation and Land Leasing in Kigali and Addis Ababa.” Brighton, UK: International Centre for Tax and Development. https://www.ictd.ac/publication/taxing-the-urban-boom-property-taxation-and-land-leasing-in-kigali-and-addis-ababa/.
Goodfellow, Tom. 2017. “Taxing Property in a Neo-Developmental State: The Politics of Urban Land Value Capture in Rwanda and Ethiopia.” African Affairs 116 (465): 549–72. https://doi.org/10.1093/afraf/adx020.