The Addis Ababa City Administration Revenue Bureau has uncovered widespread tax evasion and significant revenue leakage across vehicle trading hubs throughout the capital. The discovery follows a comprehensive investigation that revealed deep-seated compliance failures regarding annual tax obligations within the city’s vehicle trade and brokerage sectors.
The findings emerged as part of a broader regulatory enforcement that initially saw the bureau issue strict warnings to vehicle commission and brokerage operators. Traders engaged in these activities were ordered to clear all vehicles stored on their compound premises—a practice the administration noted violated established legal boundaries regarding authorized sales locations.
On August 20, 2026, the tax bureau formalized its stance by issuing a definitive directive stating that only legally registered vehicle trading and importing businesses are permitted to carry out sales from their authorized commercial premises, as previously reported by Capital.
The issue gained central prominence during the closing session of the city administration’s five-year plan and fiscal year evaluation on September 1, 2026. Addressing municipal officials and stakeholders, Addis Ababa Mayor Adanech Abiebie highlighted the severity of the findings. “Our study on how annual income and value-added taxes are evaded across vehicle trading centers in the city has exposed numerous irregularities,” Mayor Adanech stated.
She emphasized that while many citizens diligently pay taxes commensurate with their labor, others unlawfully enrich themselves by neglecting legal obligations—an unfair disparity the administration refuses to tolerate.
This crackdown is a critical component of the city’s newly overhauled revenue reform framework, which seeks to transition away from traditional collection methods and dramatically build institutional capacity. City officials noted that extensive assessments have been conducted to tap into high-potential economic sectors outside conventional revenue streams, deploying careful and methodical procedures to meet ambitious financial targets.
The administration has repeatedly warned that it will take strict, uncompromising measures against uncollected public resources. Future control mechanisms will focus intensely on eliminating revenue distortions, plugging financial leaks, and curbing resource wastage across the commercial landscape.
While the Addis Ababa City Administration had previously planned to generate a record 502 billion birr for the 2026/27 fiscal year, Mayor Adanech revealed that recent comprehensive studies indicate the city possesses an untapped revenue potential reaching up to 1.5 trillion birr.
The administration stressed that this aggressive revenue collection campaign will be implemented without imposing any tax rate increases on compliant, existing taxpayers. Instead, the strategic focus rests entirely on closing massive regulatory gaps, widening the tax net, and vigorously controlling illegal tax evasion across all commercial sectors.
As part of the evolving regulatory framework, vehicle trading hubs that were initially ordered to clear their compounds were permitted to resume operations starting August 30, 2026, under a revised directive from the Revenue Bureau.
Traders operating within these sales hubs noted that while their business spaces have officially reopened, strict operational boundaries remain in place. They are explicitly prohibited from holding and selling zero-mile vehicles on an individual basis through commissions or profit margins, or conducting such sales directly within their compounds—privileges now reserved exclusively for authorized importers.
However, traders have been cleared to operate as commission agents for individual used vehicles or purchase and resell cars directly, provided strict compliance is maintained. Business owners acknowledged to Capital that the primary objective of the new regulatory decisions is to ensure commercial operations align transparently with the city’s enhanced tax collection targets.
In the previous 2025/26 fiscal year, the Addis Ababa City Administration collected 351 billion birr from taxes and various internal revenue sources, successfully meeting its target of 350 billion birr. For the current 2026/27 fiscal year, the Addis Ababa Revenue Bureau has set out to generate a total of 502.27 billion birr, of which 380 billion birr is planned to be mobilized directly from tax revenues.
