The Addis Ababa City Administration Revenue Bureau has announced that digital content creators will be required to pay taxes on income earned from gifts and “stars,” crowdfunding, and membership fees received from followers during live-streaming activities.
The new tax measures also cover income generated through advertising and sponsorship agreements on social media platforms, including YouTube, TikTok and Telegram.
The bureau said digital content creators who fail to provide complete financial records could face a 15 percent tax deduction from their total income.
Payment platforms and other entities facilitating transactions to digital content creators will also be required to submit reports to the tax authority detailing the amounts paid to individual creators.
The measures are part of a broader Desk Audit Guideline prepared by the Addis Ababa Revenue Bureau to improve the efficiency, fairness and reliability of tax collection and the review of tax declarations for the 2018 Ethiopian fiscal year.
According to the bureau, the guideline is intended to strengthen the examination of financial statements submitted by Level “A” taxpayers and address weaknesses identified during previous tax assessments.
The bureau said its review of tax declarations for the 2017 fiscal year found that a significant number of taxpayers had underreported their income, resulting in billions of birr being excluded from the tax base.
To address such practices, the bureau said it has introduced a more uniform audit system that will use financial records and information from third parties to identify undeclared income.
Equb funds to face scrutiny
The guideline also introduces stricter requirements for taxpayers who claim that large amounts of money found in their bank accounts are proceeds from Equb, a traditional rotating savings arrangement.
Taxpayers making such claims will be required to provide supporting documents, including a list of Equb members, an account book, documentation signed by the Equb collector and a judge, and evidence showing that the money was received through a lottery or purchase arrangement.
If sufficient evidence is not provided, the bureau said the funds could be treated as business income and taxed accordingly.
The bureau will also use information obtained from slaughterhouses to assess the declared sales of butcher shops and slaughter businesses.
Under the system, tax officials will compare the number and type of animals slaughtered with the sales reported by businesses. If slaughterhouse records indicate that more animals were slaughtered than reflected in declared sales, the difference will be valued at prevailing local market prices and included in taxable income.
Construction companies will also face closer scrutiny of expenses reported in their accounts.
The bureau said contractors’ reported costs will be assessed against the actual stage of construction. For example, unusually high cement and steel expenses for a project still in the excavation stage, or excavator and earthmoving truck rental expenses for a project already in the finishing stage, may not be accepted as legitimate business costs.
The guideline also limits claims by landlords that surplus funds before depreciation expenses can be used for personal purposes.
Property owners will be required to clearly identify, in square meters, rented and unfinished areas of buildings, as well as vacant and privately used portions.
Vehicle importers will also be subject to closer monitoring. Where VAT receipts issued for individual vehicle sales do not correspond with the date and amount of deposits recorded in bank accounts, tax authorities may assess the transaction using the prevailing market value of the vehicle.
The Revenue Bureau said the new audit guideline is intended to use financial information, third-party data and technology to identify income concealed through accounting irregularities and bring previously undeclared income into the tax system.
