Only 49 percent of businesses renew licenses in Addis Ababa

The Addis Ababa City Administration Trade Bureau (AATB) announced that only 122,752 businesses have renewed their licenses out of the existing 262,688. There is only one week left until the renewal period ends. Starting from July 9 the bureau asked business owners to bring clearances from the Revenue and Customs Bureau by January 8 or face penalties.
Addis Ketama, which has the largest number of business, has only renewed 13,178 licenses from a possible 35,000, Bole renewed 15,858 from 42,000. In the other ten sub cities, Yeka, Lideta, and Arada 53 percent of the 60,000 business were renewed.
Recently the government increased the presumptive tax, estimating the tax based on the number of products and transactions in a day, for the first time in six years. By 2020 presumptive taxes are expected to reach 17 percent of GDP. However, tax collection has remained stagnant. To achieve this goal the government is conducting a study to expand the tax base and collect more taxes.
However business people have been repeatedly complaining to the government that the increase in taxes has not taken into account their actual transactions. AATB and customs officials maintain that business people still need to renew their licenses regardless of issues they have with the presumptive tax.
Berahanu Tegengne, Trade Licensing Director at Addis Ababa Trade Bureau told media on December 22, that the Bureau is working on a license renewal proclamation and that each business must renew their licenses even if they have complaints with the Revenue and Customs Authority.
He added that last year 13,692 licenses were given out which is 1,000 less compared to the previous year. However, during the same period 27,116 businesses entered into the market.
High rent prices, poor business planning, less support for entrepreneurs, and lack of a tax holiday are some of the reasons businesses have struggled in Ethiopia which is ranked 161st out of 190 countries on ease of doing business.
The Addis Ababa Trade Bureau (AATB), recently assigned Mesfin Assefa (former mayor of Legatfo) as director.