Properties valued at less than one million Birr not subject to tax
The Ministry of Finance has exempted properties in Addis Ababa and Dire Dawa with a value of less than one million Birr from paying property taxes as officials seek to ease the growing tax burden on low-income households. The threshold drops to 250,000 Birr in municipal cities and 100,000 Birr in emerging towns.
Finance Minister Ahmed Shide issued a memo to city and regional administrations this week, attempting to clarify confusion over implementation procedures and rates for the Property Tax Proclamation ratified by Parliament in March this year.
The Ministry defines low-income households as one that is proven to be experiencing economic hardship, determined by local social affairs officials, and whose annual income does not exceed half of the national average per capita income.
The Minister has forwarded sample legislative documents for regional and city administrations to use in formulating their own property tax laws.
The model proclamation dictates the taxable value of a property will be a quarter of its market value, and sets a 0.1 percent floor and 10 percent ceiling for the tax rate, which local governments are to apply under four different categories.
In the first year, the minimum property tax threshold for emerging regions is 0.1 percent, while it is 0.45 for city administrations, according to the Ministry. By the fourth year, the rate goes up to one percent for both regions and city administrations.
Public roads, streets, dams, airports, power/water transmission poles and lines, parks, heritage sites, heritage properties, communal open spaces are exempted. Property owned and used by religious organizations, cemeteries, land used for subsistence agriculture, and property owned and used by organizations that provide free social services to the public are also exempted.
