Addis Ababa's Revenue Office Says the City's Car Dealers and Brokers Are Evading Tax at Scale

The Addis Ababa City Revenue Office says an investigation into the capital's car trading centres and vehicle brokerage sector has found widespread tax evasion, with businesses in the sector failing to properly meet their annual income tax and value-added tax obligations.

Why the brokerage half is the harder half

Car dealerships are visible. They have premises, signage and stock, and a revenue office knows where to find them.

Vehicle brokerage — the delala layer that sits between a private seller and a private buyer — mostly is not. It runs on relationships and phone calls, the transaction is between two individuals, and the broker's cut is negotiated per deal. There is often no invoice for a tax authority to check, because the parties never intended to produce one.

So the announcement names two sectors but describes two different enforcement problems. Auditing dealerships is a records exercise; bringing brokers into the tax net is closer to formalising an informal market, which an investigation on its own rarely achieves.

What has not been said

The announcement establishes that the Revenue Office looked and found a problem. It does not yet establish how big the problem is.

> GAP: no figure has been published for the amount of tax believed evaded, the number of businesses investigated, or what enforcement follows. Without those, the scale of this is unknown.

Sources: Tikvah Ethiopia, citing Capital