Ethiopia 2022/2023 Second Quarter Tax Revenue Source Break Down

This article showcases an overview of government revenue sources across 17 categories and 163 line-items, with a total revenue of Birr 438.8 billion. It is a breakdown of the budget of the tax revenue of the time period: Second Quarter of 2022/2023. The revenue sources are grouped into categories such as direct taxes on income, VAT on domestic goods and services, excise tax on domestic goods, turnover tax, stamp sales and duty, customs taxes on imports, excise tax on imports, VAT on imports, export tax, surtax on imports, government fees and charges, sales of public goods and services, non-tax income from investments, miscellaneous revenue, and capital revenue.

Within each category, line-items are ranked based on their revenue amounts. The highest revenue-generating line-items include corporate taxes, taxes on wages and salaries, withholding tax on imports, dividends and lottery, and interest income tax. On the other hand, line-items with the lowest revenue growth or minimal revenue include various items related to services, such as tailoring, auditing, stamp duty on vehicles, lodging, consultancy, and advertisement.

The revenue amounts vary significantly across the line-items, reflecting the different tax rates and economic activities. This revenue is essential for funding government operations, public services, and development initiatives.

Direct Income taxes are levied directly on individuals or entities based on their income. The total amount of direct taxes on income listed is 124.8 billion birr. The largest portion of direct income taxes is corporate taxes, accounting for 78.6 billion birr of the total. Taxes on wages and salaries make up 26.3 billion birr, while withholding tax on imports constitutes 7.9 billion birr. Dividends and lottery winnings are taxed at a rate of 7 billion birr, and interest income is taxed at 3.9 billion birr. Capital gains tax is at 1.0 billion birr, followed by royalties at 0.1 billion birr. Rental income taxation is not a significant amount in billions of birr. Overall, these direct income taxes contribute to the government's revenue and help fund public services and programs.

VAT stands for Value Added Tax. It is a type of consumption tax that is levied on the sale of goods and services at each stage of production or distribution. VAT is considered an indirect tax because it is collected by businesses on behalf of the government rather than directly from individuals or entities. The burden of VAT ultimately falls on the end consumer who purchases the final goods or services. The consumer pays the VAT as part of the purchase price and the business collects and remits the VAT to the government. 

The total value-added tax (VAT) on domestic goods amounts to 36.7 billion birr. Among the listed goods, the highest VAT is levied on beer, sugar, textile & clothing, and alcoholic products, each contributing 3.0 billion birr, 1.6 billion birr, 1.5 billion birr, and 1.3 billion birr, respectively. Soft drinks, petroleum products, and food each account for 1.3 billion birr in VAT. Iron & steel, agricultural products, and non-metallic mineral products are taxed at 1.2 billion birr, 1.1 billion birr, and 1.0 billion birr, respectively. VAT on vehicles & spare parts is 0.8 billion birr, while tobacco products and chemical products contribute 0.8 billion birr and 0.5 billion birr, respectively. Plastic products, leather products, electrical goods/parts, machines/fixtures/parts, mineral water, stationery & printing, salt, wood products, cotton, yarns & fabrics, and all other goods collectively make up 20.9 billion birr. The VAT on domestic goods generates significant revenue for the government and supports public expenditures and services.

The total value-added tax (VAT) on services amounts to 45.0 billion birr. VAT is levied on various services provided within a country. The highest VAT contributors in the services sector include telecommunications, works contracts, and professional services, accounting for 15.6 billion birr, 10.6 billion birr, and 2.5 billion birr, respectively. Rent of goods, lodging, and tourism services contribute 0.7 billion birr, 0.2 billion birr, and 0.2 billion birr, respectively. Garage services, commission agents, and other services collectively contribute 15.1 billion birr total. The VAT on services generates significant revenue for the government and supports public expenditures and services.

An excise tax is a type of tax that is levied on specific goods or activities. It is a tax imposed by the government on the production, sale, or use of certain goods or services. Unlike general sales taxes, which are applied to a wide range of goods and services, excise taxes are typically targeted at specific items or industries.  The primary purposes of excise taxes are often to raise revenue for the government and to discourage the consumption of specific goods or activities that are considered harmful or socially undesirable. Common examples of goods and activities that are subject to excise taxes include alcohol, tobacco, gasoline, firearms, luxury goods, gambling, and air travel.

The provided data presents the excise tax rates in billions of birr for various domestic goods. Among the listed goods, beer bears the highest excise tax rate at 6.2 billion birr, followed by soft drinks at 3.9 billion birr and sugar at 3.2 billion birr. Tobacco and tobacco products are subject to a tax rate of 2.7 billion birr, while alcohol and alcoholic products are taxed at 1 billion birr. Textiles carry a lower excise tax rate of 0.4 billion birr, while mineral water is taxed at 0.3 billion birr. Plastic products, salt, and fuel and fuel products contribute 0.1 billion birr in excise tax applied to them. Finally, a category named "Other Goods" account for an excise tax of 2 billion birr.

Turnover tax, also known as gross receipts tax or sales tax, is a type of tax imposed on the gross revenue or total sales generated by a business. It is typically calculated as a percentage of the business's total sales or turnover. Unlike income tax, which is based on the net income of a business after deducting expenses and costs, turnover tax is based on the gross sales or total turnover of the business. This means that the tax is applied to the full amount of revenue generated by the business, regardless of its expenses or profitability. It is usually set as a fixed percentage of the total sales, and the business is required to calculate and remit the tax to the government on a regular basis, often monthly or quarterly.

The provided data outlines the total turnover tax rates in billions of birr for various domestic goods is 0.023 billion birr. It indicates that the turnover tax rates for salt, alcohol and alcoholic products, and food are all set at 0.001 billion birr, implying a very low tax burden on these goods. Notably, there is insignificant turnover tax applied to wood and wood products, iron and steel, sugar, agricultural products, and chemical products. However, a category labeled "Other Goods" has a higher turnover tax rate of 0.02 billion birr.

The provided data outlines the turnover tax rates in billions of birr for various services. The total turnover tax rate for services is indicated as 0.0892 billion birr. Among the listed services, lodging and consultancy both carry a turnover tax rate of 0.0005 billion birr. Advertisement, works contract, and tourism have a slightly lower tax rate of 0.0001 billion birr each. Financial services, tailoring, and auditing have insignificant turnover tax applied to them. However, a category labeled "Other Services" have a significantly higher turnover tax rate of 0.879 billion birr.

Customs taxes on imports, commonly known as import duties or customs duties, are taxes imposed by a government on goods and products that are imported into a country from abroad. These taxes are typically levied at the point of entry, such as ports or border checkpoints, and are collected by customs authorities.

The provided data outlines the customs taxes on imports in billions of birr. The total customs tax revenue from imports is reported as 62.2 billion birr. Among the listed product categories, motor vehicles and accessories contribute the highest customs tax revenue at 12.4 billion birr, followed by building materials and metals at 8.5 billion birr, and cotton, yarns, fabrics, and textiles at 7.8 billion birr. Electrical equipment and pharmaceutical equipment/drugs both generate 2.6 billion birr in customs taxes. Household and office goods contribute 1.8 billion birr, while machineries and capital goods account for 1.4 billion birr. Films, film/musical instruments, and stationery/calculating machines generate 1.1 billion birr and 1 billion birr respectively. Alcohol and alcoholic beverages contribute 0.2 billion birr, while food and tobacco/tobacco products each contribute 0.1 billion birr. Wood and wood products do not generate any significant customs taxes. The category "Other Goods" has the highest contribution at 22.7 billion birr.

Excise tax on imports, also known as import excise duty or import-specific excise tax, is a type of tax imposed on specific goods or products that are imported into a country from abroad. Unlike regular customs duties, which are applied to a wide range of imported goods, excise taxes on imports are specifically targeted at certain products or industries.  By levying excise taxes on these goods, the government aims to discourage their importation or consumption. Common examples include alcohol, tobacco, petroleum products, certain luxury goods, and environmentally harmful goods such as certain chemicals or pollutants.

The provided data presents the excise tax rates on imports in billions of birr. The total excise tax revenue from imports is reported as 15.4 billion birr. Among the listed product categories, automobiles contribute the highest excise tax revenue at 8.5 billion birr, followed by textiles at 2.5 billion birr, and petroleum at 2.4 billion birr. Alcoholic products generate 0.4 billion birr in excise taxes, while tobacco products contribute 0.1 billion birr. The category "Other Goods" accounts for 1.4 billion birr in excise tax revenue. This data indicates the relative importance of different product categories in terms of excise tax revenue on imports. The higher excise tax rates on automobiles, textiles, petroleum, and other goods highlight the government's efforts to generate revenue and regulate the importation of these products

Value Added Tax (VAT) on imports refers to the tax levied on the importation of goods into a country. VAT is a consumption-based tax imposed on the value added at each stage of production and distribution. When goods are imported, VAT is applied to the final sale price, including the cost of the imported goods and any applicable customs duties. The VAT on imports is typically calculated based on the customs value of the imported goods, which includes the cost of the goods, insurance, freight charges, and any applicable customs duties. The VAT rate is usually a percentage determined by the country's tax laws or regulations.

Importers are responsible for paying the VAT on imported goods to the customs authorities. The payment is made at the time of customs clearance or when the goods are released for domestic consumption. Importers may also be required to provide documentation, such as import invoices or customs declarations, to support the calculation and payment of VAT on imports.

The provided data outlines the VAT on imports in billions of birr. The total VAT revenue from imports is reported as 64 billion birr. Among the listed product categories, motor vehicles and accessories contribute the highest VAT revenue at 12.6 billion birr, followed by building materials and metals at 11.7 billion birr, and cotton, yarns, fabrics, and textiles at 5.9 billion birr. Electrical equipment generates 3.8 billion birr in VAT, while machineries and capital goods account for 2.4 billion birr. Petroleum products and lubricants contribute 1.8 billion birr, while pharmaceutical equipment and drugs generate 1.6 billion birr. Films, film/musical instruments, stationery/calculating machines, and household/office goods each contribute 1.3 billion birr. Wood and wood products generate 0.3 billion birr in VAT, while alcohol and alcoholic beverages contribute 0.2 billion birr. Food and tobacco and tobacco products each generate 0.1 billion birr. Personal Goods & Appliances generate an insignificant amount of revenue. The category "Other Goods" accounts for 19.5 billion birr in VAT revenue.

Surtax on imports, also known as import surcharge or import duty surcharge, is an additional tax or tariff imposed on top of the regular customs duties or import duties on specific imported goods. It is an extra fee or levy levied by the government on certain goods being imported into a country. The purpose of surtax on imports can vary depending on the government's objectives. Some common reasons for implementing surtaxes include: protection of domestic industries, revenue generation, or trade policy response to specific trade policy actions taken by other countries.

The provided data indicates the surtax on imports, totaling 30.4 billion birr. The highest surtax revenue is contributed by building materials and metals, followed by motor vehicles and accessories, and cotton, yarns, fabrics, and textiles. These surtaxes on specific goods are implemented to generate additional revenue for the government and potentially protect domestic industries.

Government fees and charges encompass a variety of payments and levies imposed by the government for specific services or purposes. The provided data represents government fees and charges in billions of birr, totaling 5.4 billion birr. Among the listed categories, passport and visa fees contribute the highest amount at 1.9 billion birr, followed by confiscated items at 1.1 billion birr, and foreigners' registration fees at 0.5 billion birr. The remaining fees and charges, including cargo inspection fees, legal service fees, work permit fees, business license fees, court penalties, warehouse rentals, and other fees, collectively account for 1.9 billion birr. Standards Agency fees do not generate significant revenue.

Sales of public goods and services refer to the revenue generated by government entities through the provision of goods and services to the public. These goods and services can encompass a wide range of offerings provided by the government at various levels, such as national, regional, or local.

The provided data represents the sales of public goods and services in billions of birr, totaling 5.5 billion birr. Among the listed categories, vocational and educational fees contribute the highest amount at 3 billion birr, followed by university students' cost-sharing fees at 0.4 billion birr, and health exam fees and health services fees each at 0.3 billion birr. The remaining categories, including science and technology service fees, agricultural product sales, medical product sales, forestry product sales, civil aviation fees, and government publications sales each account for 0.1 billion birr. Several categories, such as cultural service fees, mapping services fees, national examination fees, prison administration fees, research and development fees, printed forms, handicraft sales, media fees, entertainment fees, veterinary fees, advertising fees, collectively generate 0.1 billion birr revenue. Other fees generate 0.8 billion birr.

Government non-tax income from investments refers to revenue generated by the government through its investments in various financial instruments, assets, or projects. This income is earned from the returns or profits generated by the government's investment activities.

The provided data represents the non-tax income generated from investments in billions of birr, totaling 21 billion birr. The largest contributor is the surplus of state enterprises, amounting to 19.2 billion birr. This indicates the profits earned by government-owned enterprises engaged in commercial activities such as energy production, telecommunications, transportation, or banking. Interest from government bank accounts contributes 1 billion birr, reflecting the returns earned on the government's deposits and investments in financial institutions. Interest from loans to agencies generates 0.6 billion birr, indicating the income earned from lending to government agencies or departments. The national lottery surplus contributes 0.2 billion birr, reflecting the profits generated from the operation of a national lottery.

Stamp sales and duty refer to a form of tax or fee levied on certain legal documents, contracts, or transactions. When a document or transaction requires a stamp, individuals or businesses are typically required to purchase adhesive stamps from the government and affix them to the relevant paperwork as evidence that the necessary duty or tax has been paid. The total Stamp Sales and Duty revenue collected in this quarter was 1.7 billion birr. It was collected from a single source which is stamp duty on vehicles.

Export tax, also known as an export duty, is a type of tax or tariff imposed on goods or services that are being exported out of a country. It is a charge levied by the government on the value or quantity of goods being exported, with the objective of generating revenue or regulating trade. The total export tax revenue collected in this quarter is 0.01 billion birr. This was collected from a single source which is the export of Leather and Leather Products.

Miscellaneous revenue refers to the income or funds generated by a government entity from various sources that do not fall into specific tax categories or predefined revenue streams. It represents a collection of diverse sources of revenue that do not fit within the framework of major tax types, such as income tax, sales tax, or property tax. The sources of miscellaneous revenue can vary significantly and may include: Fines and penalties, Licenses and permits, Asset sales, Interest and dividends, Royalties, Donations and grants, Special services and fees, and Miscellaneous reimbursements. The total miscellaneous revenue in this quarter was 5.1 billion birr.

Capital revenue refers to the funds or income received by a government entity from the sale of capital assets, borrowing, or other capital-related activities. It represents revenue generated through capital transactions or financing activities rather than through regular taxation or operating activities. The total Capital Revenue for this quarter was 1.6 billion birr. This came from two sources. Principal dues from on-lending contributed 1.5 billion birr and Sale of properties contributed 0.1 billion birr to the total.