Ethiopia Implements 5% Telecom Tax on Airtime & Data for Disaster Fund

From February 8, all purchases of mobile airtime and data in Ethiopia will be subject to a five percent levy, as the government moves to mobilise domestic resources for its national disaster response fund, Birrmetrics learnt. The measure, which affects the two telecom operators, Ethio Telecom and Safaricom, forms part of a broader effort to ensure predictable funding for emergency preparedness and reduce dependence on foreign assistance. According to a directive seen by Birrmetrics, Commissioner Shiferaw Teklemariam (PhD), head of the Disaster Risk Management Commission, has made the contributions mandatory rather than optional. Officials describe it as part of a “home-grown resilience strategy,” placing local institutions at the centre of funding Ethiopia’s emergency preparedness. The initiative follows recent disruptions in international aid, including the temporary global suspension of United States Agency for International Development disbursements in January 2025, which affected health services, refugee support, and other humanitarian programmes. Ethiopian authorities have responded by establishing a comprehensive domestic financing framework for disaster management. Analysts say the levy is a big step toward making Ethiopia self-sufficient in funding emergencies, moving away from reliance on foreign aid and leaning more on domestic and business resources. “This measure will make the flow of emergency funds steady and predictable,” said Mikiyas Mulugeta (PhD), an independent consultant. He added that with global changes, especially after President Trump’s second term, relying on yourself has become essential. “But the levy has to be properly regulated so it’s not abused,” Mikiyas told Birrmetrics. He also pointed out that moving toward self-sufficiency will mean producing more things locally instead of importing, which he sees as a boost for the country’s economy. The telecom levy is embedded within a wider contribution system covering multiple sectors of the economy. Banks and microfinance institutions are required to remit one percent of the total value of loans disbursed, while insurance companies contribute one percent of all premiums collected. Corporate shareholder dividends incur a one percent annual levy, and digital banking services are subject to a five percent surcharge on service fees. Transportation and infrastructure providers are also included. Domestic airline tickets will carry a fixed 100 birr surcharge, maritime transport and logistics services a five percent levy on annual sales, and fuel supplied by the Ethiopian Petroleum Supply Enterprise will attract a 1 birr per litre charge. Administrative and federal services, including passport and visa issuance, business licensing, and document authentication, will incur fixed fees of 200 birr. The Federal Customs Commission will remit 60 percent of proceeds from the sale of confiscated contraband goods, payable semi-annually. Manufacturers and importers of chemicals are required to contribute one percent of monthly domestic sales or import values, while tobacco and alcohol producers and importers remit five percent of monthly domestic sales. The gaming sector contributes one percent of lottery ticket prices and winnings. To ensure stable funding, the federal government will transfer 0.25 percent of its total annual budget, with Addis Ababa and Dire Dawa city administrations matching the same proportion, all on a quarterly basis. The Disaster Risk Management Commission will oversee compliance, requiring monthly reporting from all institutions. Noncompliance carries legal consequences, including fines and potential criminal liability. The levy on telecom services underscores Ethiopia’s determination to embed disaster financing directly into everyday economic activity, creating a predictable domestic funding base. While officials describe the measure as a step toward national self-sufficiency, consumers and businesses will bear a direct financial burden on routine transactions, from mobile phone usage to transport and fuel, which adds to household costs at a time the government is broadening its tax base. Mikiyas Mulugeta noted that service providers will likely adjust rates to cover the charges, passing costs onto households and businesses. “It isn’t too much for individual payers, but collectively it adds up and represents a substantial contribution to the economy,” he said.