The House of Peoples Representatives has approved the infamous Excise Tax Proclamation (The Proclamation) last Thursday, February 13, 2020. Within hours from the approval of the proclamation, Ministry of Revenues have written a letter to manufacturers of excisable goods stating that the proclamation will be implemented starting from February 14, 2020, which in effect violates both the FDRE Constitution and Negarit Gazeta Establishment Proclamation. The proclamation has not yet been published in the Negarit Gazeta and there are notorious discrepancies between the Amharic and English versions. In addition, with no transition time given to the manufacturers, they are forced to prepare manual invoices, which separately shows the amount of excise tax payable in the transaction as the new law requires the amount of excise tax should be separately shown in the invoice.
Setting aside all these problems occurring due to the panic moves of the government, the Proclamation has introduced fundamental changes to the existing excise tax framework and the market has already felt the punch of these changes within few days of its implementation. In this brief overview, some of the major changes introduced to the Excise Tax Regime will be assessed.
1. Imposition of Excise Tax on Excisable Goods