5% additional tax imposed on hotels in Addis Ababa

A 5% municipal tax has been imposed on hotels and other similar establishments in Addis Ababa. According to the new regulation, any establishment providing lodging services must submit a detailed list of the number of rooms and the daily rate for each room to the Addis Ababa Revenue Office.

All hotels, resorts, motels, guesthouses other similar establishments that provide lodging services will have to pay this tax, according to the new regulation titled “Hotel and Similar Service Providers’ Lodging Service Municipal Tax Regulation No. 204/2018”. The regulation came into effect on June 12, 2018 (Ethiopian Calendar).

Lodging establishments can collect 5% municipal tax from guests on the price of the room. The tax rate will be calculated based on the standard room rate, excluding value-added tax (VAT). Service providers will report and remit the taxes they collect to the Addis Ababa Revenue Office on a monthly or quarterly basis.

Failure to comply with the instructions mentioned in the regulation will lead to suspension of the establishment’s license and other punishments. Any hotel or similar establishment that fails to report its lodging revenue on time may be subject to a penalty of up to 5% of the payment, up to a maximum of 50% per month. In addition, any establishment that fails to remit the tax revenue on time will be subject to a penalty of 15% on top of the interest calculated at the current bank lending rate.

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