In Addis Ababa's popular restaurants and shops, businesses often direct customers to pay via personal mobile accounts, evading taxes and leaving no official record. This practice, highlighted in a recent analysis, undermines government revenue and burdens compliant taxpayers. Authorities face calls for stricter enforcement and simplified compliance measures.
Addis Ababa's vibrant dining and retail scene hides a widespread issue of tax evasion, where even established businesses route payments to personal accounts. As described by Befikadu Eba in a Capital Newspaper article published on October 20, 2025, customers at a popular butchery in Bole or a spice shop in the area receive personal names like 'Abebe Lemma' or 'Selamawit Tesfaye' for transfers, with waiters assuring, 'It’s the same.' No receipts are issued, creating no paper trail.
In Piassa's renowned eateries, the deception appears more polished. Customers receive receipts with barcodes that scan to reveal 'Organization does not exist,' prompting managers to suggest, 'Oh, the system has a problem,' and direct payments to personal mobile money accounts. Eba notes this affects formal Private Limited Companies, whose revenues vanish from official ledgers, avoiding Value Added Tax (VAT) and corporate income tax.
Excuses like 'It’s faster' or 'The business account is complicated' mask the intent, Eba argues. This creates a two-tier system: salaried workers and large corporations face strict deductions via Pay-As-You-Earn (PAYE), while hospitality and retail evade scrutiny. The revenue shortfall forces higher taxes on compliant entities, eroding fairness.
Eba calls for action, including undercover enforcement by the Ethiopian Revenues and Customs Authority (ERCA) to trace digital trails from accounts receiving frequent, round-sum payments. Penalties could include fines, back taxes with interest, prosecution, and closures. He also advocates simplifying compliance with certified electronic cash registers (ECRs) and business-linked mobile accounts, plus public campaigns urging customers to demand valid receipts. As consumers accept these methods for convenience, they enable a system that diverts funds from public services like roads, schools, and hospitals.