15% VAT on Fuel Sales to be Imposed in Ethiopia

The government of Ethiopia intends to impose 15% value added tax (VAT) on fuel sales. The government made this announcement in the draft budget submitted to the House of People’s Representatives.

The government plans to collect more than 3 billion birr from the value-added tax levied on fuel and fuel products. It is also expected that starting July 2025, oil prices will be determined by international market. Oil prices have increased significantly in Ethiopia with gasoline recently hitting 122 birr per liter. In October 2024, the price was 91.00 birr per liter, increasing to 122.53 birr per liter in May 2025, representing a 34.6% increase.

Ethiopian government has been gradually lifting fuel subsidies over the past few months. The government is likely to impose VAT on salt and Sugar too. In the past, products such as fuel and sugar were subsidized by the government and exempted from VAT.

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