## Ethiopia’s Tax System: Structure, Performance, and Benchmarking

_Selected Issues Papers, July 30, 2025_

## Source details

**Canonical URL:** [Ethiopia’s Tax System: Structure, Performance, and Benchmarking](https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/30/ethiopias-tax-system-structure-performance-and-benchmarking-569136)

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## Bibliographic details
- Authors: Gabriel Hegab
- Published: July 30, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229019255.018

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### Key summary
- Reviews Ethiopia’s tax system, highlighting its persistently low tax-to-GDP ratio despite sustained economic growth.
- Benchmarks Ethiopia’s revenue performance against regional and structural peers.
- Examines the structure and efficiency of major tax categories.
- Analyzes revenue responsiveness to the business cycle.
- Uses stochastic frontier analysis to estimate the country’s tax potential and identifies significant gaps.

### Major themes and analytical approaches
- Benchmarking
  - Compares revenue performance with regional and structural peers.
- Tax structure and efficiency
  - Focuses on major tax categories including consumption taxes, Corporate income tax (CIT), Personal income tax, Value-added tax (VAT), and trade taxes.
- Revenue responsiveness
  - Assesses how tax revenues respond to the business cycle.
- Tax potential estimation
  - Applies stochastic frontier analysis to estimate tax potential and gaps.

### Subjects and keywords (as provided)
- Subjects: Consumption taxes, Corporate income tax, Personal income tax, Revenue administration, Taxes, Value-added tax
- Keywords: B. tax revenue structure, Benchmarking, CIT tax revenues, Consumption taxes, Corporate income tax, D. tax revenue elasticity, E. revenue potential, Ethiopia, Fiscal sustainability, Income tax, Personal income tax, Revenue mobilization, Stochastic frontier analysis, Sub-Saharan Africa, Tax efficiency, Tax policy, Tax potential, trade openness, Trade tax, Value-added tax

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/07/30/ethiopias-tax-system-structure-performance-and-benchmarking-569136_