Ethiopia revises tax exemption on electric vehicle import

APA-Addis Ababa Ethiopia’ s Ministry of Finance has introduced a revised tax regulation that will allow the importation of electric vehicles without taxes. The move aims at encouraging local vehicle assemblers and making electric vehicles affordable to users. The revised regulation has exempted both imported or locally assembled EVs from Value Added Tax,…

APA-Addis Ababa (Ethiopia) Ethiopia’s Ministry of Finance has introduced a revised tax regulation that will allow the importation of electric vehicles (EVs) without taxes.

The move aims at encouraging local vehicle assemblers and making electric vehicles affordable to users.

The revised regulation has exempted both imported or locally assembled EVs from Value Added Tax, excise tax, and surtax.

The ministry has also reduced the Customs tariffs imposed on EVs based on their assembly status.

Ethiopia’s tax system is often criticized for making cars unaffordable for regular citizens who have to pay twice as much as Kenyans living just across the border.

Apart from Customs duty, car importers pay five different forms of tax.

These taxes include Value Added Tax of 15%; excise tax from 5-500 percent (depending on engine size, age, and type); 10% surtax; withholding tax of 3%; and income tax.

Together with a vehicle’s import price makes imported cars too expensive to be afforded by the average person.

The locally assembled cars are equally unaffordable for many as the tax levied on local assemblers is only 5% less than for commercial importers, according to a report.

The taxes imposed on non-Electric vehicles have not changed as officials plan to replace the growing fuel-consuming transportation service options with environmentally friendly electric vehicles.

The authorities, however, expect EVs to be affordable with the revised taxes increasing local assembly and driving down the prices.

The latest tax revision has taken issues related to safety and the environment into consideration as part of a vision to create a carbon emission-free transport system, the Ministry of Finance said.

The newly revised regulation would incentivize the growing local electric auto assembly sector and EV importers while reducing the cost of EV users, the ministry said.

The regulation targets a range of electric vehicles including private, public, and freight EVs.

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