Ethiopia has significantly broadened its Value Added Tax (VAT) system, mandating more businesses and professionals to register under new regulations. This move, outlined in Directive No. 1104/2025, aims to boost compliance and expand the nation's tax base.

• All Category “A” taxpayers and businesses with annual taxable and exempt transactions exceeding 2 million birr are now required to register for VAT.
• The Ministry of Finance, led by Finance Minister Ahmed Shide, is the key organization behind these changes.
• The new directive also extends VAT obligations to professional service providers regardless of turnover, effective after publication on the Ministry of Finance’s website and registration with the Ministry of Justice.