Evaluation of the Efficiency of Standard Assessment for Category C Taxpayers in Ethiopia: The Case of Tigray Regional State

  • Muuz Abraha Meshesha
Keywords: Category C, Efficiency, Ethiopia, Presumptive taxation, Standard assessment, Taxpayers, Tigray


This article evaluates the application and efficiency of the Ethiopian standard tax assessment, as enshrined in the Income Tax Regulation No. 78/2002, against the tax liability of Category C Taxpayers, commonly known as small business taxpayers, referring to the practice in Eastern Zone Administration of the Tigray National Regional State. This mode of tax assessment was introduced to ensure the basic principles of tax systems such as equitability, efficiency, certainty, simplicity etc; as opposed to the situation when the tax regime is employing estimated tax assessment for the same purpose. It is found that there is a contradiction between the rules of standard tax assessment and their practical application, since the actual tax liability of the large section of the Category C Taxpayers is being assessed according to estimated taxation and this practice is incurring higher cost of administration. This article argues that the practical assessment of tax liability of Category C Taxpayers is not ensuring efficiency and the practice has to conform to the rules of standard tax assessment to meet efficiency; yet the criteria for categorization of taxpayers into Category C Taxpayers must be revised to fit the actual incomes of taxpayers to ensure equity and equality.