The Ministry of Finance (MoF) has suspended the implementation of a Ministry of Revenue (MoR) decision that would have required domestic fruit drink manufacturers to pay several years of backdated excise taxes, penalties, and interest.

The dispute originated from the application of the 2019 Excise Tax Regulation, which broadened the tax base to include sweetened beverages but left ambiguity around fruit-based drinks. In 2023, the Ethiopian Food and Drug Authority clarified that only beverages containing at least 30 percent fruit concentrate or pulp qualify as fruit juice, prompting the MoR to classify most locally produced fruit drinks as taxable soft drinks.

The MoR’s directive required manufacturers to register for excise tax and retroactively pay sums accumulated over four years under Proclamation No. 1186/2020. Industry representatives argued that imported beverages were not subject to similar treatment, further distorting market competition.

After receiving a formal appeal from the Ministry of Industry, the MoF reviewed the case and determined that enforcing retroactive payments would be unjustified given the unclear legal framework. In a letter dated September 22 and signed by former State Minister Eyob Tekalign, the MoF ordered a suspension of enforcement pending further legal clarification. The decision restricts excise tax obligations to sales made after November 2023. 

Source: Capital Newspaper