Proposed Title:

Ethiopia reported its first confirmed case of COVID19 on March 14, 2020. Since then, the
pandemic has been spreading across the country, reaching a peak of 1829 daily new cases on
August 21, 2020. In order to limit the economic and social costs of COVID19, the federal and
regional governments of Ethiopia have declared a state of emergency and taken different
measures, such as the closure of schools, ban on public transport, postponement of the general
election and billions of birr liquidity to commercial banks. They have introduced tax directives
in a bid to mitigate the economic impacts of COVID19 on the taxpayers and then stimulate the
economic activities of the country1. The directives include measures like waiver of outstanding
tax liabilities that taxpayers owe to the government, a tax amnesty on interest and penalties for
tax debt, an extension of filing and tax payment deadlines, deferral of tax payments, speedier
settlement of refunds of excess input VAT, removal of taxes from the import of raw materials for
the production of Covid-19 essential goods.xxx

This research is intended to explore the legal problems pertaining to the design and enforcement
of the tax directives. It also will assess the appropriateness of the introduced tax measures, the
implications of the tax measures on the Ethiopian tax system and the problems associated with
the enforcement of the tax directives. The study will be conducted under the heading of the
following five basic research questions.

1. How are the tax directives and the specific tax measures designed? Are the selection of
the tax measures and drafting of the tax directives guided by proper legal principles and
procedures?
2. How do the tax measures affect the equitability and efficiency of the Ethiopian tax
system?
3. How do the government and taxpayers perceive the enforcement and effectiveness of the
tax measures?
4. What lessons should the government take concerning tax responses to future pandemics
and similar events?

1
See the Tax Directives No. 64/2020 and 65/2020, Issued to Mitigate the Economic Impact of Corona Virus on
Taxpayers, Ministry of Finance, Ethiopia.
Data relevant to answer the research questions and generate relevant information for the study
will be collected from purposively selected seven cities (Addis Ababa, three cities in Amhara
Region, and three cities in Oromia Region) through document analysis, structured questionnaire,
key informant interview, focus group discussion, and field observation. In order to understand
and examine the design of tax measures interpretation and analysis of legal and non-legal sources
will be made. Proclamations, regulations, directives and decisions constitute the legal sources.
Researchers will collect and critically examine related research works, books, journals, articles,
periodicals, websites, and conference proceedings in Ethiopia and other countries as non-legal
sources. The implementation of tax measures will be assessed through structured questionnaire
that will be collected from randomly selected tax officers, tax payers and independent experts in
seven cities and analysed with simple descriptive statistics tools such as tables and percentages.
The sample size determination formula by Yamane (1967:886) will be used to determine the
sample size and the number of participants in each city will be determined proportionally. This
will be corroborated and triangulated by key informant interviews and Focus Group Discussions
(FGD) in the seven cities that will be held with purposively selected participants, who have
experience and/ or knowledge in the area of emergency economic and fiscal measures, tax law
and administration and representatives of the business community.
Our proposed research will play a vital role in improving the revenue space of the government
while creating an equitable and efficient fiscal and monetary response to the economic and tax
related problems of COVID-19 pandemic. It will realize these objectives by enabling policy
makers to make an informed decision about tax issues and policies relating to COVID-19. The
research will also be useful for the academic community as an input for further research and
dialogue. As this research topic is new, it will increase the knowledge pool available for the
academia. It will help them as a spring board for further investigation into the area and enable
them to see the issue from a different perspective. It will indicate the faults policy makers did in
their past decisions and to enable them make corrections. It will aware them about taxpayers who
are affected seriously and who are in need of help. It will also aware policy makers of what
businesses are benefiting from COVID-19 and must pay more taxes. The research once
completed will clarify the exact economic conditions of the country during and after COVID-19
and suggest to the tax authorities the appropriate measures that must be taken in the future. It will
enable them to have clear understanding on the economic implications of COVID-19 on
taxpayers and its consequential impact on the revenue generating capacity of the government. It
will allow them to apply a correct diagnosis for the right problem so that the government can
collect substantial revenue without damaging those taxpayers who are hard hit by the pandemic.

Time line of the study: Our research project will be accomplished within six months starting
from the date by which the research fund from ERTN is released for us.