The Ministry of Revenues has instructed tax authorities to levy value-added tax on over-the-counter medicines, confirming that such products fall within the scope of existing legislation.
A directive issued on August 14, 2025, calls for enforcement measures against pharmaceutical companies that have not complied with tax requirements since the law came into force.
The notice was circulated to the minister’s office, the tax system sector, medium taxpayer branches and the West Addis Ababa small taxpayers office. It instructs that over-the-counter medicines be treated as taxable supplies and outlines measures to ensure compliance.
Ethiopia introduced its VAT framework in 2003, with the latest revision setting a 15 percent standard rate on most goods and services. Prescription medicines, basic food items and certain medical supplies remain exempt. A recent directive reviewed VAT-exempt categories but largely preserved exemptions for prescription drugs.
The pharmaceutical market depends heavily on imports, with over-the-counter products accounting for a sizeable share of non-prescription medicine consumption.