WHEREAS, it has become necessary to review the type of goods on which excise tax has been collected and impose the tax on goods and services that are believed to be luxury, hazardous to health, causes social problems as well as on basic goods which are demand inelastic;

WHEREAS, it is believed that replacement of the current excise tax which was assessed on production cost by ex-factory price will alleviate the problem encountered by taxpayers due to lack of predictability on the amount of tax they are liable to pay;

WHEREAS, to overcome the problems encountered in collecting proper excise tax due to shortcomings in the current excise tax proclamation, it has become necessary to introduce a new law that puts in place a system which alleviates problems so far encountered;

NOW, THEREFORE, in accordance with Article 55(1) and (11) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows.