It's imperative that one knows the existing tax regulations in Ethiopia when one plans to start business in the country and while doing business in Ethiopia. What type of taxes are there in Ethiopia? What are the tax rates in Ethiopia? What are the tax exemptions in Ethiopia (if applicable)? How are taxes filed in Ethiopia? These are important questions and 2merkato has provided information on Ethiopian tax regulations, which is put together from Proclamations and Regulations, Manuals and Directives.
01Income Tax Proclamation No. 286/2002 or 286/1994 (according to the Ethiopian calendar - EC)
02Value Added Tax Proclamation No. 285/2002 or 285/1994 EC
03Excise Tax Proclamation No 307/2002 or 307/1994 EC
04Turn over tax proclamation No. 308/2002 or 308/1994 EC
05Council of Ministers Income Tax Regulations No. 78/2002 or 78/1994 EC
06Council of Ministers VAT Regulations No. 79/2002 or 79/1994 EC
These documents can be purchased at Berhanena Selam Printing Enterprise Shop at Arat Kilo. One can also visit http://www.erca.gov.et/index.php (the Ethiopian Revenues and Customs Authority Website).
The various taxes are dealt with separately in other categories on this website (Value Added Tax (VAT), Income Tax, Turnover Tax (TOT), and Withholding Tax and Excise Tax)
Types of Taxes in Ethiopia and their rate in percentage:
The following shows only the rates of the various tax types in Ethiopia. To find out detailed descriptions and applicable exemptions, one may visit the different categories on this website.
Indirect Taxes
- VAT (Value Added Tax): 15%
- Excise Tax: varies widely for different goods and one may check the separate category for excise tax on this website.
- TOT (Turnover Tax): 2% on goods sold locally; for services 2% (two percent) on contractor, grain mills, tractors and combine-harvesters and 10% (ten percent) on others
Direct Taxes
- Personal Income Tax: progressive and ranges from 10% to 35%.
- Rental tax: progressive for persons and ranges from 10% to 35% and 30% flat rate on bodies.
- Business Profit Tax: progressive for unincorporated businesses and ranges from 10% to 35% and 30% flat rate on incorporated businesses (eg. PLC, Share Company).
- Withholding Tax: On imported goods at 3% of the sum of cost, insurance and freight (CIF). On payments made to taxpayers at 2% on cost of supply goods involving more than Birr 10,000 in any one transaction or contract and services involving more than Birr 500 in one transaction or service.
- Other Taxes (Taxes from Royalties, Income from Rendering Technical service, Income from Games of chance, Dividends, Income from Rental of property, Interest Income on deposits gain on trainer of certain In-properly)
