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List of Taxes Imposed On Business Companies Operating in Ethiopia - Fikadu and Associates Law Office

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17 views4 pages

List of Taxes Imposed On Business Companies Operating in Ethiopia - Fikadu and Associates Law Office

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muudlaynegn
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List of Taxes Imposed On Business

Companies Operating In Ethiopia


04/02/2010

If you are a business company intending to open a new business here in


Ethiopia or an already established business, here is alist of taxes imposed on
business companies operating in Ethiopia.

The principal taxes currently in place are profit tax, turn over tax (TOT), value-
added tax (VAT), excise tax, customs duty and income tax from employment.
VAT has replaced sales tax. TOT and withholding taxes have been introduced
recently. Other taxes include corporate tax, dividend income tax, royalties and
stamp duties.

The Government has recently been introducing a series of measures to reform


the tax system with a view to encouraging investment and foreign trade. On the
whole, the reform process is to reduce the rates but broaden the base.

Corporate Income Tax

The corporate income tax (tax on profit) in Ethiopia is 30 per cent.

Turn Over Tax

A 2 per cent tax is payable from supplying of goods to the local market and
rendering of construction, grain mill, tractor, combine harvesting services
undertaken in the country. A 10 per cent tax is payable on other sectors
excluding the above mentioned services.

Excise Tax
:
Excise tax is levied on selected items when produced locally or imported from
abroad. The tax rate ranges from ten per cent to hundred per cent.

Customs Duties

Customs duties are payable on imports by all persons and entities which have
no duty-free privileges. The main regulation on customs duty has introduced a
harmonized system of classification of goods and the rate of customs duty
ranges from 0 to 35 per cent.

Income Tax from Employment

Personal income tax is payable as per Proclamation No.286/2002. According


to this law, the first Birr 150 of monthly personal income is exempted from
payment of income tax. For monthly income of Birr 151 and above the
marginal tax rates range from 10 per cent to 35 per cent with 7 income
brackets as shown below.

Income tax from employment


Monthly income (Birr) Tax rate (%)
Up to 150 Nil
151-650 10
651-1400 15
1401-2350 20
2351-3550 25
3551-5000 30
Above 5000 35

Export Taxes

There are no taxes on export products and services from Ethiopia.


:
Withholding Tax

Withholding taxis payable on import of goods and is set at 3 per cent of the
same cost, insurance and freight. In case of organizations, having legal
personality, government agencies, private non-profit institutions, and non-
governmental organizations (NGOs), the amount withheld is 2 per cent of the
gross amount of payment.

Value Added Tax

Value added tax is levied on those businesses whose turnover is over and above
Birr 500,000 per year. They are expected to pay 15 per cent VAT. All export
goods and basic services, however, are exempted from VAT.

Principal Taxes Tax Rate


Corporate Income Tax 30%
Turn Over Tax (TOT) 2% and 10%
Excise Tax 10% up to 100%
Customs Duties 0% up to 35%
Income Tax from Employment 0% up to 35%
Export Taxes —
With holding Taxes 2%
Value Added Tax 15%

Tax Treaties

Ethiopia has concluded tax treaties with a number of countries and is also
ready to conclude similar treaties with other countries for the purpose of
avoidance of double taxation.

Any pertinent information about investment in Ethiopia, tax in Ethiopia, can be


:
available from an Ethiopian Investment Lawyer, Ethiopian Tax lawyer,
Ethiopian, Ethiopian Employment Layer, Ethiopian Labour Relationships
Lawyer, Ethiopian Immigration lawyer.

If you have an additional question or comment please Contact us.


:

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