The council of ministers income tax regulation no 782002 is here by amended as follows. Whereas, it has become necessary to amend the income tax proclamation n0. The ethiopian economy is still largely on subsistence level, and in spite of some progress made, ethiopia has only taken the very first steps towards economic and social development. By abrham yohannes on april 12, 2020 leave a comment proclamation no. Accordingly, the income tax proclamation has introduced four kinds of schedules. Base of computation of the turnover tax shall be the gross receipt in respect of goods supplied or services rendered. Ethiopian revenue and customs authority establishment. May 07, 2016 ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation. Ethiopian revenue authority may raise vat withholding. Federal income tax proclamation wheras, it has become necessary to introduce modern and efficient tax system that supports the economic development and which is in accord with the level of economic development achieved so far. Federal negarit gazeta establishment proclamation resources. A person who sells goods and services has the obligation to collect the turnover tax from the buyer and transfer it to the tax authority.
Apr 25, 2016 importing vehicle to ethiopia and dealing with ethiopia car import tax made easy for car importers and anyone coming to ethiopia. Corporate tax in ethiopia is imposed at a standard rate of 30%. Tax reform discourse and its implication on development. The tax system of ethiopia by peter schwab in 1966 emperor haile selassie i of ethiopia promulgated by executive decree a new tax law. Paragraph 18 states, taxable business income shall be determined per tax period on the basis of the profit and loss account or income statement, which shall be drawn in compliance with the general accepted accounting standards, subject to the provisions of this proclamation and the. Importing vehicle to ethiopia and dealing with ethiopia car import tax made easy for car importers and anyone coming to ethiopia. Turnover tax rate, computation, obligation and exemption. There are specific tax rules, albeit brief, applicable to upstream petroleum activities set out in the. Federal turnover tax law of 2002 to collect turnover taxes. Apr 30, 2008 income tax regulations, assessment and payment in ethiopia details written by administrator published on 30 april 2008 category. The government collects this tax from any individual employees, other than. In addition, principle of economy also requires the tax system to concert tax efforts on those taxpayers with high revenue potential. Mar 31, 2011 turnover tax amendment proclamation no.
Ethiopian legal information portal find laws, cases. This regulation is issued by the council of ministers pursuant to article 5 of the definition of powers and duties of the executive organs of the federal democratic republic of ethiopia proclamation no. Income tax regulations, assessment and payment in ethiopia. Time spent on bookkeeping and tax accounting by ownership type and turnover 21 table 3.
Now, therefore, in accordance with article 55 1 and 11 of. Establishment of the secretariat of the house of peoples representatives and of the house of the federation proclamation. Whereas, the economic and social development of the country requires that transport service be regulated to make it more competitive, safe and efficient. The principal taxes currently in place are company profit tax, turn over taxvalueadded tax vat, excise tax, customs duty, income tax from employment and income tax from business. As a federal country, the functions and duties of the government are divided between central and state governments and they are generally defined in the constitution. A comparative overview dasalegn mosissa jalata lecturer department of accounting and finance, college of business and economics, wollega university, post. Dec 22, 2016 ethiopian revenue authority may raise vat withholding december 22, 2016 the growing number of requests for tax refunds is causing the government to consider increasing the withholding percentage from value added tax vat, reports capital. Individuals who desire to establish a political party by rallying around a common political objective must have a memorandum of association in which they declare the establishment of the type of. A comparative overview dasalegn mosissa jalata lecturer department of accounting and finance, college of business and economics, wollega university, post box no. The national regional republic of ethiopia business income. Ethiopian revenue authority may raise vat withholding december 22, 2016 the growing number of requests for tax refunds is causing the government to consider increasing the withholding percentage from value added tax vat, reports capital.
Whereas, it has become necessary to amend the turnover tax proclamation n0. This proclamation may be cited as the federal income tax proclamation no. A reflection of problems wollela abehodie yesegat abstract this paper examines vat administration in ethiopia and identifies key problems including lack of sufficient number of. Tax administration proclamation draft ethiopian legal. A proclamation to amend the investment proclamation whereas it has become necessary to amend the investment proclamation no 7692012. Tax on employment income used to be guided by income tax proclamation no. Ethiopia tax rate for 20162017, 20152016, 20142015 ethiopia income tax rate 20152016. Oct, 2014 the value added tax and sales tax in ethiopia 1. Definitions a term used in this proclamation that is defined in the tax administration proclamation shall have the meaning in the tax administration proclamation unless defined otherwise in this proclamation.
Proclamation, schedule c incomebusiness income tax. Nov 23, 2012 categories of taxpayers administrative convenience requires classification of taxpayers into different groups at it is not possible to extend the same treatment to all taxpayers at the same time. Rental income tax rates 1 the rate of rental income tax applicable to a body is 30%. Ethiopia to amend income tax proclamation a new draft bill has been. Turnover tax is payable on goods and services supplied by persons who are not registered for. Though there is no constitutional distinction between bills subject to parliamentary legislation and those subject to executive declaration, parliamentary ratification has been, and continues to be. Usda pleased with ethiopian govt for its willingness to approve gmos ethiopia observer addis ababa introduces evenodd scheme to restrict private vehicles from roads protocol to the african charter on human and peoples rights on the rights of older persons in africa ratification proclamation no. Public finance and taxation in ethiopia pdf in a moment of dismissive hubris, the ethiopian tax system may be. Whereas, it is believed that introducing the system of advance tax ruling helps.
Proclamation with responsibility for the administration and enforcement of the tax. Employment income tax is a tax on the earnings of an employee. Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. Inhouse compliance cost of time spent on general bookkeeping and tax accounting in etb by ownership type and turnover 22. The following is the progressive rate table for monthly employment income. Proclamation 4942006 to amend the labour proclamation. Obligation to collect and transfer the turnover tax. Categories of taxpayers administrative convenience requires classification of taxpayers into different groups at it is not possible to extend the same treatment to all taxpayers at the same time. Subject to the prior secured claims of creditors, the authority has a preferential claim upon the assets of the person liable to pay the tax until the tax is paid from the date on which tax becomes due and payable under this proclamation. Federal income tax proclamation exclusive document from the. Ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation. Taxes and tax reform in ethiopia, 19902003 alemayehu. This regulation may be cited as the council of ministers income tax amendment regulation no. Tax compliance costs in etb and as a share of turnover by taxpayers ownership type and sector 17 table 3.
All legal entities must register for income tax with the ethiopian revenue and customs authority and obtain a tax identification number tin and file annual tax returns by june of the year following the end of the tax year the value added tax vat in ethiopia is levied at a standard rate of 15%. Turnover tax rate, computation, obligation and exemption in. In addition, the costs of vat administration were briefly examined in the case of jantschers 1990 study. Accounting and tax corporate tax in ethiopia is imposed at a standard rate of 30%. This page contains turnover tax rate in ethiopia, base of computation obligation, and exemption from tot in ethiopia.
Nov 24, 2011 and article 117 i of the income tax proclamation as amended no. Chapter two will introduce the students to the income tax in ethiopia. A reflection of problems 147 of filing and payments, refunds, audits and penalties. Employers must withhold the tax from each payment to an employee and pay the tax over to the tax authorities for each month.