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    Taxation in Ethiopia-Geta Summary

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    Geta

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    Taxation in Ethiopia-Geta Summary

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    11 views3 pages

    Taxation in Ethiopia-Geta Summary

    Uploaded by

    Geta

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    The following proclamations and regulations are referred to for all the information under the tax section.

     Proclamation No. 1097/2018 Definition of Powers and Duties of the Executive Organs of
    the Federal Democratic Republic of Ethiopia Proclamation.
     Proclamation No. 979/2016 Federal Income Tax Proclamation.
     Proclamation No. 983/2016 Federal Tax Administration Proclamation.
     Proclamation No. 715/2011 Private Organizations Employees’ Pension Proclamation as
    amended by Proclamation No. 908/2015.
     Proclamation No. 285/2002 Value Added Tax Proclamation, as amended by
    Proclamation Nos. 609/2009 and 1157/2019.
     Excise Tax Proclamation No. 1186/2020 Proclamation No. 308/2002 Turnover
    Tax Proclamation, as amended by 611/2008.
     Proclamation No. 110/1998 Stamp Duty Proclamation, as amended by 612/2008.
     Investment Proclamation No. 1180/2020.
     Proclamation768/2012 Export TradeDuty Incentive Schemes Proclamation.
     Proclamation No. 859/2014 Customs Proclamation, as amended by Proclamation 1160/2019.
     Regulations No. 410/2017 Federal Income Tax Regulations;
     Regulations No. 407/2017 Federal Tax Administration Regulations;
     Regulations No. 270/2012 Investment as amended by Regulations No. 370/2014 (a
    new regulation is at draft stage);
     Regulations No. 154/2008 Higher Education Cost Sharing Regulations;
     Regulations No. 79/2002 Value Added Tax Regulations.

    The Ethiopian Taxation system has two major categories: direct and indirect taxes. All tax types in the
    Ethiopian tax system are described and explained as follows.

    Direct Taxes
    These are one type of taxes a company or individual pays directly to the government. The following are
    the tax categories under the income tax proclamation No. 979/2016. Tax payers are categorized
    according to their income levels.

    Category A taxpayers:
     A body or any other person having annual gross income of ETB 1,000,000
    or more.

    Category B taxpayer:
     A person, other than a body, having an annual gross income of ETB 500,000
    or more, but less than ETB 1,000,000.
    Category C taxpayer:
     A person, other than a body, having an annual gross income of less than
    ETB 500,000.
    The proclamation provides for the taxation of incomein accordance with the following schedules:
    1) Schedule A, income from employment;
    2) Schedule B, income from rental of buildings;
    3) Schedule C, income from business;
    4) Schedule D, other income;
    5) Schedule E, exempt income.

    Schedule A employment Income Tax


    Tax computation
    Employment income per month (I) Employment = Employment income
    (birr) Deduction EIT =
    income tax
    rate Employment
    income tax

    0–600 0% 0
    601–1 650 10% 60.00 EIT = I x 10% – 60
    1 651–3 200 15% 142.50 EIT = I x 15% –
    142.50
    3 201–5 250 20% 302.50 EIT = I x 20% –
    302.50
    5 251–7 800 25% 565.00 EIT = I x 25% – 565
    7 801–10 900 30% 955,00 EIT = I x 30% – 955
    More than 10 900 35% 1 500.00 EIT = I x 35% – 1
    500

    Schedule B Rental Income Tax

    Corporations are taxed 30% flat rate.


    Tax computation
    Rental income Rental Income Deduction I = Rental income RIT=
    per year (I) tax rate Rental
    income tax

    0–to 7 200 0% 0
    7 201–19 800 10% 720.00 RIT = I x 10% – 720
    19 801–38 400 15% 1 710.00 RIT = I x 15% – 1 710
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