It seizes and takes legal action on the people and vehicles involved in the act of smuggling while it facilitates the legitimate movement of goods and people. Pdf since 1991, policies of economic liberalization in ethiopia have been effective in releasing the economy from rigid state control. Consistency of the practice with the ethiopian transfer pricing rules. The new income tax in ethiopia new income tax calculations. The sate of amhara is located in the north western and north central part of ethiopia. The direct and indirect taxes applicable in ethiopia. Tax has been replaced by value added tax, and the overall taxation. As of the new budget year, which starts at hamle 2008 e.
An individual, who stays in ethiopia for more than 183 days in a period of twelve 12 calendar months, either continuously or intermittently, shall be resident for the entire tax period. Ethiopia is also a vavilov center of diversity for domesticated crops, including enset, coffee and teff. Apr 2020 taxation in ethiopia latest ethiopian news. Double taxation agreements with ethiopia agreements. The current constitution of ethiopia, which is the supreme law of the federal democratic republic of ethiopia, came into force on 21 august 1995. So an individual foreigner, who lives in ethiopia for more than 183 days in a period of twelve calendar months, whether continuously or intermittently, is regarded as being resident for the entire tax period and is taxed in accordance with the provisions of income tax proclamation no. Income tax proclamation ethiopian chamber of commerce and.
Ethiopia used income taxes as one of the principal sources of domestic government revenue since the beginning of modern taxation in the 1940s. All ethiopian languages shall enjoy equal state recognition. It will start with a brief look at the history of income taxes in ethiopia and will go on to look at different. This study is, hence, to assess the vat withholding system in ethiopia and the implications for revenue collection and refunds. Introduction about ethiopian taxation and accounting practice. Income tax proclamation 782002 income tax regulation no. Mscprogram value added tax vat withholding practices and challenges acknowledgment. The principal taxes currently in place are company profit tax, turn over tax valueadded tax vat, excise tax, customs duty, income tax from employment and income tax from business. Referconsult a tax schedule schedule that shows how much tax is owed for different amounts of income earned by the employee to find. The ethiopian income tax system is schedular in structure and orientation, the computation, assessment and collection of income. This is direct tax, which a person pays from any income he gets. Tax regulations in ethiopia details written by administrator published on 30 april 2008 category. Tax administration proclamation draft ethiopian legal. 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.
Head office or any of its branch offices estblished in any part of ethiopia and the tax authorities of the. The number of proclamations, regulations and directives makes it to some extent difficult to understand this area of law. Added tax proclamation, is not registered by reason of his. Income tax regulation amharic clean ministry of finance and. Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes.
If the person is not resident of ethiopia gets his income which has its source in ethiopia also should pay tax. In addition to raising revenue, the mor is responsible to protect the society from adverse effects of smuggling. Using an umbrella company for income tax in ethiopia. Tax revenue to gdp ratio is very low in ethiopia as compared to some of subsaharan african countries. For these reasons, we believe that consideration of evasion, avoidance, and administration is essential to the positive and normative analysis of.
According to proclamation no 28694 any person whose permanent residence is in ethiopian, has to pay tax from the income that he gets within ethiopia or abroad. Ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation. Value added tax vat this is a sales tax based on the increase in value or price of product at each stage in its manufacture and distribution. Dont want to miss our interesting news and updates. Legality principle of taxation in ethiopia papers in the ssrn.
Introducing modern taxation system oct 04, 2012, ethiopian press agencythe ethiopian revenue and customs authority erca announced friday that etax training and implementation for a number of taxpayers is well underway. Taxation in ethiopia direct and indirect taxes categories of tax payers declaration of income and assessment of taxes tax incentives addis ababa 12005 published by. Some amharic sources for modern ethiopian history, 1889. The major types of taxes that exist in ethiopia, their meaning, rates and conditions, as provided by the federal inland revenue authority, are presented as follows.
Done in duplicate at new delhi this 25th day of november, one thousand nine hundred and seventysix in the amharic, english and hindi languages, all the texts being equally authentic, except that in the case of divergence of interpretation the english text shall prevail. The application of ethiopian transfer pricing rules on multinational enterprises. C the ministry of finance and economic cooperation mofec has announced this new tax proclamation the new income tax proclamation has employees and low earners at its benefiters. Taxation, borrowing and aid are not taken solely with reference to economics but also. Apr 2020 business profit tax in ethiopia latest ethiopian news ethiopian business directory and product catalog. Exports are almost entirely agricultural commodities with the exception of gold exports, and coffee is the largest foreign exchange earner. The 1 other indirect taxes mainly refer to excise taxes 2 world bank 2015, how to collect more and better revenue. Tax this page presents links to guide you on types of taxes, tax rates, exemptions, tax filing procedures and other information you need when you start up a business as a selfemployed person, a partnership or a limited company. Double taxation agreement between india and ethiopia.
In present study an attempt is made to analyze empirically the determinants of tax revenue and assess the response of tax revenue to changes in its. Ethiopian chamber of commerce ecc, ethiopian business development services network ebdsn, on behalf of. The constitution consists of 106 articles in 11 chapters. This is in line with the commitment of the ethiopian revenues and customs authority erca, the government agency responsible for administering customs in ethiopia, to ensure transparent, reliable and predictable customs services. An ethiopian tax and customs law is characterized by frequent repeal and amendments. Contractors in ethiopia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. Pdf in most developing countries, income inequality tends to worsen during initial stages of growth, especially in urban areas.
It seizes and takes legal action on the people and vehicles involved in the act of smuggling while it facilitates the legitimate. In the case of a business located and operating in ethiopia as the branch, subsidiary or. The reform also introduced a 5 per cent tax rate for work contracts and financial services, while a 15 per cent rate is applied to the sale of other services. Introduction about ethiopian taxation and accounting. An individual shall be resident in ethiopia, if he. About the constitution of the federal democratic republic of ethiopia. Reports on books published in amharic, as well as on literature on ethiopia in general, are to be found in numerous issues of the rivista degli studi orientate and oriente moderno. It will start with a brief look at the history of income taxes in ethiopia and will go on to look at different concepts and definitions involved in income taxation. The new ethiopian cabinet takes the oath of office file photo. Ethiopian ethiopian business chamber of commerce development services network chamber of crafts german technical cooperation hwk rheinmain, germany taxation in ethiopia direct and indirect taxes categories of tax payers declaration of income and assessment of taxes tax incentives addis ababa 12005. New car vehicle excise tax rate for new cars to be reduced from 30% to 5%. 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.
Valuedadded tax vat was introduced in january 2003 and may mean a shift from ethiopias dependence on foreign to domestic trade, but it is too. First add all the payments in cash and in kind made to their employees in a month. Amharic version of ethiopian laws, imposes obligation only on tax payers by saying. In ethiopia, employers can determine the tax to be withheld by following 3 key steps. Employment income tax in ethiopia introduction individuals may receive various types of income such as wages or salary from employment, rent from letting houses or buildings, interest from lendingsaving money, and profit from their trading activities or business. Amharic shall be the working language of the federal government. According to the new changes to be introduced to the amendment, an excise tax levy which was proposed on imported new vehicles cars with production dates not exceeding two years and with engine capacity of. The capital city of the state of amhara is bahirdar.
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