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Ethiopia Tax Rate for 2016-2017, 2015-2016, 2014-2015

Ethiopia Income Tax Rate 2015-2016

Employers must withhold the tax from each payment to an employee and pay the tax over to the tax authorities for each month. The following is the progressive rate table for monthly employment income.

Monthly Employment Income (ETB)

Tax Rate %

 

0 - 150

 

0%

 

150 - 650

 

10%

 

650 - 1400

 

15%

 

1400 - 2350

 

20%

 

2350 - 3550

 

25%

 

3550 - 5000

 

30%

 

Above 5000

 

35%

For “bodies,” the business income tax rate is 30%. For other taxpayers, the following is the progressive rate table for annual business income

Annual Business Income (ETB)

Tax Rate %

 

0 - 1800

 

0%

 

1800 - 7800

 

10%

 

7800 - 16800

 

15%

 

16800 - 28200

 

20%

 

28200 - 42600

 

25%

 

42600 - 60000

 

30%

 

60000 Above

 

35%

 

The following is the progressive rate table for annual rental income.

Annual Rental Income (ETB)

Tax Rate %

 

0 - 1800

 

0%

 

1800 - 7800

 

10%

 

7800 - 16800

 

15%

 

16800 - 28200

 

20%

 

28200 - 42600

 

25%

 

42600 - 60000

 

30%

 

60000 Above

 

35%

 

 

Although identical rate tables apply to business income and rental income, these types of income are taxed separately.

Credits. For details regarding the foreign tax credit, see Section E.

Relief for losses. Individuals may carry forward net operating losses from businesses for three years. However, if a business incurs losses following the year of the loss, the loss-carry forward period may be extended for a year for each loss year in the three-year period, up to a maximum loss-carry forward period of six years. Earlier losses must be offset first. Losses may not be carried back.

Nonresidents. Nonresidents are subject to tax at the same rates as residents on Ethiopian-source income only.

Ethiopia Income Tax Rates 2014 and Deductions

Ethiopia Income Tax Rate for Individual Tax Payers

Lowest Individual Tax Rate is 10 % and Highest Rate is 35%
Tax Rate for Resident Individuals (Employment Tax)
 

Monthly Employment Income (ETB)

Tax Rate %

 

0 - 150

 

0%

 

150 - 650

 

10%

 

650 - 1400

 

15%

 

1400 - 2350

 

20%

 

2350 - 3500

 

25%

 

3500 - 5000

 

30%

 

Above 5000

 

35%

 

All income from rental of buildings is taxed in accordance with this schedule.

Annual Rental Income (ETB)

Tax Rate %

 

0 - 1800

 

0%

 

1800 - 7800

 

10%

 

7800 - 16800

 

15%

 

16800 - 28200

 

20%

 

28200 - 42600

 

25%

 

42600 - 60000

 

30%

 

60000 Above

 

35%

 

Corporate Tax Rates in Ethiopia

Resident companies

Corporate tax 30%
Dividends 10%
Interest on deposits (local) 5%
Royalties 5%
Rental of property 15%
Supply of goods (exceeding ETB10 000) 2%
Supply of technical & professional services (exceeding ETB500) 2%
Payment to a person without a tax identification number (TIN) 30%

Non-resident companies

Interest on borrowings-foreign 10% (maximum)
Technical services from abroad 10%
Royalties 5%

Capital Gains Tax in Ethiopia

Certain gains of a capital nature are subject to capital gains tax (CGT), such as:
- Building held for business, factory or office − 15%;
- Shares of companies − 30%.

Withholding tax (WHT) on royalties

Royalties for the right to use artistic works 5%
Royalties paid by holders of large- scale mining licenses 10%
Precious minerals 8%
Semi-precious minerals 6%
Metallic minerals 5%
Industrial minerals 4%
Construction minerals 3%
Salt 4%
Geothermal 2%

Ethiopia Transaction taxes

Value-added tax

Value-added tax (VAT) is charged, under the Value-Added Tax Proclamation on the supply of goods and services by registered persons, and on the importation of goods and services into Ethiopia and services performed by a non-resident person (not registered for VAT in Ethiopia) who performs services for a resident in Ethiopia. The rate of VAT is 15%.

Turnover tax

Turnover tax is charged under the Turnover Tax Proclamation and at a rate of 2% on the supply of goods and services relating to contractors, grain mills, tractors and combine harvesters and at a rate of 10% on other services. Turnover tax is payable on goods and services supplied by persons who are not registered for VAT.

Excise tax

Excise tax is payable on certain goods specified under the Schedule to the Excise Tax Proclamation, when imported and when produced locally. The excise tax rate varies from 10% to 100% on the cost of production, or CIF (“cost-insurance-freight”) as the case may be.

Customs duty

Customs duty is payable on imports by all persons and entities without duty-free privileges. The main regulation on customs duty is Proclamation No. 38/1993, which has introduced a harmonized system of classification of goods. The rate of customs duty ranges from 0% to 35%.

Stamp and transfer duty

Stamp duty is payable on a broad class of legal instruments, including:
- Memoranda and Articles of Association:
- upon first execution − a flat ETB350; and
- upon any subsequent execution − a flat ETB100.
- Contracts and agreements and memoranda − a flat ETB5;
- Security deeds − 1% on the value of the deed;
- Contract of employment − 1% of 1 month’s salary;
- Register of title to property − 2% of the value;
- Lease and sub-lease thereof – 0.5% of the value; and
- Bonds including warehouse bonds – 1% of the value.

Ethiopia Due Dates for filing Returns / Reporting and Payment

For individuals, the tax year is the government’s fiscal year which runs from July 8 to July 7

 
 

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