A brief note on the List of Taxes Imposed On Business Companies Operating In Ethiopia.
List of Taxes Imposed On Business Companies Operating In Ethiopia
If you are a business company intending to open a new business here in Ethiopia or an already established
business, here is a list 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
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
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 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 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
Income tax from employment
Monthly income (Birr) Tax rate (%)
Up to 150 Nil
Above 5000 35
There are no taxes on export products and services from Ethiopia.
Withholding tax is 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
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%
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 Lawyer, Ethiopian Investment Lawyer, Ethiopian Tax lawyer, Ethiopian,
Ethiopian Employment Lawyer, Ethiopian Labour Relationships Lawyer, Ethiopian Immigration lawyer.
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