Types we have compiled here the rates and exemptions on personal income tax or tax on income from employment in ethiopia. The direct and indirect taxes applicable in ethiopia. It produces empirical evidence about the tax performance of ethiopia through dynamic measures of. For the purposes of this proclamation the following terms shall have the meanings given to them hereunder. One such dynamic policy shift involves the new tax regime namely income tax and the valueadded tax vat of ethiopia, which seems to have caught the ngo community unaware and unprepared to deal with it. 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. Chapter two will introduce the students to the income tax in ethiopia.
Pdf taxes and tax reform in ethiopia, 19902003 researchgate. In the portion, what is vat, its historical background, merits and demerits, subjects of vat, exemptions, collection and generally administration in ethiopia will be given high attention. Personal income tax rate in ethiopia is expected to reach 35. Apr 2020 salary income tax calculation in ethiopia latest. The new income tax in ethiopia new income tax calculations.
Ethiopian chamber of commerce ecc, ethiopian business development services network ebdsn, on behalf of. Based on the above taxation, it can be classified into different degrees of progression. Click download or read online button to get taxation in ethiopia book now. Ethiopia is one of the poorest countries in the world, with a per capita gross national income. Whereas, it has become necessary to amend the income tax proclamation n0. 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. 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. New evidence based on a new data set andre gbato1 abstract. The federal arrangement in ethiopia and taxing powers 330. They are proportional tax, progressive tax, regressive tax and degressive tax. The new income tax proclamation has employees and low earners at its benefiters. In addition to raising revenue, the mor is responsible to protect the society from adverse effects of smuggling.
Marys university online public access catalog catalog. Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. Categories of tax payers, declaration of income and assessment of taxes, tax. Jan 21, 2020 the personal income tax rates in ethiopia stands at 35 percent. Feb 16, 2016 liberal delegations coupled with dearth of avenues to challenge the delegation of taxing power have continually put legality principle of taxation on the brink of porosity. In this study, we empirically test the impact of taxation on the longterm growth of a sample of 32 countries in subsaharan africa. The amendment, expected to be ratified by january 2020, is. In the longterm, the ethiopia personal income tax rate is projected to trend around 35. Public finance and taxation in ethiopia pdf in a moment of dismissive hubris, the ethiopian tax system may be. The tax system of ethiopia by peter schwab in 1966 emperor haile selassie i of ethiopia promulgated by executive decree a new tax law. The vat regime under ethiopian law with special emphasis on.
If the person is not resident of ethiopia gets his income which has its source in ethiopia also should pay tax. Constitution of the federal democratic republic of ethiopia, it is. There are various provisions on taxation of fringe benefits provided by employers to employees. The new york state tax burden new york state is among the top seven states for the three major taxes. Productive capacity and economic growth in ethiopia 1 introduction ethiopia is one of the largest least developed countries ldcs in subsaharan africa, with a popula. Productive capacity and economic growth in ethiopia. C the ministry of finance and economic cooperation mofec has announced this new tax proclamation. Coronavirus live update live statistics and coronavirus news tracking the number of confirmed cases, recovered patients, and death toll by country due to the covid 19 coronavirus from wuhan, china. Property taxes and assessments department of taxation and. Customs under the current legal system of ethiopia, customs duty, tariff and taxes are regulated by a number of laws which include domestic laws and international bilateral treaties to which ethiopia is a part to. This proclamation may be cited as the income tax proclamation no. Item type current location collection call number copy number status date due.
Business income the characterization of an amount as business income is important in both schedular and global income tax systems. 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. Official pdf, 80 pages world bank documents world bank group. 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. Hence importing vehicle into ethiopia is tough, daunting and downright frustrating. The impact of tax reform on private sector development. Ethiopian ministry of revenues mor is the body responsible for collecting revenue from customs duties and domestic taxes. Apr 25, 2016 ethiopia car import tax is easy but information is not available.
It will start with a brief look at the history of income taxes in ethiopia and will go on to look at different. These are important questions and this page provides explanation of withholding tax in ethiopia. Ethiopia personal income tax rate 20062020 data 2021. Legality principle of taxation in ethiopia papers in the ssrn. It is the combination of high local taxes across the board, that causes the states overall local tax ranking to rise to the top. For developing countries drm is the only dependable and long term source of development financing in terms.
The new tax regime, especially vat, is indeed a step learning curve for ngos and the tax authorities as well. Jul 08, 2016 as of the new budget year, which starts at hamle 2008 e. When vat was first proposed as a new source of tax at the beginning of this century, some members of the. If you are a business company intending to open a new business here in ethiopia or an already established business, here is the list of taxes imposed on business companies operating in ethiopia. Personal income tax in ethiopia details written by administrator published on 09 march 2009 category. As of the new budget year, which starts at hamle 2008 e.
Apr 2020 taxation in ethiopia latest ethiopian news. This is direct tax, which a person pays from any income he gets. The results indicate a zero effect of taxation on longterm growth. Performance and prospects of tax collection in ethiopia undp. Mar 08, 20 tax treaties and related documents between the uk and ethiopia. Dutyfree irrigation, mechanization and animals feed. The new income tax law also allowed deductions for business expenditures. This site is like a library, use search box in the widget to get ebook that you want.
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. Pdf in most developing countries, income inequality tends to worsen during. This article argues that the issue of legality principle of taxation is left ajar to derail in ethiopia. 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. Apr 2020 salary income tax calculation in ethiopia latest ethiopian news ethiopian business directory and product catalog. Import tax to ethiopia addis ababa local business listing. A tax is called proportional when the rate of taxation remain constant as the income of the tax payer raises. New income tax rates in ethiopia, salary income tax calculation. Apr 2020 salary income tax calculation in ethiopia. 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.
The new system also amends the tax rate of business vehicles with less than. Basically the ethiopian tax law provides direct and indirect taxes. Employment income is one of the most well known forms of tax in ethiopia. Global mobility services taxation of international. 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. 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. Definitions in this proclamation, the meanings of terms defined in other laws of ethiopia apply unless a different meaning is expressly provided herein. Taxation in ethiopia download ebook pdf, epub, tuebl, mobi. 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 0 horsepower and less was to be reduced from 30 percent down to 5 percent, according significant cost advantage to local car assembles and new car importers. A new bill has been introduced by the finance ministry to amend the nations excise tax law in an effort to standardise taxation. Mar 24, 2009 customs duty, tariff and taxes in ethiopia details written by administrator published on 24 march 2009 category. Chapter 16, taxation of income from business and investment 2 ii. Chapter three will introduce you with vat new area of taxation. In 20089 fiscal year, employment income tax amounting to 1.