What is the VAT rate in Ethiopia?

How does VAT work in Ethiopia?

For every taxable transaction by a registered person, every import goods other than an exempt import, and an import of services, 15% of the value or zero rate of the value (as specified below) shall be applied as value added Tax.

What is the difference between TOT and VAT in Ethiopia?

As it stands the TOT rate is 10 percent for services and 2 percent for goods, while there is 15 percent VAT on items sold. … Excise tax on the other hand is 35 to 100 percent.

Who must pay income tax in Ethiopia?

If the person was present for 183 days in Ethiopia within 12 months permanently or other way, the law regards him as an Ethiopian resident and imposes him an obligation of paying tax from any income he gets. So, any employed person should pay tax from his salary according to table A of the proclamation.

What is surtax in Ethiopia?

The surtax is a flat tax of 10 percent on all imports, unless otherwise exempted. The withholding tax is a flat tax of three percent on the CIF price of all imports, unless otherwise exempted.

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How is profit tax calculated in Ethiopia?

As per income tax proclamation no 979/2016, here are the business profit tax rates in Ethiopia.

Schedule “C”

Taxable Business Income Tax rate Deductible Amount
0 – 7,200 ETB Exempt threshold 0%
7,201 – 19,400 10% 720
19,401 – 38,400 15% 1,710
38,401 – 63,600 20% 3,630

How is income tax calculated in Ethiopia?

Here are the formulas on how to calculate personal (employee) income tax, pension, gross and net income in Ethiopia.

  1. Salary Income Tax = (Gross Salary * Tax Rate) – Deduction.
  2. Employee Pension – Gross Salary x 7%
  3. Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable)

What is the maximum tax rate in Ethiopia?

Ethiopia Income Tax Rate for Individual Tax Payers

Annual Rental Income (ETB) Tax Rate %
16800 – 28200 20%
28200 – 42600 25%
42600 – 60000 30%
60000 Above 35%

What triggers the introduction of VAT in Ethiopia?

Ethiopia introduced value added tax (VAT) in the year 2003 as a replacement to sales tax. … This may be caused by factors including poor VAT administration, i.e., the incapacity of tax authorities to implement the attributes of the tax in practice.

How is turnover tax calculated in Ethiopia?

The Turnover Tax shall be: 1) 2% (two percent) on Goods sold locally 2) for Services rendered locally; (a) 2% (two percent) on Contractors, grain mills, tractors and combine-harvesters; (b) 10% (ten percent) on others.

Who is eligible for turnover tax in Ethiopia?

Ethiopian government Proclamation No. 308/2002, TOT is applicable to any resident person whose turnover from business does not exceeds 500,000 during any year of income. Turnover tax is imposed on the supply of taxable goods and services by persons not registered for VAT.

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