This proclamation may be cited as the federal income tax. Ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation. Corporate businesses are required to pay 30% flat rate of business income tax. Ethiopia to amend income tax proclamation a new draft bill has. Pdf overview of ethiopian excise tax hcbst 2016 amanuel. For comparison purpose, we have also added the old net salary, pension and income tax caluculation methods. Enter your email address to subscribe to this blog and receive notifications of new posts by email.
Income tax proclamation 2008ec or 2016 web design and app. Ethiopia implicit tax rate on labor, a summary measure that approximates an average. This proclamation may be cited as the income tax amendment proclamation no. Income tax proclamation ethiopian chamber of commerce and. Income from employment received by casual employees who are not regularly employed provided that they do not work for more than one month for the same employer in any twelve. Descriptive statistics result about the 9792016 income tax effect on 1120 employees.
Ketan dalal managing partner, katalyst advisors llp more. Federal income tax proclamation exclusive document from the. In addition to raising revenue, the mor is responsible to protect the society from adverse effects of smuggling. Wheras, it is found essential to make the tax system fair and bring income that. Whereas, it is found essential to make the tax system fair and bring. The tax laws which are expected to come into force any time in 2016 are a new income tax proclamation and the tax administration proclamation.
Long term contracts 1 1nthe case of a person accounting for tax purposes on an accrual basis, the timing of inclusions in and deductions from income relating to a longterm contract of a business of that person shall be accounted for on the basis of the. Whereas, it has become necessary to amend the income tax proclamation n0. 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. Further, a licensee effecting payment to a nonresident subcontractor shall withhold and transfer to the tax authority 10% of the payment. C the ministry of finance and economic cooperation mofec has announced this new tax proclamation. Whereas, the declaration on economic policy of the government of the federal democratic republic of ethiopia inaugurates a new era in social and economic relations and institutions in this country. Income tax proclamation 782002 income tax regulation no. Ethiopia at risk of yellow fever outbreak, who says. Personal income tax rate in ethiopia is expected to reach 35. Similarly, the house approved the revised labor proclamation no. Proclamation means the federal income tax proclamation. Federal income tax proclamation 2016 federal negarit gazette extra ordinary issue proclamation no. It is an important and most significant source of revenue of the government.
Mar 19, 2018 here are the formulas on how to calculate personal employee income tax, pension, gross and net income in ethiopia. Ethiopian ministry of revenues mor is the body responsible for collecting revenue from customs duties and domestic taxes. Salary income tax calculation in ethiopia, pension, gross. The following payments in cash or benefits in kind shall be excluded from computation at income taxable under schedule a of the ethiopian income tax proclamation. New salary income tax in ethiopia web design and app. Because the charities and societies terminology differs from the terminology for csos in the new cso proclamation, it is unclear whether and how ethiopian tax authorities will apply this provision. Government of the federal democratic republic of ethiopia inaugurates a new era in social. These draft proclamations are yet to be published to the public, but some of the changes that they propose include. Constitution of the federal democratic republic of ethiopia, it is hereby proclaimed. Accordingly, the house decided the new income tax proclamation to be effective as of ethiopias new budget year july 1, 2009 the house also approved the newly revised tax administration and business registration and licensing proclamation. The proclamation reduces deductibles from this groups. Whereas, it has became necessary to amend the mining income tax proclamation. It remains to be seen whether the 2016 income tax proclamation will be amended to reflect this change in terminology, or whether new rules will be.
House approves revised vat proclamation ethiopian news agency. No more annual renewal of commercial registration certificate. Ethiopian tax system strikes one as random, disorganized, and incoherent in places. Jul 08, 2016 as of the new budget year, which starts at hamle 2008 e. On income of persons according to schedule b shown below of the income tax proclamation no. On income of bodies share companies, plcs for example thirty percent 30% of taxable income, 2. This proclamation may be cited as the federal income tax proclamation no. It is to be noted that the federal income tax proclamation n9792016, provides, inter alia, that a business income tax rate of 25% is applicable to licensees article 37. Whereas, in consequence of these developments, the existing system of income tax needs to be changed and adjusted to the basic principles of fiscal treatment in a free market economy. If the person is not resident of ethiopia gets his income which has its source in ethiopia also should pay tax. Now therefore, in accordance with article 55 i of the constitution of the federal democratic republic of ethiopia, it is hereby proclaimed as follows.
Ethiopia personal income tax rate 20062020 data 2021. This is direct tax, which a person pays from any income he gets. The number of proclamations, regulations and directives makes it to some extent difficult to understand this area of law. The new income tax in ethiopia new income tax calculations. Employment income tax in ethiopia fikadu and associates law. Income tax is imposed on the income from rental of buildings and collected at the following rates. The effect of the income tax reform 9792016 on employees. A proclamation to approve the state of emergency proclamation no. We are more accustomed to talking if ever about income taxes even then, of specific income taxes, the value added tax, or customs duties than of the ethiopian tax system as a whole. A business organisation acquires a legal personality through registration. Oct 11, 2016 the previous proclamation has now been repealed and replaced by the commercial registration and business licensing proclamation no. Since the jurisprudence of ethiopian taxation is yet to develop fully, this. May 07, 2016 ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation.
The federal income tax proclamation these regulations are issued by the council of ministers pursuant to article 5 of the definitions of powers and duties of the executive organs of the federal democratic republic of ethiopia proclamation no. The new income tax proclamation has employees and low earners at its benefiters. This research investigates the effect of the new income tax proclamation 9792016 on the employees. In the longterm, the ethiopia personal income tax rate is projected to trend around 35. Business profit schedule c tax rates, calculation, rates. In order to impose a heavier tax burden on those employees who earn more, the government uses a progressive employment income tax system. Definitions a term used in this proclamation that is defined in the tax administration proclamation shall have the meaning in the tax administration proclamation unless defined otherwise in this proclamation. Tax on income from employment has 6 bands or groups of rates. House approves newly revised income tax proclamation.
New federal income tax proclamation proclamation no. Whereas, the declaration on economic policy of the. Federal income tax this regulation is issued by the council of ministers pursuant to article 5 of the definitions of powers and duties of the executive organs of the federal democratic republic of ethiopia proclamation no. An ethiopian tax and customs law is characterized by frequent repeal and amendments. The new commercial registration and business licensing.
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