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More details on taxation and custons please find
on the webpage
of the Ministry of Revenue
www.mor.gov.et
TAXATION
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For personal taxes, the first 120
birr ($15) earned per month is tax-free. Salaries and wages above 120 birr
are taxed progressively at rates of 10% to 40% (the latter applies at 3001
birr ($375) per month and above). Transportation allowances, medical
treatment expenses, travelling expenses and insurance premiums provided for
in the employment contract are deductible insofar as they constitute a
reasonable proportion of total income. Expatriates are subject to personal
income tax on income derived from local sources.
For sales tax, the rate of sales
tax is 4% for selected lists of agricultural and essential goods, such as
live animals and products, vegetables, fruits, printed materials and hides.
A levy of 12% is charged on all other products.
Excise tax is levied on selected
items when produced locally or imported from abroad. The tax rate ranges
from 10% in the case of textiles and television broadcasting receivers to
50% in the case of alcohol. Excise tax is payable on goods produced locally
by the producer within a period of three days from the date of production,
and on goods imported from abroad by the importer at the time of clearing
the goods from the customs net.
Customs duties are 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 harmonised system of classification of goods. The rate of
customs duty ranges from 0 to 40%.
There are no taxes on export products (except
coffee) or services from Ethiopia.
Ethiopia has treaties with Italy and Kuwait to
avoid double taxation, and discussions on similar treaties are under way
with several other countries. Intra-company charges, involving the local
subsidiary and the parent company abroad, are allowed, provided they are
incurred through arm’s-length transactions.
Incentives
To encourage investment, the Ethiopian government has developed a range
of incentives for investors engaged in new enterprises and expansion across
a range of sectors. The incentives include:
Customs Import Duty
A 100% exemption from the payment of import customs duties and other
taxes levied on imports is granted to all investment capital goods, such as
plant, machinery and equipment, as well as spare parts worth up to 15% of
the value of the imported investment capital goods, provided that the goods
are not produced and not available locally in comparable quantity, quality
and price.
Investment capital goods imported without the
payment of import customs duties and other taxes levied on imports may be
transferred to another investor enjoying similar privileges.
Exemptions from customs duties or other taxes
levied on imports are granted for raw materials necessary for the production
of export goods. Taxes and duties paid on raw materials are drawn back at
the time of export of finished products. The duty drawback scheme applies to
all taxes at the time of import and to those paid on local purchases.
Income Tax Holiday
As illustrated in Table 14, any income derived from an approved new
investment (made pursuant to Proclamation No. 37/1996) is exempted from
income tax for periods ranging from 1 to 5 years, depending upon the
priority of investment activity and the location in which the investment is
undertaken.
Income derived from an expansion whose invested
capital is in accordance with the Council of Ministers Regulation No.
7/1996, Article 6 (2), is exempted from income tax for a period of two years
for pioneer activities and one year for promoted activities.
Research & Development Incentives
An investor is entitled to deduct expenditure on research,
improvement studies or training from taxable income.
Remittance of Capital
Any remittance made by a foreign investor from the proceeds of the sale
or transfer of shares or assets upon the liquidation or winding up of an
enterprise is exempted from the payment of tax.
Losses carried forward
Business enterprises that suffer losses during the tax holiday
period can carry forward such losses following the expiry of the exemption
period under the conditions specified in Table 15.
Exemption from import custom duties
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www.ethioinvestment.org\regulation7\two.htm
 external
webpage
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Pionneer investment activities
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Promoted investment activities
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Expansion and upgrading of existing enterprise
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Minimum capital
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Commencement of period of exemption of income
tax
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Carry forward of losses
Income Tax Proclamation
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Please
find in the following the new Income Tax Proclamation from July 2002.
Hereafter we document the most important topics. The entire Proclamation
text with 35 pages is to long for this webpage. So, please find it as
Winword.doc for download here below.
Income Tax Proclamation -
Contents:
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Topic 1: Definitions
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Topic 4: Obligation to pay
income tax
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T 6: Source of income
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T 8: Schedules of income
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T 11: Tax rate schedule A
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T 15: Tax rate schedule B
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T 19: Tax rate schedule C
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T 38: Powers and duties of
tax authority
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T 40: Code of conduct for
tax authority employees
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T 45: Business licences
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T 48: Record keeping
requirement
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T 52: Collection of tax on
imports
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T 58-63: Tax accounting
principles
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T 64-71: Declaration and
assessment
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T 74-76: Payment
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T 77-83: Collection
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T 86-91: Penalties
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T 92: Appeal against
penalties
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T 94-98 Criminal
offences
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T 99: Offences by tax
authority employees
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T 100: Unauthorized tax
collection
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T 104-117: Appeal procedures
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Income
Tax Proclamation
is
availabe for 5 Birr at the Birhaneas Selam Printing Press, Addis
Ababa, in Amharic and English
|
More details on taxation and custons please find
on the webpage of the Ministry of Revenue
www.mor.gov.et
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