Ethiopian income tax proclamation 2016 pdf

The direct and indirect taxes applicable in ethiopia. Below is a schedule that specifies tax bands and their tax rates. Federal income tax proclamation exclusive document. Ethiopian tax system strikes one as random, disorganized, and incoherent in places. A study on assessment of tax administration system on. This proclamation may be cited as the income tax amendment proclamation no. So an individual foreigner, who lives in ethiopia for more than 183 days in a period of twelve calendar months, whether continuously or intermittently, is regarded as being resident for the entire tax period and is taxed in accordance with the provisions of income tax proclamation no. Pdf analysis of tax compliance and its determinants.

Ethiopia to amend income tax proclamation a new draft bill has been prepared to amend the existing income tax proclamation. List of proclamations and regulations enacted in the. Both individuals and business entities can deduct up to 10 percent of their taxable income that is donated to ethiopian charities and societies income tax proclamation article 24. The new income tax proclamation has employees and low earners at its benefiters. An ethiopian tax and customs law is characterized by frequent repeal and amendments. Ethiopia implicit tax rate on labor, a summary measure that approximates an average effective. New salary income tax in ethiopia as of the new budget year, which starts at hamle 2008 e. In order to impose a heavier tax burden on those employees who earn more, the government uses a progressive employment income tax system. List of proclamations and regulations enacted in the period between august 2016 and december 2017. Whereas, it is found essential to make the tax system fair and bring. 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. Ketan dalal managing partner, katalyst advisors llp more. House approves newly revised income tax proclamation.

List of proclamations and regulations enacted in the period. Federal tax administration proclamation 1 proclamation no. Corporate businesses are required to pay 30% flat rate of business income tax. Wheras, it is found essential to make the tax system fair and bring income that. Schedule a all incomes from employment shall be taxed based on this schedule. Uncorporate or individual businesses are taxed in accordance with the following schedule below. Federal democratic republic of ethiopia ethiopian revenue and customs authority biometric data capturing procedure income tax proclamation no. 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.

Here are the formulas on how to calculate personal employee income tax, pension, gross and net income in ethiopia. The present study focuses on assessment of tax administration system on. Descriptive statistics result about the 9792016 income tax effect on 1120 employees. According to the above tax rate schedule, employees who earn up to 150 birr a month are below the threshold for paying employment income. This proclamation may be cited as the tax administration proclamation no. Whereas, it has became necessary to amend the mining income tax proclamation. C both the amharic and english versions of the income tax proclamation have been enacted. For comparison purpose, we have also added the old net salary, pension and income tax caluculation methods.

Definitions for the purpose of this proclamation, unless the context otherwise requires. However, it is only the amharic version of the federal tax administration proclamation that has been enacted. On income of persons according to schedule b shown below of. Pdf employment income tax in ethiopia amanuel tsegaye. As per the report, after 2002 income tax proclamation, there was no change and amendments for. Whereas, it has become necessary to amend the income tax proclamation n0. These regulations may be cited as the income tax pay as you earn amendment regulations 2016 and come into force on 6th april 2016.

House approves revised vat proclamation ethiopian news. Whereas, the declaration on economic policy of the. Business profit schedule c tax rates, calculation, rates. Pdf on jan 1, 2019, wondimu sebhat and others published analysis of tax compliance and its determinants. Four schedules of income a income from employment, b income from rental of buildings, c. This proclamation may be cited as the value added tax proclamation no. Article 6 states the sources of income subject to tax under proclamation 2862002. Excise tax proclamation no 3072002 or 3071994 ec and its amendment. The effect of the income tax reform 9792016 on employees. Fiscal evasion with respect to taxes on income ratification proclamation. Accordingly the income tax proclamation has introduced four kinds of schedules. 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. Setting up your business in ethiopia issues to consider. Policy, law and practice, pretoria, south africa wollela abehodie yesegat addis ababa university october 2016.

Council of ministers federal income tax regulation. On income of bodies share companies, plcs for example thirty percent 30% of taxable income, 2. 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. Income tax proclamation 782002 part iii tax payable under schedule b 5. Implications for revenue performance and refund preliminary findings paper prepared for the symposium on vat in developing countries.

The number of proclamations, regulations and directives makes it to some extent difficult to understand this area of law. Now therefore, in accordance with article 55 i of the constitution of the federal democratic republic of ethiopia, it is hereby proclaimed as follows. Further, a licensee effecting payment to a nonresident subcontractor shall withhold and. Since the jurisprudence of ethiopian taxation is yet to develop fully, this. Federal income tax proclamation 2016 federal negarit gazette extra ordinary issue proclamation no. New federal income tax proclamation proclamation no. The income tax pay as you earn amendment regulations. Ethiopian ministry of revenues mor is the body responsible for collecting revenue from customs duties and domestic taxes.

It seizes and takes legal action on the people and vehicles involved in the act of smuggling while it facilitates the legitimate movement of goods and people. Based on this fact the researcher wants to assess tax administration system on category b tax payer after. Evidence from kaffa, bench maji and sheka zones category b. Taxable income pursuant to part iii of the proclamation, taxable income from sources chargeable under schedule b shall be calculated as follows. This proclamation may be cited as the federal tax administration proclamation no.

Government of the federal democratic republic of ethiopia. Similarly, the house approved the revised labor proclamation no. Coronavirus counter with new cases, historical data, and info. Definitions in the tax laws including this proclamation, unless the context otherwise requires. 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. This proclamation may be cited as the federal income tax proclamation no. C the ministry of finance and economic cooperation mofec has announced this new tax proclamation. Tax on income from employment has 6 bands or groups of rates. Ethiopian source income except to the extent that it is attributable to a business. Ethiopian tax laws who is required to pay an income tax. Income tax is imposed on the income from rental of buildings and collected at the following rates. Oil and gas taxation in ethiopia deloitte united states. There are specific tax rules, albeit brief, applicable to upstream petroleum activities set out in the. In addition to raising revenue, the mor is responsible to protect the society from adverse effects of smuggling.

The new income tax in ethiopia new income tax calculations. As per income tax proclamation no 9792016, here are the business profit tax rates in ethiopia. Salary income tax calculation in ethiopia, pension, gross. These draft proclamations are yet to be published to the public, but some of the changes that they propose include. Income tax proclamation ethiopian chamber of commerce and. The employees income tax system divides taxable income into different tax bands. A proclamation to approve the state of emergency proclamation no. Now, therefore, in accordance with article 55 1 and 11 of the constitution of the federal democratic republic of ethiopia it is hereby proclaimed as follows. The ethiopian income tax system follows a scheduler approach as a result income from different sources shall be taxed and treated separately.

These are a range of income bands with different tax rates. 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. Definitions in the tax laws i ncluding this proclamation, unless the context otherwise requires. Federal democratic republic of biometric data capturing. 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.