Income Tax Rates in Ethiopia for 2023-2024

In Ethiopia, which is officially known as the Federal Democratic Republic of Ethiopia, the taxation system collects two major categories of tax: direct and indirect. Direct taxes are paid directly to the government by individuals or companies. Sources of income may include employment income, rental of property income and business income. Indirect taxes comprise four types, that is, value-added tax (VAT), customs duty, excise tax, and turnover tax (TOT). The taxation system is administered by the official tax body, the Ethiopian Revenue and Customs Authority (ERCA).

What is income tax? It is the payment made by individuals or companies to the government based on their earnings which may be derived from employment, pensions, investments or other income. 

The Income Tax Proclamation No. 286/2002 provides guidance and support in the form of income tax tables for individuals and businesses. Taxpayers must familiarize themselves with these tax tables and the corresponding tax brackets and tax rates, for effective tax planning and to remain compliant with Ethiopian tax laws.

Here you will learn about:

• headline tax rates
• personal income tax (PIT) rates
• corporate income tax (CIT) rates 
• capital gains tax (CGT) rates
• withholding tax rates
• value-added tax (VAT) rates

Headline Tax Rates in Ethiopia

Personal Income Tax (PIT) Rates in Ethiopia 2022-2024

How do you calculate income tax in Ethiopia? An individual may be taxed either as a resident or a non-resident. While the same rates of tax apply to both, residents are taxed on their worldwide income while non-residents are charged only on Ethiopian-sourced income.

Personal Income Tax Due Dates

Corporate Income Tax Rates in Ethiopia 2023-2024

Corporate income tax (CIT) is applicable at the rate of 30% on the taxable income of a person. The taxable income of a business is the gross income reduced by allowable expenses.

Corporate Income Tax Due Dates

Capital Gains Tax in Ethiopia

For the purpose of Capital Gains Tax (CGT) in Ethiopia, taxable assets are classified Class A and Class B.

Withholding Tax Rates for Residents and Non-Residents in Ethiopia

In general, withholding tax (WHT) is charged at the rate of 2% for payments for: 

• the supply of goods (worth ETB 10,000 or more) and 
• the provision of services (worth ETB 3,000 or more). 

WHT rates may vary for non-resident corporations in treaty countries based on the double taxation treaties signed by the treaty member country. Residents who pay WHT may have this creditable against their corporate income tax (CIT).

Value Added Tax Rates in Ethiopia