Accounting and tax

Eritrea accounting and tax planning

  1. The standard corporate tax rate levied on all net profits derived from Eritrea is 34% (which includes 30% income tax and 4% municipal tax). Companies engaged in the petroleum business pay tax at the rate of 35%. Tax returns are filed yearly and the fiscal year runs January 1st to December 31st and taxes must be filed by the 31st of March of the subsequent fiscal year;
  2. Branches pay a corporate tax rate of 34%. There is no specific branch remittance tax in Eritrea;
  3. There is no VAT in Eritrea but a general service tax is levied on provision of goods and services at variable rates of between 5% to 12%;
  4. Capital gains are subject to the standard corporate tax rate of 34%;
  5. Withholding tax levied on i) interest paid to non-residents at the rate of 10% ii) royalties paid to non-residents at the rate of 10% and royalties paid to mining companies at the rate of 5% and iii) management and technical services fees paid to non-residents at the rate of 10%. Withholding tax is not levied on dividends;
  6. Losses may be carried forward for a period of five years; a carryback is however not allowed;
  7. Employers must submit to the relevant authorities, municipality tax contributions on behalf of their employees at the rate of 4%. Eritrea has not yet introduced a social security system;
  8. Eritrea has exchange controls whereby the Bank of Eritrea may allocate foreign exchange to investors, but priority is given to exporters. However, entities may repatriate funds and profits from the country. Investors may open and operate foreign exchange accounts in Eritrea and use such foreign exchange for the operation of their investments. Investors may also retain 100% of their export earnings in foreign currency in Eritrea;
  9. Eritrea has not concluded any double tax avoidance treaties;
  10. Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
  11. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

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For additional information on our accounting and legal services in Eritrea, please contact our in-house country expert, Ms. Jaya Thevathasan, directly:
Consultant at HC - jaya
  • Ms. Jaya Thevathasan
  • Client Relationship Officer
  • Contact me!