Ethiopia legal and accounting and tax considerations in 2024

1. Corporate tax in Ethiopia is imposed at a standard rate of 30%. All legal entities must register for income tax with the Ethiopian Revenue and Customs Authority and obtain a Tax Identification Number (TIN) and file annual tax returns by June of the year following the end of the tax year;
2. The Value Added Tax (VAT) in Ethiopia is levied at a standard rate of 15%. Companies must i) register for VAT with the Revenue Authority ii) obtain a tax Identification Number (TIN) and iii) file tax returns on a monthly basis;
3. A 15% capital gains tax is applicable on building held for office space, business of warehouse. A higher rate of 30% is applicable on gains from transfer of shares;
4. A 10% withholding tax is applicable on i) dividends paid to resident companies and ii) technical services fees paid to non-resident companies in Ethiopia;
5. Other withholding taxes applicable in Ethiopia include i) a 5% withholding tax on royalties paid to both resident and non-resident companies ii) 4% withholding tax on interests on deposits paid to resident companies;
6. Business losses in Ethiopia can be carried forward for a period of up to 3 years, a carryback of losses if however not permitted;
7. Employers in Ethiopia are required by law to submit 9% of their employee’s monthly gross salaries as social security contribution to the pension scheme;
8. Ethiopia has so far entered into double taxation treaties with 12 countries including France, Czech Republic, Russia, South Africa, Israel, Italy among others;
9. Healy Consultants will assist the Client with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparing financial accounting records and iv) preparing forecasts, budgets and performing sensitivity analysis;
10. 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.