New business income tax rate in ethiopia. Tax brackets were reduced from seven to six tiers,...
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New business income tax rate in ethiopia. Tax brackets were reduced from seven to six tiers, with rates ranging from 15% (the new lowest rate, up from 10%) to 35% at the highest bracket (monthly income exceeding approximately ETB 14,000). Ethiopia’s revised Income Tax Proclamation took effect as of July 2025, introducing major changes aimed at improving tax equity, transparency, and digital compliance. Corporate income tax (CIT) is applicable at the rate of 30% on adjusted business income (taxable income) of a person. permanent establishment of the non-resident in Ethiopia Home / Ethiopia Taxes / Ethiopia Taxes Ethiopia Taxation: A Guide for Foreign Investors (2025) Understanding the Ethiopian tax system is crucial for foreign investors seeking to establish and . Tax Rate: You pay tax according to the progressive The amendment broadens the scope of taxable digital services, raises thresholds for employment, rental and business income, and introduces new taxpayer requirements, affecting both Increased tax rates for dividends, undistributed profits, and several withholding taxes, which have risen from 10% to 15%. The taxable income of a business for tax purposes is the gross income Tax Calculation: Your tax is calculated on your net profit your gross income minus all your allowed business expenses and deductions. A strict new cash transaction limit of ETB 50,000, with significant The Amendment Proclamation introduces new tax rates and brackets, as well as new rules for tax collection. 2/ A non- resident who derives an Ethiopian source dividend that is attributable to a income tax ^t a rate of 15% of the gross amount of the dividend. As per income tax proclamation no 979/2016, here are the business profit tax rates in Ethiopia. Elimination of Presumptive business taxes The Amendment To improve compliance with the business income tax, the new reform introduces a Minimum Alternative Tax (MAT) at the rate of 2. 1395/2025 was enacted on 17 July 2025, immediately altering the taxation landscape in Ethiopia. The proposal includes It is worth noting here that no changes have been made to corporate income tax, which stands at 30%. Understanding the New Business Income Tax Categories Proclamation 1395/2025 The biggest change for sole proprietors in Ethiopia is how the government now classifies your business. No amendments were made to this rate, but advance income tax payment is introduced as mentioned in the below sections. Corporate businesses are required to pay 30% flat rate The Income Tax Proclamation (Amendment) No. Learn how these payroll changes Now, businesses that derive income from any digital service provided in Ethiopia will be subject to income tax at a rate not exceeding 5% of their revenue, to be determined by the Council of Executive Summary: Ethiopian Income Tax Overhaul 2025 Ethiopia has enacted a significant overhaul of its income tax system with the new 2025 Tax Tables [Quick Links] Related Calculators Ethiopia Personal Income Tax Tables in 2025 The Income tax rates and personal allowances in Ethiopia are Draft investment regulations Ethiopia has drafted a new investment-incentive regulation that introduces changes to corporate tax policies and related benefits. Ethiopia has introduced new income tax rules in 2025 with updated salary tax brackets, a higher tax-free threshold, and a new Minimum Alternative Tax. 5% of turnover. These changes introduce significant compliance obligations for businesses The corporate income tax rate remains unchanged at 30%.
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