The principal types of taxes are profit tax on business (both incorporated and un-incorporated), sales tax, excise tax, customs duties, income tax from employment. There are
also other types of taxes such as income tax from dividend, royalties and stamp duties.
Corporate Income Tax
The corporate income tax in Ethiopia is 35 percent.
Sales and Excise Taxes
Sales and excise tax Proclamation No. 68/1993 sets a legal basis for imposition of sales and excise taxes on
Sales Tax Rates
The rate of sales tax is 4 percent for selected list of agricultural and essential goods such as live animals and products vegetables and fruits and unprocessed cereals food, pharmaceuticals,
books and printed materials, hides and skins, and cotton when either produced locally or imported while it is 12 percent for all other products. Sales tax is paid by the producer, importer or the person rendering
services as the case may be.
Excise tax
Excise tax is levied on selected items when produced locally or imported from abroad. The tax rate ranges from 10 in the case of textile and television broadcasting
receiver to 200 percent in case of all types of alcohol. Excise tax is payable on:
a) goods produced locally by the producer within a period of 3 days from the date of production;
b) goods imported from abroad by the importer at the time of clearing the goods from the customs area.
Customs Duties
Customs duties are payable on imports by all persons and entities which have no duty free privileges. The main regulation on customs duty is proclamation No.
38/1993 which introduced a harmonized system of classification of goods and the rate of customs duty ranges from 0 - 50%.
Income Tax from Employment
Personal income tax is payable as per Proc. No. 107/1994.
According to the said law, the first one hundred twenty Birr /120 Birr/ monthly personal income is exempted from payment of income tax. For monthly income of Birr 121 and above the marginal tax rates range from 10
percent to 50 percent with 6 income brackets as shown hereunder.
