Are you seeking to know the latest Ethiopian income tax Rate? Do you know that the Tax rate in Ethiopia might differ from year to year? If you aren’t aware, it is very important that you note when these tax bracket in Ethiopia changes so that you can adjust to the economic situation in Ethiopia.
You may also be asking: How is income tax calculated in Ethiopia? What is the rate of tax on salary How many types of taxes are there in Ethiopia?
Do you know that understanding the Ethiopian income tax calculator and how it works can help you relate properly with how the Ethiopian foreigner’s tax is calculated? The Federal Income tax rate brackets for Ethiopia have been updated in 2022.
In this article, you will get to find out what the tax bracket means, Are taxes in Ethiopia high? the updated version of the 2023 Ethiopian Income tax rate, why tax Brackets do change from year to year, how the changes in the income tax rate in Ethiopia can affect income and expenditures, and lots more. Come on, let’s get started.
Ethiopian Income Tax rate 2023.
In Ethiopia, there are two types of tax. These are direct and indirect tax.
The Ethiopia annual taxable income rate is calculated using the Ethiopia income tax calculator which includes these percentages:
- Personal Income Tax Rate 35 percent
- Corporate Tax Rate 30.00 percent
- Sales Tax Rate 15.00 percent
Individual Taxes
| Income tax from employment | Progressive rates from 0 to 35% |
| Up to ETB 600 | 0% |
| ETB 601- 1,650 | 10% |
| ETB 1,651 – 3,200 | 15% |
| ETB 3,201 – 5,250 | 20% |
| ETB 5,251 – 7,800 | 25% |
| ETB 7,801 – 10,900 | 30% |
| Above ETB 10,900 | 35% |
| Business Income | |
| Up to ETB 7,200 | 0% |
| ETB 7,201 – 19,400 | 10% |
| ETB 19,401 – 38,400 | 15% |
| ETB 38,401 – 63,600 | 20% |
| ETB 63,601 – 93,600 | 25% |
| ETB 93,601 – 130,800 | 30% |
| Above ETB 130,800 | 35% |
| Rental income | 35% |
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How is income tax calculated in Ethiopia
Salary Income Tax = (Gross Salary * Tax Rate) – Deduction.
Employee Pension – Gross Salary x 7%
Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable)
What is VAT tax in Ethiopia?
15%
Value-Added Tax
The standard rate of VAT is 15%. However, exports are zero rated. Registration for VAT is required for persons making taxable transactions greater than ETB 500,000 at the end of any period of 12 calendar months.
What happens if you don’t pay taxes in Ethiopia?
When your tax is overdue, especially over a long period (within 3years maximum), the authorities may likely ome in and obtain the tax with a penalty.
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