Tax
Schedular income tax, VAT at 15 per cent, and a federal-regional revenue split
The Federal Income Tax Proclamation 979/2016 taxes income on a schedular basis (employment, rental, business, other). VAT runs at 15 per cent under Proclamation 285/2002 as amended, and excise was overhauled in 2020.
Key rules
- Jurisdiction — Federal and regional taxing powers are enumerated separately in the constitution, with some concurrent bases; the Ministry of Revenue administers federal taxes.
Governing law
- Federal Income Tax Proclamation 979/2016 and Regulation 410/2017
- Value Added Tax Proclamation 285/2002as amended by 1157/2019
- Excise Tax Proclamation 1186/2020
- Tax Administration Proclamation 983/2016
In practice
The schedular structure means income is not aggregated into a single taxable total the way it is in most common-law systems: each schedule has its own rates and its own rules, and a taxpayer with employment and rental income is taxed separately on each. Corporate income tax is 30 per cent. The constitutional division of taxing power between the federation and the regions is genuinely operative rather than nominal, and disputes over the base — particularly on business profit tax from enterprises operating across regions — are a recurring feature. Ethiopia's tax-to-GDP ratio is low by regional standards, and the 2016 administration proclamation was aimed at collection and enforcement powers rather than at rates. Excise was substantially restructured in 2020, raising rates on vehicles, alcohol and tobacco.