KEY POINTS
- The Constitution divides taxing power between the Federal Government and the states (Articles 96 to 99).
- The Federal Income Tax Proclamation No. 979/2016 groups taxable income into schedules, such as employment, rental, business and other income.
- The Value Added Tax Proclamation No. 1341/2024 repealed the earlier VAT Proclamation No. 285/2002.
- The Federal Tax Administration Proclamation No. 983/2016 sets the procedure: registration, taxpayer identification numbers, declarations, assessments, collection, disputes, rulings and penalties.
How Ethiopian tax law is organised
Tax law in Ethiopia works on two levels. Articles 96 to 99 of the Constitution list the taxes the Federal Government may levy, those the states may levy, and those they share. Regional states therefore have their own tax laws alongside the federal proclamations described here.
Each federal tax has its own proclamation, and a separate tax administration proclamation governs the procedure for all of them. Council of Ministers regulations and directives from the tax authority implement the proclamations, so a complete answer usually draws on more than one instrument.
Income tax
The Federal Income Tax Proclamation No. 979/2016 taxes income by schedule: employment income, income from renting buildings, business income and certain other income are dealt with separately, and exempt income is listed apart. The proclamation has been amended since it was enacted, and rates and thresholds are among the provisions that change, so always work from the latest amending text.
VAT and excise tax
Value added tax is governed by the Value Added Tax Proclamation No. 1341/2024, which expressly repealed the Value Added Tax Proclamation No. 285/2002. Excise tax on specified goods is governed by the Excise Tax Proclamation No. 1186/2020, which has itself been amended.
Tax procedure, disputes and penalties
The Federal Tax Administration Proclamation No. 983/2016 is the procedural backbone. Its parts cover registration and taxpayer identification numbers, tax representatives, records and documents, declarations, assessments, payment and recovery of tax, refunds, tax disputes, public and private rulings, the Tax Appeal Commission, the licensing of tax agents, and administrative penalties and tax offences.
Frequently asked questions
What are the main tax laws in Ethiopia?
At federal level: the Federal Income Tax Proclamation No. 979/2016, the Value Added Tax Proclamation No. 1341/2024, the Excise Tax Proclamation No. 1186/2020 and the Federal Tax Administration Proclamation No. 983/2016, together with their amendments, regulations and directives.
Do regional states in Ethiopia have their own taxes?
Yes. Articles 96 to 99 of the Constitution divide taxing power between the Federal Government and the states, and give some taxes to both. Check the relevant regional law as well as the federal one.
Which law replaced Ethiopia’s 2002 VAT Proclamation?
The Value Added Tax Proclamation No. 1341/2024. Its own text repeals the Value Added Tax Proclamation No. 285/2002.
Where do I find current Ethiopian tax rates?
Rates and thresholds are set in the tax proclamations, their amendments and implementing regulations, and they change over time. Read the most recent amending text rather than a summary. jLaw can locate the provision and show you the passage it relies on.
This page is general legal information about Ethiopian law, prepared from the published texts it cites. It is not legal advice and does not confirm whether a provision is still in force or has been amended. Federal laws are published in the Federal Negarit Gazeta in Amharic and English, and the Amharic version prevails where they differ. Consult a qualified Ethiopian lawyer about your situation.