Ethiopia

Overview

Last reviewed - 17 November 2023

Ethiopia (officially known as Federal Democratic Republic Ethiopia) is one of Africa’s largest countries. Located in the Horn of Africa, Ethiopia borders Kenya in the south, Sudan in the west, and Djibouti in the east. Addis Ababa is the capital city, and the Port of Djibouti is its main seaport, as Ethiopia is a landlocked country. The official working language is Amharic, and the Ethiopian birr (ETB) is the official currency.

The Federal Government of Ethiopia is led by the Prime Minister, who appoints all the cabinet ministers (Council of Ministers). The Prime Minister is designated by the party that wins a majority of seats in the 547-seat lower House of People’s Representatives (HPR), which is elected for a five-year term. The HPR is the highest authority of the federal government. Ethiopia also has a House of Federation that consists of representatives from the nations, nationalities, and people of Ethiopia and whose main role is to interpret the law.

The 1994 Ethiopia constitution established nine member states of the federal democratic republic. Two more member states have since been established.

Ethiopia is the second most populous country in Africa with an estimated 117 million people in 2021, of which 40% are aged less than 15 years. The World Bank estimates the gross domestic product (GDP) per capita as 944 United States dollars (USD) (in 2021) with a GDP annual growth rate of 3% (2021). Foreign direct investment (net of inflows) constituted 2.2% of GDP (2020), with tax revenue as a percentage of GDP at 6.2% (2020).

Ethiopia is a member of the Common Market for Eastern and Southern Africa (COMESA) comprising 21 member countries and 586 million people, making it the largest market for trade and investment in Africa.

Ethiopia is also home to key international organisations such as the Africa Union (AU) and United Nations Economic Commission for Africa (UNECA).

PwC does not have a permanent office offering tax services in Ethiopia. However, PwC Kenya has a dedicated team responsible for providing consulting services relating to Ethiopia tax issues.

PwC has an extensive network of offices in most countries on the African continent. PwC Kenya provides integrated audit, tax, and advisory services across all industries. Our Tax Services division provides our clients with a broad range of tax services, including market entry (initial set up advisory), mergers and acquisitions, tax structuring advice, tax reviews, tax dispute support, corporate tax planning advisory and compliance, indirect taxes (VAT, customs, and excise) advisory, transfer pricing, personal tax advisory and compliance, reward and remuneration, and regulatory compliance and advisory services.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%)

30

Corporate income tax (CIT) due dates
CIT return due date

The last day of the fourth month after the end of the tax year period.

CIT final payment due date

On or before the last day of the fourth month after the year-end.

CIT estimated payment due dates

NA

Personal income tax (PIT) rates
Headline PIT rate (%)

35

Personal income tax (PIT) due dates
PIT return due date

NA for persons only earning employment income.

On or before 7 November for persons earning an annual gross income of ETB 1,000,000 or more.

On or before 7 September for persons earning an annual gross income of ETB 500,000 but less than ETB 1,000,000.

On or before 6 August for individuals with an annual gross income of less than ETB 500,000.

PIT final payment due date

NA for persons only earning employment income.

On or before 7 November for persons earning an annual gross income of ETB 1,000,000 of more.

On or before 7 September for persons earning an annual gross income of ETB 500,000 but less than ETB 1,000,000.

PIT estimated payment due dates

NA

Value-added tax (VAT) rates
Standard VAT rate (%)

15

Withholding tax (WHT) rates
WHT rates (%) (Dividends/Interest/Royalties)

Resident: 10 / 5 or 10 /5

Non-resident: 10 / 5 or 10 /5

Capital gains tax (CGT) rates
Headline corporate capital gains tax rate (%)

Class A taxable assets relate to immovable assets, and the CGT rate is 15%. Class B taxable assets relate to shares and bonds, which attract CGT at the rate of 30%.

Headline individual capital gains tax rate (%)

Class A taxable assets relate to immovable assets, and the CGT rate is 15%. Class B taxable assets relate to shares and bonds, which attract CGT at the rate of 30%.

Net wealth/worth tax rates
Headline net wealth/worth tax rate (%)

NA

Inheritance and gift tax rates
Headline inheritance tax rate (%)

NA

Headline gift tax rate (%)

NA

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.