Ethiopia

Taxable period

The tax period of a person (body) is the accounting year and is the 12-months period ending on the date of the annual financial statements. A person can change the tax period upon seeking approval from the MoR in writing.

The normal taxable period runs from 8 July to 7 July of the following year. However, a different tax period can be allowed, and the base will be computed differently.

Tax returns

Resident companies and PEs of non-resident companies must file a self-assessment tax return annually. The return is accompanied by a tax computation and financial statements, amongst other schedules. The return is due on the last day of the fourth month after the end of the tax year period. Before accepting the tax return, the MoR undertakes a desk review, after which they may request additional information/clarifications.

Payment of tax

Payment for CIT should be made on or before the last day of the fourth month after the year-end.

Tax audit process

Large taxpayers are selected for audit on a regular basis. The MoR tends to audit two tax periods, but this can be extended. Most audits are carried out onsite. In some instances, the MoR may conduct a desk audit of the taxpayer's tax affairs where they note discrepancies on tax returns filed by the taxpayer, anomalies with turnover, or any other situations that justify an audit.

Statute of limitations

Under the Tax Administration Proclamation, a taxpayer is required to retain documents for the longer of the record keeping period specified in the Commercial Code of Ethiopia (CCE) or five years from the date the tax declaration for the tax period was filed with the MoR. According to the CCE, company documents and books must be maintained for ten years. An entity can request the MoR to audit and issue clearance letters at any time.