Generally, payments for supply of goods (worth ETB 10,000 or more) and provision of services (worth ETB 3,000 or more) to a resident person are subject to WHT at the rate of 2%.
The 2% WHT applies if the supplier provides a valid tax identification number (TIN) and a business licence. If the TIN and the licence are not provided at the time of making the payment, the payer is required to subject the payment to a 30% WHT rate.
On other qualifying payments, WHT is levied at varying rates on a range of payments to residents and non-residents. Resident WHT is a final tax or creditable against CIT.
|Payments||Resident WHT rate (%)||Non-resident WHT rate (%)|
|Repatriation of profits by PE||10|
|Savings deposit with financial institution||5||5|
The table below shows the maximum rates of tax that recipients in those countries with a double taxation treaty (DTT) with Ethiopia can be charged on dividends, interest, and royalties. The table is for guidance only and shows taxation agreements that are currently in force.
|Treaty partner||WHT* (%)|
|Kuwait||0/5 (2)||0/5 (3)||30|
|United Arab Emirates||5||5||0/5|
* Most tax treaties Ethiopia has signed do not include provisions on management fees.
- The 5% rate applies to interest paid on a loan granted by a bank of a contracting state, and the 10% rate applies in other cases.
- The 0% rate applies if the beneficial owner is the government of the other contracting state or a company 49% of the capital of which is owned by the government. The 5% rate applies in other cases.
- The 0% rate applies if the interest is derived by the government of the other contracting state or a company 49% of the capital of which is owned by the government or if the interest is paid on loans guaranteed by the government. The 5% rate applies in other cases.
- The 5% rate applies if the beneficial owner is (i) a company (other than a partnership) that is a resident of the other state and directly holds at least 10% of the capital of the payer company or (ii) a pension fund. The 10% rate applies if the payer company is a resident of Ethiopia. The 15% rate applies if the payer company is a resident of the Netherlands.