The National Bank of Ethiopia regulates the entry and remittance of foreign currencies in Ethiopia through specific directives applicable to both Ethiopians and foreigners. The directives govern the flow of foreign exchange. Virtually all outgoing and some incoming foreign currencies (such as foreign loans) are regulated.
Expatriates employed in Ethiopia may remit, in convertible foreign currency, salaries and other payments accruing from their employment in accordance with the foreign exchange laws of the country.
Where an expatriate employee is assigned to Ethiopia and the employer does not have a presence in Ethiopia, the employee can opt to register for taxes and comply through the self-withholding tax regime.
Under the self-withholding regime, the employee will be required to submit quarterly returns and remit the PAYE on a quarterly basis.
Foreign nationals are not permitted to contribute to social security in Ethiopia.
A business visa must be applied for via the Embassy in one’s home country and must be in place before arrival into Addis Ababa.
It is possible to travel on a business visa and convert it into a work permit.
Foreigners can work in Ethiopia provided that they have obtained a work permit. A work permit is issued for three years but must be renewed every year.
Where an individual is tax equalised whilst on assignment, this generally means that the employer is responsible for the host country taxes and any host country refunds would also be due to the employer.
The individual would only be responsible for the hypothetical taxes that would have been paid on their income had they remained in their home country (and not gone on assignment). As such, it is likely that they would be on a guaranteed net package such that once the hypothetical taxes are deducted from their gross salary, this amount would need to be grossed up for tax purposes to arrive at the chargeable pay in the host country.