The Ethiopian Ministry of Finance issued a Directive to Provide Rules on Transfer Pricing, Directive No. 981/2024, establishing clear rules on transfer pricing. This landmark Directive aims to enhance tax fairness and transparency by ensuring transactions between related parties are conducted at arm’s length, reflecting market conditions. The Directive draws its authority from the Federal...Read More

Capital gains refer to the profits earned from the sale of business assets such as stocks, bonds, or immovable properties. Capital gains taxation is the process of taxing these gains at different rates depending on the type of asset. “Business asset” is defined to mean any asset held or used in the conduct of a...Read More

The Federal Supreme Court of Ethiopia has ruled that using retained earnings to pay up subscribed capital is not considered reinvestment, but rather debt offsetting. This means that dividends used to pay subscribed capital will be subjected to a 10% tax. The Ministry of Revenue’s ability to retroactively impose taxes on shareholders’ reinvested dividends is...Read More

House Sales in Addis Ababa to Be Taxed at Predetermined Prices The Addis Ababa City Government has set a fixed price per square meter for house sales in an effort to collect all revenue generated by the city, in line with recent tax reforms. Under the new valuation, the government will estimate that a house...Read More

Legal Update on the Revised Property Tax Levied by the Addis Ababa City Administration PDF Version Available Here The land tax, sometimes referred to as the property tax, is regarded by the government as one of the most significant sources of revenue for the government and is used to meet the increasing demand for services...Read More

The new Excise Tax Amendment Proclamation No. 1287/2023 became effective as of April 27, 2023 in Ethiopia. The Proclamation abates the excise tax rate for imported new vehicles, stating the earlier rates were “exaggerated.” It also introduces a 5% excise duty on telecommunication services, including internet, voice, and SMS services. As per the Proclamation, this...Read More

Authorities are collecting a 3% social welfare levy on imported goods.   It was back in August 2022 that a new social welfare levy was introduced by the government through the Social Welfare Levy on Imported Goods Regulation No. 519/2022. With a 3% rate, the social welfare levy applies to all goods imported into Ethiopia...Read More

Can a taxpayer present evidence to the tax authority after an Audit has started? Ethiopian tax statutes have not addressed the admissibility of evidence presented to the tax authority (the Ministry of Revenue) once an audit has started. The repealed Financial Bookkeeping Directive No. 152/2019 and the new Directive No. 176/2022 don’t sufficiently cover the...Read More