Introduction Ethiopia has taken a significant step to implement the African Continental Free Trade Area (AfCFTA) by issuing Council of Ministers Regulation No. 574/2025. This new regulation, published on July 14, 2025 in the Federal Negarit Gazette, operationalizes Ethiopia’s tariff reduction commitments under AfCFTA. In practical terms, it establishes how import duties on goods from...Read More

The Income Tax (Amendment) Proclamation No. 1395/2025 has been enacted, revising most provisions of Ethiopia’s Federal Income Tax Proclamation No. 979/2016. This document outlines the main legislative changes from the amendment. Definitions and Scope Income from Digital Content Creation:A new definition covers income generated via online platforms, including advertisements, sponsorships, subscriptions, and digital or physical...Read More

The Ministry of Finance has released a new draft proclamation to amend some provisions of the Income Tax Proclamation No. 979/2016. Below is a summary and analysis of the key proposed changes under the draft Income tax proclamation. Taxpayer Categories: The categories of taxpayers have been redefined, with specific thresholds for Category A and B...Read More

Introduction The Ministry of Revenue has issued a new directive on Tax Administration Penalty Waiving, Directive No. 189/2025 on February 2025. The directive provides a structured framework for the waiver of administrative tax penalties. The directive introduces specific classifications, conditions, and procedures governing penalty waivers, aiming to improve fairness and efficiency in tax administration. Scope...Read More

The Ministry of Finance (“MoF”), with its set vision of having a systematized excise assurance mechanism in the way of digital and physical stamps, has issued a directive on excise stamp management named the “Excise Stamp Management Directive No 1004/2024”. The intent as set in the Directive’s introduction is aimed at prevention of illicit trade,...Read More

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