Key Highlights of the 2026 Tax Reforms (Proclamation 1395/2026)
: Applies to payments exceeding ETB 20,000 per contract.
These rates are general guidelines. Actual rates may be lower if a Double Taxation Agreement (DTA) is in effect between Ethiopia and the recipient's country of residence. withholding tax proclamation in ethiopia pdf best
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: Employers deduct income tax from employees' gross pay based on progressive rates. Key Highlights of the 2026 Tax Reforms (Proclamation
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Regional states may have their own implementing regulations, but the federal proclamation is the benchmark. : : Employers deduct income tax from employees'
Withholding tax in Ethiopia has undergone major changes with the enactment of the , which updates several provisions from the original Proclamation No. 979/2016 . These reforms significantly impact rates for dividends, services, and digital income. Current Withholding Tax Rates (2025/2026)
. These laws establish the rates, thresholds, and obligations for both domestic and international transactions. ✅ Key Rates and Thresholds (2025 Updates)
To combat tax evasion and ensure a baseline contribution, the 2025 amendment introduced a on annual turnover. This applies if a taxpayer's declared business income tax falls below this 2.5% threshold. Notably, this tax can be credited against future liabilities for up to five years. Strategic Implications for Compliance