Power of taxation in Ethiopia is given to the federal government, state government or concurrently for both central (federal) and state government.
Article 96 of the FDRE Constitution provides Federal Power of Taxation:
- The Federal Government shall levy and collect custom duties, taxes and other charges on imports and exports.
- It shall levy and collect income tax on employees of the Federal Government and international organizations.
- It shall levy and collect income, profit, sales and excise taxes on enterprises owned by the Federal Government.
- It shall tax the income and winnings of national lotteries and other games of chance.
- It shall levy and collect taxes on the income of air, rail and sea transport services.
- It shall levy and collect taxes on income of houses and properties owned by the Federal Government; it shall fix rents.
- It shall determine and collect fees and charges relating to licenses issued and services rendered by organs of the Federal Government.
- It shall levy and collect taxes on monopolies.
- It shall levy and collect Federal stamp duties.
Article 97 of the FDRE Constitution states State Power of Taxation:
- States shall levy and collect income taxes on employees of the State and of private enterprises.
- States shall determine and collect fees for land usufractuary rights.
- States shall levy and collect taxes on the incomes of private farmers and farmers incorporated in cooperative associations.
- States shall levy and collect profit and sales taxes on individual traders carrying out a business within their territory.
- States shall levy and collect taxes on income from transport services rendered on waters within their territory.
- They shall levy and collect taxes on income derived from private houses and other properties within the State. They shall collect rent on houses and other properties they own.
- States shall levy and collect profit, sales, excise and personal income taxes on income of enterprises owned by the States.
- Consistent with the provisions sub-Article 3 of Article 98, States shall levy and collect taxes on income derived from mining operations, and royalties and land rentals on such operations.
- They shall determine and collect fees and charges relating to licenses issued and services rendered by State organs.
- They shall fix and collect royalty for use of forest resources.
Article 98 of the FDRE Constitution provides cases of concurrent power of taxation:
- The Federal Government and the States shall jointly levy and collect profit, sales, excise and personal income taxes on enterprises they jointly establish.
- They shall jointly levy and collect taxes on the profits of companies and on dividends due to shareholders,
- They shall jointly levy and collect taxes on incomes derived from large-scale mining and all petroleum and gas operations, and royalties on such operations.
Article 99 of the FDRE Constitution has provided the case of undesignated power of taxation:
The House of the Federation and the House of Peoples' Representatives shall, in a joint session, determine by a two thirds majority vote on the exercise of powers of taxation which have not been 'specifically provided for in the Constitution. Accordingly levying and collection (taking the income) of VAT has been given to the Federal Government.
