Value Added Tax (Registration, Rates, and Exemptions) in Ethiopia

Value Added Tax is a recent addition to the tax regime in Ethiopia. On this page, you can find the rate of VAT in Ethiopia, voluntary and Obligatory registration of VAT in Ethiopia, zero rate VAT in Ethiopia, and VAT on imported goods.

Value Added Tax Proclamation No. 285/2002 or 285/1994 EC DOWNLOAD
VAT Amendment Proclamation No.609/2008 DOWNLOAD
Council of Ministers VAT Regulations No. 79/2002 or 79/1994 EC DOWNLOAD

Here are the highlights of the Value Added Tax Proclamation and Regulation.

Imposition and Rate of Tax

For every taxable transaction by a registered person, every import goods other than an exempt import, and an import of services, 15% of the value or zero rate of the value (as specified below) shall be applied as value added Tax.

Time and value of the Imports of Goods

Time of the Imports of Goods

An import of goods takes place when the goods are entered into the customs declaration.

Value of a Taxable Import

  1. The value of a taxable import is the customs value of the goods, determined in accordance with the customs legislation of Ethiopia, plus the sum of duties and taxes payable upon the import of the goods into Ethiopia, excluding VAT and income tax withholding.
  2. In the case of services considered part of an import under Article 5, Sub-Article (2) of the VAT Proclamation, their value, without VAT, is added to the value as defined list no. 1 above.

Zero Rate Tax

The following taxable transactions shall be charged with VAT at a rate of zero percent.

  1. The export of goods or services to the extent provided in regulation.
  2. The rendering of transportation or other services directly connected with international transport of goods or passengers as well as the supply of lubricants and other consumable technical supplies taken on board for consumption during international flights;
  3. The supply of gold to the National Bank of Ethiopia.
  4. A supply by a registered persons to another registered person is a single transaction of substantially all of the assets of a taxable activity or an independent functioning part of taxable activity as a going concern, provided a notice in writing signed by the transferor and transferee is furnished to the authority within 21 days after the supply taxes place and such notice includes the details of the supply;

Exempt Transactions

For transactions exempted from value added tax, please see Article 8 of the VAT Proclamation and chapter 2 articles 19-23 of the VAT Regulation.

VAT Registration

Obligatory Registration

A person who carries on taxable activity and is not registered is required to file an application for VAT registration with the Authority if

  1. at the end of any period of 12 calendar months the person made, during that period, taxable transactions the total value of which exceeded 500,000 Birr; or
  2. at the beginning of any period of 12 calendar months there are reasonable grounds to expect that the total value of taxable transactions to be made by the person during that period will exceed 500,000 Birr.

Voluntary Registration

A person, who carries on taxable activity and is not required to be registered for VAT, may voluntarily apply to the Authority for such registration, if he regularly is supplying or rendering at least 75% of his goods and services to registered persons.