The House of Peoples Representatives Ethiopia ratified a double taxation avoidance agreement reached with China, Egypt, India and Sudan.
The agreement means that business owners that are nationals of these countries or Ethiopian business people operating in their jurisdiction will not be required to pay tax on the same declared income.
Taxable gains in one country will not be taxed twice by the country in which the gains are earned and in the country of residence of the business person.
The tax will either be paid in the country of residence and be exempt in the country in which the gains are made or the country in which the gains are made will deduct the taxation at source as withholding tax and the taxpayer will be given a foreign tax credit in the country of residence showing that the tax has already been paid.The taxpayer will need to be registered in the foreign country as a non resident to take advantage of this scheme thus allowing the tax authorities of the two countries to share information and share investigations on potential tax evasion.
Source: Capital
