Ethiopia’s Ministry of Finance and Economic Cooperation (MoFEC) disclosed a draft amendment bill for the income tax regime.

According to the Legal Service Director at the Ministry, Wasihun Abate, the amendment mainly reduces tax on income from employment. The decision to reduce the tax rate took into account the earnings of the society, he added.

Business community, foreign companies and professional associations would discuss on the draft bill on June 9 – 10, 2016, Wasihun explained.

The federal legislature, House of Peoples’ Representatives (HPR), is expected to pass the proclamation until July 7, 2016 and the amendment will become effective as of July 8, 2016.

According to Fana Broadcasting Corporate (FBC), the amended income tax rate for income generated from employment will be as follows:

Employment income per month         Income tax rate
0 – 585                                              0%
586 – 1,650                                       0%
1651 – 3145                                      15%
3,146 - 5,195                                     20%
5,196 - 7,758                                     25%
7,759 - 10,833                                   30%
10,834 and above                             35%

The draft proclamation also includes tax on rented houses and enterprises. According to FBC, the amendment is going to be as follows:

Rent income per month            Income tax rate
0 – 7,000                                   0%
7,001 – 19,300                         10%
19,301 - 37,750                        15%
37,751 - 62,350                         20%
62,351 - 93,100                         25%
93,101 - 130,000                       30%
130,001 and above                    35%

Source: Fana Broadcasting Corporate