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• New Tax Rate in Ethiopia - Employment, Salary, Business, Building Rental Tax Rate Revision in Ethiopia

# New Tax Rate in Ethiopia - Employment, Salary, Business, Building Rental Tax Rate Revision in Ethiopia

The newly amended proclamation reduced the taxation of income from employees and took into account the earnings of the society, said Wasihun Abate, Legal Service Director at MoFEC.

See the tax rate below:

 Employment income (Per Month-birr) Income tax payable 0-600 0% 601-1,650 10% 1,651-3,200 15% 3,201-5,250 20% 5,251-7,800 25% 7,801-10,900 30% Over10,900 35%

Similarly, the ministry revealed tax payable on rented houses and enterprises.

 Taxable Income from rental (Per year-birr) Income tax payable 0 - 7,200 0% 7,201 - 19,800 10% 19,801 - 38,400 15% 38,401 - 63,000 20% 63,001 - 93,600 25% 93,601 - 130,800 30% Over 130,800 35%

### Sample Calculation

 Calculation Using The New Tax Rates Calculation Using The Old Tax Rates ExampleIf the salary of an employee is 2,000 Birr.By referring to the above table, we can see that 2,000 birr falls in the No. 4 row. So, Tax Rate = 15% and deduction = 142.50Income Tax = (2,000 Birr x 15%) - 142.50 BirrIncome Tax = 300 Birr - 142.50 = 157.50 BirrEmployee Pension = 2,000 Birr x 7% = 140 BirrEmployee Net Income = 2,000 Birr - 157.50 - 140 = 1702.50 BirrNet Income = 1,702.50 Birr ExampleIf the salary of an employee is 2,000 Birr.By referring to the above table, we can see that 2,000 birr falls in the No. 4 row. So, Tax Rate = 20% and deduction = 117.50Income Tax = (2,000 Birr x 20%) - 117.50 BirrIncome Tax = 400 Birr - 117.50 = 282.50 BirrEmployee Pension = 2,000 Birr x 7% = 140 BirrEmployee Net Income = 2,000 Birr - 282.50 - 140 = 1,577.50 BirrNet Income = 1,577.50 Birr

So, for a person earning 2,000 birr per month, the new ethiopian taxation system will increase his/her net income by almost 125 birr.