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

New Salary Tax Rates in Ethiopia Employment Salary Income Building Rental Business Profit Company Tax Rate Revisions in Ethiopia 2016 2008 ECUpdate - According to Fana Broadcasting, The newly amended proclamation has been accepted by the House of People’s Representatives on July 26, 2016.

There were a few changes to what was announced on June 08, 2016. For example, the 0 - 585 range was changed to 0 - 600, 586 - 1,650 was changed to 601 - 1,650, 1,651 - 3,145 was changed to 1,651, - 3,200, etc...
The new taxation will be effective as of Hamle 1, 2008 or July 08, 2016.

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

Example

If 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 = 142.50

Income Tax = (2,000 Birr x 15%) - 142.50 Birr

Income Tax = 300 Birr - 142.50 = 157.50 Birr

Employee Pension = 2,000 Birr x 7% = 140 Birr

Employee Net Income = 2,000 Birr - 157.50 - 140 = 1702.50 Birr

Net Income = 1,702.50 Birr

Example

If 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 = 117.50

Income Tax = (2,000 Birr x 20%) - 117.50 Birr

Income Tax = 400 Birr - 117.50 = 282.50 Birr

Employee Pension = 2,000 Birr x 7% = 140 Birr

Employee Net Income = 2,000 Birr - 282.50 - 140 = 1,577.50 Birr

Net 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. 

Tags: Taxation in Ethiopia,, Salary Income Tax Calculation in Ethiopia,, Business Profit Tax in Ethiopia,, Salary Income Tax in Ethiopia,, Building or House Rental Taxation in Ethiopia,, Building and House Rental Tax Calculation in Ethiopia,

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