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Turnover Tax - Rate, Computation, Obligation and Exemption - in Ethiopia


Tax Laws Tax Regulations

Turnover Tax (Rate, Computation, Obligation and Exemption) in Ethiopia

Fast and Easy Facts on Ethiopian TOT Turnover Tax

Value Added Tax (VAT) Income TaxTurnover Tax (TOT)Withholding TaxExcise TaxCapital Gains TaxRental Income TaxTax on Royalty PaymentsSur-Tax on GoodsStamp Duty Tax


Ethiopian Revenue & Customs Authority (ERCA)


1. Income Tax Proclamation No. 286/2002 or 286/1994 (according to the Ethiopian calendar - EC) and its amendment Proclamation No. 608/2008.

Points of Interest of the Turnover Tax Proclamation, Regulation


The Rate of Turnover Tax and Exemption


Note: If VAT is charged over goods or services, then TOT will not be charged. Filing of Tax Return and Payment of TOT can be done either at the end of each Ethiopian calendar month or once in at the end of every quarterly year of the tax year (that is every three months starting from 8th of July (Hamle 1).


Rate of Turnover Tax


The Turnover Tax shall be:

(two percent) on Goods sold locally

For services rendered locally:

2% (two percent) on contractor, grain mills, tractors and combine-harvesters;

10% (ten percent) on others.


Base of Computation of the Turnover Tax


Base of computation of the Turnover tax shall be the gross receipt in respect of goods supplied or Services rendered

Obligation to Collect and Transfer the Turnover Tax

A person who sells goods and services has the obligation to collect the Turnover Tax from the buyer and transfer it to the Tax Authority. Hence, the seller is principally accountable for the payment of the tax.


Exemption


1. The following shall be exempted from Turnover Tax: The Minister of Finance and Economic Development may, by directive, exempt other goods and services.

The sale or transfer of a dwelling use for a minimum of two years, or the lease of a dwelling:

The rendering of financial services;

The supply of national or foreign currency (except for that used for numismatic purposes) and of securities;

The rendering by religious organizations of religious or other related services:

The supply of prescription drugs specified in directives issued by the relevant government agency, and the rendering of medical services;

The rendering of educational services provided by educational institutions, as well as child care services for children at pre-school institutions:

The supply of goods and rendering of services in the form of humanitarian aid:

The supply of electricity, kerosene, and water;

The provision of transport;

Permits and license fees;

The supply of goods or services by a workshop employing disabled individuals if more than 60%of the employees are disabled; and

The supply of books.

2. The Minister of Revenue may, by directive, determine the scope and manner of exemptions provided for in this Article.


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