- This directive introduces critical practical exceptions, most notably the ability to use a Purchase Voucher to pay a lower 3% withholding rate even when a supplier cannot produce a business license.
To review the official text, you can access the proclamations through platforms like or PolicyVault :
: The baseline legislative framework establishing tax schedules (A, B, C, D, and E), general assessment rules, and early WHT mechanisms.
These rates are general guidelines. Actual rates may be lower if a Double Taxation Agreement (DTA) is in effect between Ethiopia and the recipient's country of residence. withholding tax proclamation in ethiopia pdf best
A trusted, comprehensive online legal repository in Ethiopia that hosts high-quality, searchable PDFs of Proclamation No. 979/2016 alongside its accompanying Regulations No. 410/2017.
Not every individual or business is legally permitted or required to withhold tax. The Federal Income Tax Proclamation explicitly identifies authorized withholding agents, which include:
: The official government portal for all published laws (registration may be required). Actual rates may be lower if a Double
: 30% if the supplier does not provide a Tax Identification Number. Dividends and Profits : 15% (increased from 10%). Undistributed Profits : 15% (increased from 10%). Repatriated Profits Other Income Interest on Deposits : 10% (increased from 5%). : 15% (increased from 5% for residents). Games of Chance : 20% on winnings (increased from 15%). Digital Content Creation : 15% final withholding for non-professional activities. Compliance Requirements Withholding Agents : Must provide a Withholding Tax Certificate to the recipient at the time of payment. Remittance : Taxes must be paid to the Ministry of Revenue within after the end of the month in which the income was paid. Cash Limit : Payments exceeding ETB 30,000
Complete Guide to the New Withholding Tax Proclamation in Ethiopia
All legal entities (bodies), government agencies, and non-profits are required to withhold tax at source from payments to suppliers. 410/2017
Failure to comply with the withholding tax proclamation in Ethiopia may result in penalties, including:
If you want to dive deeper into Ethiopian tax compliance, tell me:
Despite the benefits of withholding tax, there are several challenges and limitations to its implementation in Ethiopia, including:
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