Withholding tax is a type of tax that is deducted from an individual's or business's income by the payer and remitted to the tax authority. In Ethiopia, withholding tax is governed by the Withholding Tax Proclamation No. 608/2008 and the Income Tax Proclamation No. 282/2002.
Reconciling advance withholding payments during annual tax filings.
Failure to withhold or remit taxes according to the proclamation can lead to penalties, including fines and interest charges. It is critical to stay updated on new proclamations to avoid compliance issues with the Ethiopian Ministry of Revenue. withholding tax proclamation in ethiopia pdf best
The 2025 amendment within a 12-month period. This means:
: Withholding agents (including state organs, non-profits, and bodies with legal personality) must withhold 3% of the gross payment on transactions exceeding the statutory threshold, excluding micro-enterprises. 2. Broadened Digital Economy Capture Withholding tax is a type of tax that
The payer of the income is responsible for withholding tax. The payer is required to:
To ensure compliance with the withholding tax proclamation in Ethiopia, the following best practices are recommended: 282/2002
By following these recommendations, Ethiopia can improve its tax system and increase revenue, which can be used to fund public goods and services.
Interest paid on savings and deposits is typically withheld at 5% , while other forms of commercial interest may incur higher rates. Who Qualifies as a Withholding Agent?