Ethiopia Corporate Income Tax

Corporate income tax rates and base

Resident companies pay corporate income tax at a flat 30% on net business profit; non-resident companies are taxed on Ethiopian-source income. The 2025 amendment introduced a minimum alternative tax, a tax on undistributed profits, and higher dividend/interest withholding rates.

• Standard corporate income tax rate — 30 % (Income Tax Proclamation No. 979/2016)
• Tax base — Net business profit (gross income less deductible expenses) per the financial accounts as adjusted for tax (Income Tax Proclamation No. 979/2016)
• Mining / petroleum sector rate — Mining 25%; petroleum operations subject to separate sector rules % ((approx — confirm current sector rate)) (Mining Income Tax Proclamation)
• Minimum Alternative Tax (MAT) — 2.5% of annual turnover where the declared tax liability falls below that amount; creditable against future tax % (Income Tax (Amendment) Proclamation No. 1395/2025)
• Tax on undistributed profits — 15% on undistributed profits of corporate bodies unless reinvested (used to increase capital/shareholders' equity) within 12 months of year-end % (Income Tax (Amendment) Proclamation No. 1395/2025)
• Withholding tax on dividends — 15% (increased from 10%) % (Income Tax (Amendment) Proclamation No. 1395/2025)
• Withholding tax on interest — 10% (increased from 5%); final tax % (Income Tax (Amendment) Proclamation No. 1395/2025)
• Withholding tax on royalties — 5% to 10% depending on residency/context % ((approx — confirm split between resident/non-resident)) (Income Tax (Amendment) Proclamation No. 1395/2025)
• Withholding on domestic supplies of goods/services — 2% withholding on payments for goods/services above a de minimis threshold % ((approx — confirm threshold)) (Income Tax Proclamation No. 979/2016)
• Non-resident taxable-presence (PE) time threshold — Reduced from 183 days to 91 days for services and construction/installation projects (Income Tax (Amendment) Proclamation No. 1395/2025)
• Annual return filing/payment deadline — Within 4 months of the end of the tax year ((approx — confirm)) (Tax Administration Proclamation No. 983/2016)
• Quarterly advance income tax (large taxpayers) — Category A large taxpayers make quarterly advance payments, settled within 30 days after each 3-month cycle (Ministry of Finance advance income tax directive (2025))