Corporate Income Tax in Ethiopia

Who this applies to

Bodies, all Category A whatever their turnover (art. 3). Limited liability partnerships and registered collective investment funds pay no corporate tax but withhold on distributions (art. 19(3)). Income from 8 July 2025 follows Proc. 1395/2025 (art. 4).

Rates, bands and thresholds

Item	Amount	Tax year	Official URL
Standard rate; Proc. 1395/2025 left art. 19(1) of Proc. 979/2016 unchanged	unverified 30%	2026	unverified
Minimum alternative tax: on turnover; banks on net banking income; insurers on gross premium; price-regulated bodies on commission (art. 23(2))	2.5%	2026	https://www.hopr.gov.et/admin/Files/2026/4/8/5fc57d68-d0f6-4bf1-91b4-5b23abd0df72%E1%8C%88%E1%89%A2%20%E1%8C%8D%E1%89%A5%E1%88%AD%20%201395.pdf
Credit for minimum tax (art. 23(5))	up to 5 years	2026	same
Undistributed profit not reinvested within 12 months of year end (art. 64)	15%	2026	same
Repatriated profit of a permanent establishment (art. 65)	15%	2026	same
Dividend (art. 57); group distributions and dividends on a 12.5% controlling holding are out (arts 57(3), 68(1)(t))	15%	2026	same
Interest (art. 58)	10%	2026	same
Royalty: art and culture / other (art. 56)	5% / 10%	2026	same
Withholding on goods over ETB 20,000 and services of ETB 10,000 (art. 97(1)); 30% without TIN and licence	3%	2026	same
Mining rate, sector rule	unverified 25%	2026	unverified

The base

Net business profit as adjusted for tax. Minimum tax is measured after incentives (art. 23(7)). Liquidation and debt restructuring are out (art. 23(6)). Investment incentives stand only under the Council of Ministers regulations (art. 105). Payments over ETB 50,000 outside bank channels are not deductible (art. 29(1)(o)).

Deadlines and filing

1. File within 4 months of year end (Proc. 979/2016 art. 83(4)).
2. Pay the balance at filing, net of advances (art. 89(2)(b)).
3. Pay 25% of last year's tax within 30 working days of each quarter end (art. 89(2)(a)). A new taxpayer pays at filing in its first year (art. 89(5)).
4. Overpaid advances are refunded (art. 89(2)(c)).
5. Forms are on the Ministry page, with balance sheet and annexes.

Penalties and interest

See payroll. Assessment limits: 5 years, 10 with tax fraud (Proc. 983/2016 art. 28 as amended by 1434/2026). Appeals to the Commission: 30 days (art. 105). Conciliation and conditional tax clearance are new (arts 61 to 71, 72(6)).

Cross-border points

Permanent establishment at over 91 days (art. 4). Non-resident withholding: insurance premium 15%, royalty 10%, dividend 15%, interest 10%, management or technical fee 15% (art. 52(2)). Digital service tax at up to 5% (art. 53). Banks need tax clearance before a foreign investor repatriates (Proc. 1434/2026, art. 72(11)). Transfer pricing has a Ministry directive, not yet covered by a skill.

Two worked examples that recompute

Simple case: profit ETB 100,000, turnover ETB 10,000,000, so minimum tax applies at the 30% rate marked unverified.

name: Minimum alternative tax
inputs:
  p: 100000
  t: 10000000
steps:
  - normal: p * 0.30
  - minimum: t * 0.025
  - payable: max(normal, minimum)
expected:
  normal: 30000.00
  minimum: 250000.00
  payable: 250000.00

Decision: after-tax profit of ETB 3,500,000, kept idle or put into capital within 12 months. Kept idle costs 525,000; capitalised costs nil.

name: Keep or capitalise
inputs:
  p: 3500000
steps:
  - idle: p * 0.15
  - capitalised: 0
  - saving: idle - capitalised
expected:
  idle: 525000.00
  capitalised: 0.00
  saving: 525000.00

Ask the client first

• Turnover and profit for the year?
• Bank, insurer or price-regulated?
• Any incentive, liquidation or restructuring?
• Dividends paid or capital increased within 12 months of year end?
• Foreign owners or a permanent establishment?

Sources

Source	URL	Read on	What was read
Income Tax (Amendment) Proclamation 1395/2025, Federal Negarit Gazette 31st Year No. 64	https://www.hopr.gov.et/admin/Files/2026/4/8/5fc57d68-d0f6-4bf1-91b4-5b23abd0df72%E1%8C%88%E1%89%A2%20%E1%8C%8D%E1%89%A5%E1%88%AD%20%201395.pdf	2026-11-01	Whole text read (English column)
Federal Income Tax Proclamation 979/2016, Amharic consolidated print	https://www.lawethiopia.com/images/federal_proclamation/proclamations_by_number/979.pdf	2026-11-01	Declaration, payment, withholding and exemption articles read in Amharic; article numbers are those before the 1395/2025 renumbering
Federal Tax Administration Proclamation 983/2016, Amharic consolidated print	https://www.lawethiopia.com/images/federal_proclamation/proclamations_by_number/983.pdf	2026-11-01	Penalty articles and art. 37 read in Amharic
Tax Administration (Amendment) Proclamation 1434/2026, Federal Negarit Gazette 32nd Year No. 48, 30 July 2026, listed by the Ministry of Revenues	https://www.mor.gov.et/domestic-law-proclamation	2026-11-01	Whole text read; adds 17 to the penalty article numbers of 983/2016
Ministry of Revenues forms list	https://www.mor.gov.et/forms	2026-11-01	Titles of the published forms read; the form boxes were not read

Not yet confirmed: the 30% rate and the mining rate: the rate article of Proc. 979/2016 was not read, so both stay marked unverified; the Council of Ministers income tax regulation that sets the digital service tax rate (capped at 5%) was not found; the e-tax portal steps and the box numbers on the Ministry forms were not read, so no box numbers are given as law; the Ministry directives on undistributed profit and advance tax were not read.

General reference only. This document does not constitute tax, legal, or financial advice. Verify figures against the cited primary sources or with a licensed professional before relying on them.