End-to-end workflow for Ethiopian self-employed individuals and sole proprietors filing an annual Schedule C income tax declaration with the Ministry of Revenues (MOR), covering Category A/B classification, advance tax reconciliation, VAT registration assessment, and Minimum Alternative Tax (MAT) check under Proclamation 1395/2025.
Confirm the client's residence status (resident = worldwide income; non-resident = Ethiopian-source only), citizenship (determines POESSA pension obligation), taxpayer category (A vs B under Proclamation 1395/2025), and whether they are a listed professional. Establish the fiscal year in scope (8 July – 7 July) and verify the client has a valid Tax Identification Number (TIN) registered with MOR.
Determine whether the client has crossed or is approaching the ETB 2,000,000 VAT registration threshold under VAT Proclamation No. 1341/2024 and Regulation 570/2025. If already VAT-registered, confirm VAT filing is current. VAT registration status also fixes the client firmly in Category A for income tax purposes.
Collect and classify all business receipts and deductible expenditures for the fiscal year. Reconcile bank statements from CBE, Awash, Dashen, telebirr, or M-PESA against invoices. Identify deductible business expenses (rent, staff costs, utilities, professional fees, advertising) and strip out non-deductible items (personal drawings, fines, income tax payments, VAT liability payments). Apportion mixed-use costs (vehicle, telecom, home premises) conservatively.
Apply the progressive Schedule C annual rates under Proclamation 1395/2025 to compute income tax on taxable business income. Run the Minimum Alternative Tax (MAT) check: if 2.5% of annual turnover exceeds the computed Schedule C income tax, MAT applies. Present both figures and confirm which governs. For Category B clients on turnover tax, apply the presumptive rate table (2%–9%) instead.
Under the new advance tax regime introduced by Proclamation 1395/2025, Category A and B taxpayers must make quarterly advance payments (approximately one quarter of the prior year's tax liability) within 30 days after each 3-month cycle. Reconcile all advance payments made during the fiscal year against the final Schedule C liability to determine the balance payable or refund due.
Prepare and lodge the annual income tax declaration with the Ministry of Revenues via the MOR e-services portal (mor.gov.et) or the relevant regional revenue bureau. Attach the Schedule C working paper, supporting financials (Category A requires full books; Category B requires turnover summary), and evidence of advance tax payments. Pay any balance due. Retain all filed documents and acknowledgement receipts for the 5-year statute of limitations period.
Run this workflow in your AI agent
Install the MCP connector once — your agent loads the right skills, works through each phase, and routes to a licensed Ethiopia accountant for review.