Guides a VAT-registered business through each monthly Ethiopian VAT cycle: from transaction classification and input-VAT validation through reverse-charge self-assessment on imported services, to completing the MOR e-Tax VAT return (Boxes 1–18) and remitting any net payable by the last day of the following month under Proclamation 1341/2024.
Confirm the business is correctly registered — or must register — under VAT Proclamation 1341/2024. The mandatory threshold is ETB 2,000,000 in taxable turnover in any 12-month period; voluntary registration is available from ETB 1,000,000. Turnover Tax (TOT) is abolished as of Proclamation 1395/2025, so below-threshold businesses are subject only to Category B income tax. If registration is required but absent, stop and escalate — penalty is 100% of tax due.
Review all purchase invoices and bank transactions for the month. Classify each supply as 15% standard, 0% (exports, gold to NBE, diplomatic), or exempt. Identify blocked inputs (entertainment, motor vehicles under 10 seats not used for hire, personal use, purchases from unregistered suppliers). Validate that each claimed input VAT has a proper VAT invoice from a MOR-registered supplier — cash register receipts are acceptable only up to ETB 500 per retail transaction.
For any services received from non-resident suppliers (cloud SaaS, consulting, software licences), self-assess output VAT at 15% under Proclamation 285/2002 Art. 10 as preserved under 1341/2024. The same amount is simultaneously recorded as input VAT, making the net effect zero for a fully-taxable business — but both sides must appear in the return. This phase is skipped only if no non-resident services were received in the period.
If the business makes both taxable and exempt supplies (e.g. a bank offering advisory services alongside exempt financial products, or a hospital with some taxable pharmacy sales), apply the turnover-based apportionment formula under Art. 20(3) of the VAT Proclamation to calculate the recoverable fraction of mixed inputs. This phase is skipped entirely for fully-taxable businesses.
Compile the completed MOR e-Tax VAT return using the classified and validated figures. Populate all output boxes (1–8: standard-rated sales, zero-rated, exempt, total taxable supplies, output VAT, reverse-charge output, adjustments, total output VAT) and all input boxes (9–15: local purchases, imports, local input VAT, import VAT, reverse-charge input, adjustments, total input VAT). Compute the net position at Box 16, add any credit brought forward at Box 17, to arrive at net payable or refund at Box 18.
Log in to the MOR e-Tax portal (etax.mor.gov.et) and submit the completed VAT return. Payment of any net VAT payable (Box 18) must be made by the last day of the month following the tax period — e.g. the January return and payment are due by 28/29 February. Payment is made via CBE, Dashen Bank, Awash Bank, or other MOR-authorised banks using the TIN-linked payment reference generated by e-Tax. Late filing attracts ETB 5,000 per month; late payment 2% per month on the outstanding amount.
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.