You can find the official PDF version of the Withholding Tax Proclamation in Ethiopia on the Ethiopian Tax Administration website or other government websites.
The Ethiopian government has been reforming its tax system to generate better revenue to finance public expenditure. As part of these reforms, there has been a focus on increasing compliance through modernized withholding systems and adjusting tax brackets for individuals (such as the 2026 PAYE reforms).
Understanding is critical for businesses, independent contractors, and finance professionals operating within the country. Ethiopia’s tax landscape underwent major updates with the enactment of Income Tax (Amendment) Proclamation No. 1395/2025 . This law fundamentally altered the local and international withholding tax (WHT) structures originally established under the foundational Federal Income Tax Proclamation No. 979/2016 . withholding tax proclamation in ethiopia pdf best
: A key differentiator for compliance is the use of Purchase Vouchers , which carry a lower 3% WHT rate. This directive from the Ministry of Revenues allows a far gentler 3% withholding rate for cash payments to informal or unregistered suppliers when a purchase voucher is issued.
: The threshold has been raised to ETB 10,000 per contract (previously ETB 3,000). You can find the official PDF version of
unless it is conducted as a registered professional business. Digital Service Tax: A new tax (capped at
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: For official local proceedings, companies rely on the Federal Income Tax Proclamation No. 979/2016 (Amharic Version) .
The primary legislation for withholding tax in Federal Income Tax Proclamation No. 979/2016 , which was significantly updated by the Income Tax (Amendment) Proclamation No. 1395/2025 Key Proclamation Documents (PDFs) Income Tax (Amendment) Proclamation No. 1395/2025
In conclusion, the withholding tax proclamation in Ethiopia is an important aspect of the country's tax system. It helps to increase revenue, improve tax compliance, and reduce tax evasion. To ensure compliance, taxpayers and withholding agents should follow best practices, including registering with the tax authorities, keeping accurate records, submitting withholding tax returns, and remitting withheld tax. The withholding tax proclamation in Ethiopia PDF provides a comprehensive overview of the withholding tax system, and taxpayers and withholding agents are encouraged to download and review the document to ensure compliance.