Finding the version is the first step toward full compliance. To recap:

AI responses may include mistakes. For legal advice, consult a professional. Learn more Ethiopia issues a new Income Tax Proclamation

Ethiopia’s withholding tax framework requires payers to withhold tax at source on certain payments (e.g., salaries, contractor payments, rent, dividends, interest) and remit it to the Ethiopian Revenue and Customs Authority (ERCA). The rules determine withholding rates, withholding agents’ responsibilities, reporting and remittance deadlines, and penalties for non-compliance. Recent proclamations and regulations refine rates, exemptions, and administrative procedures; practitioners rely on the official proclamation text plus supporting regulations and ERCA guidance for correct application.

Ensure the PDF contains both the Amharic and English text to resolve any translation ambiguities.

Historically, taxpayers were split into three groups (Categories A, B, and C). Under the current system, the tiers have been streamlined into two categories:

The Income Tax (Amendment) Proclamation No. 1395/2025 focuses on modernization and broadening the tax base:

To avoid severe penalties, audits, and business disruptions, financial officers must execute a tight compliance strategy. Issue Withholding Tax Receipts Immediately