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Global expatriate tax guide

Expatriate tax - Ethiopia

Individuals taking up employment in Ethiopia will be subject to employment tax in Ethiopia. The tax is imposed on the monthly employment earnings of the employee. The tax rate on employment income ranges from 0% to 35% depending on the taxable income level of the employee. Taxable income includes salary and allowances paid in cash and benefits in kind.

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Facts and figures
Pre arrival procedures
  • Signing an Employment contract
  • Obtaining a Work Visa
  • After obtaining a work visa and upon entering to Ethiopia an expat will be required to obtain a work permit and residence ID
Tax year

The Ethiopian tax year runs from July 8th to July 7th for individuals. 

Tax returns and compliance

A company hiring individuals is required to withhold payroll tax from payment of salary and remit to the tax authorities. As a result, employees are not required to file tax by themselves in their salary. 

Due dates and extensions

Employment income tax returns and payments are due on the end of the following month the employment income relates to. The income tax is paid monthly. Extension of due date not allowed, thus, taxpayers may be subject to interest and penalties if tax is not paid within the date.

Income tax rates for employees


No. Salary Range(ETB) Tax Rate - %
1. 0 - 600 0%
2. 601 - 1,650 10%
3. 1,651 - 3,200 15%
4. 3,201 - 5,450 20%
5. 5,251 - 7,800 25%
6. 7,801 - 10,900 30%
7. Over 10,901 35%


Sample income tax calculation

Income tax calculation 

Gross salary: ETB 20,000

Tax Payable: 20,000*35%-1500 = ETB 5,500

Net Salary: ETB14,500.00

Basis of taxation
Charge to tax

Resident expats taxed are subject to tax on worldwide income and Non-resident expats are taxed only on Ethiopian source income.

Employment income derived by an employee shall be Ethiopian source income to the extent that it is derived in respect of employment exercised in Ethiopia, wherever paid.


A resident individual is an individual who:

  • has a domicile in Ethiopia;
  • is present in Ethiopia continuously or intermittently for more than 183 days in a one-year period.
Income from employment

Generally, earnings such as wages, fees, allowances, bonus, commission, gratuity, severance pay as well as fringe benefits i.e. interest free loans, house hold personnel, meal or refreshment, private expenditure allowances, vehicles, debt waiver, employee share scheme, and others received from an employer to an employee is respect to a past, current or future employment are reportable and taxable 
as income from employment

Source of employment

The source of employment is generally determined by the place where services are performed.

Benefit in kind

Generally, any benefits (in kind) are taxable except exempt benefits with certain conditions such as subsidy to a meal or canteen service to staff provided that the sector of the employer is among those eligible by the directive laid out by Ministry of Finance of Ethiopia, provision of accommodation under the condition the remoteness of the employment location, provision of mobile phones to employees, and others that are listed in exempt fringe benefits.

Relief from double taxation

TextEthiopia has concluded Double Taxation Agreements (DTA’s) with several countries, such as China (People's Republic in China), France, India, Israel, Italy, Kuwait, Romania, Russia, Tunisia, Turkey, South Africa, and the United Kingdom to enhance economic cooperation and trade facilitation.

The double tax avoidance treaty provides relief in taxation if the employees satisfies the criteria set

Deductions from taxable income

Deduction is not allowed on employment income tax calculation. 

Other taxes
Capital gains tax

Gains arising from the disposal of immovable property and shares are subject to capital gain tax. 

The capital gain tax rate is 30% on transfer of shares and bonds and 15% on the transfer of building. It should be noted that building does not include the building used as private residence for two years prior 
to its disposal.

The gain/loss on disposal of taxable assets is determined by comparing the total consideration received from the disposal with the cost of that asset.

Inheritance, estate, and gift taxes

A cash amount, or the value of asset, acquired by gift or inheritance are exempted from tax.

Dividend tax

Dividends sourced from Ethiopia is generally taxed at 10%.

Social security taxes

Expatriates are not subject for social security contribution in Ethiopia. 

Tax planning opportunities

Primary planning opportunities exist before arrival to Ethiopia, whether that be long term (an ‘indefinite’ assignment of more than one year) or short term (one year or less). With proper planning, potential costly and unforeseen tax burdens can be mitigated, particularly with respect to fringe benefits, assignment allowances and pre-assignment income. Planning is also available for individuals concerning incentive compensation or any kind of benefit arrangements.


For further information on expatriate tax services in Ethiopia please contact:


Seid Abdella 
T- +25111536364
E -


Fitsum Haile 
T - +25111536364
E -