Ethiopian business development services network ebdsn p. Tax, public finance, ethiopian taxation, direct tax and indirect tax. To meet this objective, time series macroeconomic data on gdp, vat, total tax revenue excluding vat, nontax revenue and foreign revenue were used. In the case of a business located and operating in ethiopia as the branch, subsidiary or associated company of a business located and operating abroad, no payment of any kind made to the holding or associated company of the business in ethiopia shall be accepted as deduction from gross income in calculating the taxable income unless.
The ethiopian government revenue is broadly divided into three. Determinants of tax payers voluntary compliance with. Ethiopias public finances are under great budgetary pressure, as years of war and poverty have taken a heavy toll on the countryside, population, and infrastructure. What is new after a decade and half strategy of gradualism in reform, 20012017 working paper pdf available. Box 113 addis ababa, ethiopia in collaboration with. Ethiopias public finance management system has shown improvement over the period 2007 to 2010, according to standardised assessments. Pdf public finance and taxation yonas moges academia.
Each subfederal government is responsible for the provision of public services at its. A tax is called proportional when the rate of taxation remain constant as the income of the tax payer raises. Federal government of ethiopia ministry of finance and. Coming in the heels of the food and fuel crisis from which ethiopia was just beginning to. Thus, this paper analyses the role of vat on economic growth of ethiopia from 2003 to 2012 based on theoretical and empirical evidences. The partnership taxation model, on the other hand, taxes the income derived by the organization directly to the owners whether or not distributed. This paper assesses the treatment of corporate taxation in the ethiopian tax law and argues that the corporate tax issues are not properly addressed in a manner that attracts corporate business. Taxes and tax reform in ethiopia, 19902003 unuwider. The principal taxes currently in place are company profit tax, turn over taxvalueadded tax vat, excise tax, customs duty, income tax from employment and income tax from business. Oct 14, 2019 public finance can be defined as the study of government activities, which may include spending, deficits and taxation.
The budget has become the powerful instrument for fulfilling the basic objectives of government. Intermediate level b4 public finance and taxation i study text nbaa foreword the national board of accountants and auditors in tanzania is a professional body in tanzania, established under the auditors and accountancy registration act no 33 of 1972 as amended by act no 2. Tax directivesministry of finance and economic cooperation. The impact of tax reform on private sector development acknowledgement the draft report on the impact of tax reform on private sector development was prepared by ato amin abdella based on an earlier draft written by ato beyene bekele of tademcos consulting. This study investigates the financial performance the ethiopian banking sector using tof he panel data set for the period 200405 200910. The email address is not made public and will only be used if you wish to receive a new password or wish to receive certain news or notifications by email. The study shows the prominent role played by iqqub schemes in ethiopia in terms of providing interestfree financial loans to entrepreneurs who cannot borrow money from formal money lending institutions such as the commercial bank of ethiopia. The law of corporate taxation in ethiopia ethiopian legal brief. Financial performance of the ethiopian banking sector. Constitution of the republic of the union of myanmar. Access to finance in ethiopia microfinance gateway. Fiscal federalism federalism is a system of government in which there is division of powers and functions between federal government and several regional governments, each of which in its own sphere coordinates with the others and each of which acts directly on the people through its administrative machinery.
If you dont see any interesting for you, use our search form on bottom v. Chapter two will introduce the students to the income tax in ethiopia. General government revenue, expenditures and fiscal deficit. The first deals with broad public finance topics such as aggregate. Ethiopia operating costs and compliance by wollela abehodie 2009 and the influence of tax education on tax compliance attitude by zelalem berhane 2011, even these were not fully covering the problem at hand in all income tax payers in the country tax payers category a. Sep 19, 2011 the partnership taxation model, on the other hand, taxes the income derived by the organization directly to the owners whether or not distributed. The agricultural bank of ethiopia, established in 1945, was targeted primarily to meet the needs of farmers who had suffered damage during the italoethiopia war. The reform also introduced a 5 per cent tax rate for work contracts and financial services, while a 15 per cent rate is applied to the sale of other services. Based on the above taxation, it can be classified into different degrees of progression. However, the agreement is not yet ratified and therefore does not have the force of law.
Pdf the current state of ethiopian financial sector and. An introduction into public finance and taxation issues for. Taxpayers moral and compliance behavior in ethiopia. The current state of ethiopian financial sector and its regulation. Corporate taxation typically imposes a tax on the income of certain types of business organizations and also taxes the profits distributed to the holders of the ownership interests. Tax regulations in ethiopia details written by administrator published on 30 april 2008 category. Simulations of safety net financing in ethiopia from 20152019. Apr 11, 2011 taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. The central banking function was thus taken over by the national bank of ethiopia. In addition, the costs of vat administration were briefly examined in the case of jantschers 1990 study.
Tax is very important for each and every government. Referconsult a tax schedule schedule that shows how much tax is owed for different amounts of income earned by the employee to find. This was followed by this indepth access to finance in ethiopia study. In ethiopia, employers can determine the tax to be withheld by following 3 key steps. The impact of tax reform on private sector development. Multiple choice questions write the letter corresponding to the correct answer in the space to the left of the question. It will start with a brief look at the history of income taxes in ethiopia and will go on to look at different concepts and definitions involved in income taxation. Tax this page presents links to guide you on types of taxes, tax rates, exemptions, tax filing procedures and other information you need when you start up a business as a selfemployed person, a partnership or a limited company. Public revenue public revenue refers to different sources of governments income. Evolution of propoor finance after economic liberalisation in 1994, poverty and food insecurity led the government of ethiopia goe to adopt microfinance as a prime component of its.
The tax revenue includes income taxes, vat, tot, excise tax, custom duty, and stamp duty. Pdf ethiopias new financial sector and its regulation. Tax directivesministry of finance and economic cooperation of ethiopia. Ethiopia public finance the ethiopian fiscal year begins 8 july, in the ethiopian month of hamle. First add all the payments in cash and in kind made to their employees in a month. Apr 08, 2011 tax directivesministry of finance and economic cooperation of ethiopia by abrham yohannes on april 8, 2011 18 comments tax on partially produced skin for export. The taxation of business organizations generally falls into two basic modelscorporate taxation and partnership taxation.
Fikadu asfaw and associates law office falo on 11 apr 2011 related to taxes and accounting in ethiopia. The companies are experts in ethiopia taxation, and theyll ensure that you keep the largest proportion of your earnings whilst complying with local laws. However, whilst the budget process is well ordered and. Ethiopia accounting and auditing rosc page 1 reports on observance of standards and codes ethiopia accounting and auditing november 2007 contents executive summary i. All emails from the system will be sent to this address. Unuwider also acknowledges the financial contributions to the research programme by. The budget reflects what the government intends to do. Corporate tax in ethiopia is imposed at a standard rate of 30%. Taxation in ethiopia in ethiopia a company, based on its activities may be required to pat the following taxes. In the process of development, states not only increase the levels of tax ation, but also undergo pronounced changes in patterns of taxation, with increasing emphasis on broader tax bases, i. Valuedadded tax vat was introduced in january 2003 and may mean a shift from ethiopias dependence on foreign to domestic trade, but it is too. For unincorporated or individual businesses the business income tax ranges from 10% 35%.
According to lemessa most of the respondents feel that. Business income the characterization of an amount as business income is important in both schedular and global income tax systems. All legal entities must register for income tax with the ethiopian revenue and customs authority and obtain a tax identification number tin and file annual tax returns by june of the year following the end of the tax year the value added tax vat in ethiopia is levied at a standard rate of 15%. The word now means, plans of government finances submitted for the approval of the legislature. You must answer all components of all three parts of the exam. Lecture 3public finance in ethiopia public finance. Reports on observance of standards and codes rosc is a world bank and imf joint initiative that helps member countries strengthen their financial systems by improving compliance with internationally recognized standards and codes of best practice. M an economic analysis of fiscal federalism in ethiopia 5 of taxation power identifies the following main criteria in assignment process. Abeje belay 2014, system of division of revenue in ethiopia, european. A country financial accountability assessment cfaa is a diagnostic tool designed to enhance knowledge of financial accountability arrangements in the public and private sectors in client countries, to be used by the govemment of the country concerned, and other donors. As a federal country, the functions and duties of the government are divided between central and state governments and they are generally. A reflection of problems wollela abehodie yesegat abstract this paper examines vat administration in ethiopia and identifies key problems including lack of sufficient number of.
Department of accounting and finance, addis ababa university, ethiopia. If the amount of tax shown on a declaration understates the amount of tax required to be shown, the taxpayer is liable for a penalty in the amount of 10% of the understatement or 50% if the understatement is considered substantial. Pdf the current state of ethiopian financial sector and its. The law of corporate taxation in ethiopia ethiopian. The goals of public finance are to recognize when, how and why the government should intervene in the current economy, and also understand the possible outcomes of making changes in the market. This is the tax imposed on the taxable business income net profit realized from entrepreneurial activity. Chapter 16, taxation of income from business and investment 2 ii. On this page you can read or download ethiopian public finance exam with answer in pdf in pdf format. Investment guide for ethiopia business environment investment policy investment areas incentivesguarantees taxation investment opportunities investment procedures addis ababa, ethiopia january 2004 published by. Introduci1on for a number of poor african countries a central economic management problem today is how to finance agricultural expenditures. The financial performance of the ethiopian banks has been evaluated using the volume of deposit, bank assets. An economic analysis of fiscal federalism in ethiopia. In the case of a business located and operating in ethiopia as the branch, subsidiary or. They can deal with any issues with the ethiopian tax office or tax department directly including processing your tax.
Ethiopia is the successful case of a country with similar starting conditions. Dont want to miss our interesting news and updates. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. They are proportional tax, progressive tax, regressive tax and degressive tax. The article covers the prehistory and history of ethiopia from its emergence as an empire under the aksumites to its current form as the federal democratic republic of ethiopia as well as the history of other areas in what is now ethiopia such as the afar triangle. Dear abrsh,could you tell me about the evolution and current taxation structure in our country, please i need your help. African business insights provides premium content, resources, tools, insights, and strategy for doing business and investing in africa. The first deals with broad public finance topics such as aggregate fiscal management, efficient allocation of public spending, revenue. Every government need revenue to lead the economic, infrastructure, medical.
It forms the basis for policy focused analyses and sustained dialogue that facilitate close partnership and enhanced. Due to myanmars human rights records and the related international sanctions, foreign aid and. The federal democratic republic of ethiopia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income note this agreement was signed on 24 august 2016. Ethiopia is a federal country with a twotiers structure of decentralized governance. What is new after a decade and half strategy of gradualism in reform, 20012017 working paper pdf available february 2017. Lecture 3public finance in ethiopia public finance bonds. As we are all know that taxation can be classified into direct and indirect taxes. The study shows the prominent role played by iqqub schemes in ethiopia in terms of providing interestfree financial loans to entrepreneurs who cannot borrow money from formal money lending institutions such. Country financial accountability assessment ethiopia. Apr 30, 2008 tax regulations in ethiopia details written by administrator published on 30 april 2008 category. An economic analysis of fiscal federalism in ethiopia abu girma moges.