This is a tax withheld at source by the payer (usually a government agency, NGO, or private entity) when making payments to a supplier.
Using the wrong PDF can lead to costly errors. Here are real-world consequences seen among Addis Ababa businesses:
| Mistake | Consequence | | :--- | :--- | | Using 2002 Proclamation (10% on all contractor payments) | Under-withholding by 8% (since current rate is often 2%). Results in penalty of 100% of difference. | | Missing the 30-day remittance rule (old PDF said “end of year”) | Interest charged at 10% monthly. | | Ignoring exemptions for new manufacturing investors (introduced in 2016) | Over-withholding, causing cash flow problems for suppliers. |
The best PDF will explicitly mention Article 94 (Exemptions) – which lists organizations like the Ethiopian Red Cross, religious institutions, and certain cooperatives. withholding tax proclamation in ethiopia pdf best
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A: Section 53(c) treats non-residents more strictly. For payments to non-residents without a permanent establishment in Ethiopia, the rate is generally 10-15%, and the withholding agent must also account for VAT.
Many tax advisory firms (e.g., Deloitte, PwC, KPMG Ethiopia) publish Ethiopia Withholding Tax Guides as PDFs. The most practical is: This is a tax withheld at source by
"Ethiopia: Withholding Tax Guide 2024" by Deloitte Ethiopia
The most referenced part of any withholding tax proclamation in Ethiopia PDF is the table under Section 53. Here is the standard schedule (always check the official PDF for exact percentages):
| Type of Payment | Withholding Rate (Resident) | Withholding Rate (Non-Resident) | | :--- | :--- | :--- | | Contractors (Construction, transportation, etc.) | 2% – 10% (varies) | 10% | | Rental of property (buildings, vehicles, equipment) | 7% (for buildings) / 30% (for equipment) | 15% | | Interest on deposits | 5% | 10% | | Royalties | 5% | 10% | | Management fees, technical service fees | 2% (small businesses) / 10% (others) | 15% | | Dividends | 10% | 10% | A: Section 53(c) treats non-residents more strictly
Note: The best PDF will include footnotes or references to Council of Ministers Regulations (e.g., Regulation No. 410/2017) that adjust specific rates for certain sectors like agriculture or manufacturing.
Any person, business, government body, or NGO that pays another person for goods, services, or income is a withholding agent if they are registered for VAT or meet the annual turnover threshold (currently > 500,000 ETB).
Obligations of a withholding agent: