The Ethiopian tax law provides for direct and indirect taxes. The direct taxes are divided into five categories: personal income tax, rental tax, withholding tax, business profit tax and other taxes. The main types of indirect taxes applicable are value added tax (VAT), customs duty, excise and turn over taxes. The VAT replaces the old business tax system of commodity and service taxes. The VAT rate is 15 per cent of the value of every taxable transaction by a registered person and all imports of goods and services other than those exempted. 

Excise tax is payable on a range of consumer goods, whether produced locally or imported, e.g., alcohol, tobacco, salt, fuel, television sets, cars, carpets and toys. The rate varies from 10 per cent to 100 per cent depending on the product and is payable in addition to VAT.

Every investor has a tax obligation and is required to obtain a tax payer identification number (TIN). An investor who is involved in taxable activity has also an obligation to register for VAT.

Taxes can change at short notice. Austrade strongly recommends you reconfirm these prior to doing business in Ethiopia and seek professional advice.