A 2% withholding tax applies to payments made for the supply of services involving more than 3,000 ETB in a single transaction.
Key takeaways from the 2025 amendment for withholding tax include:
The search for the “withholding tax proclamation in ethiopia pdf best” is ultimately a search for legal certainty. To summarize:
: Non-professional digital content creation is subject to a 15% final WHT . Compliance and Modernization
: The threshold has been raised to ETB 10,000 per contract (previously ETB 3,000).
: A strict transaction limit of ETB 50,000 for cash payments has been introduced to encourage digital tracking of taxable transactions. Essential Documents for Download (PDF)
The new system uses 6 progressive brackets ranging from 0% to 35%.
This Proclamation establishes the legal framework for the withholding of tax at source on specified payments made within the Federal Democratic Republic of Ethiopia. It sets out the obligations of withholding agents, the categories of payments subject to withholding, applicable rates, conditions for exemptions or reductions — including requirements for documentary evidence and tax treaty benefits — and procedures for remittance, reporting, assessment, and enforcement.
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.
Business expenses exceeding ETB 50,000 paid in cash are now non-deductible; these must be processed through authorized banking channels.
: Proclamation No. 979/2016, Proclamation No. 1395/2025, Regulation No. 410/2017, and Directive No. 2/2018.
Here are the key features and details regarding the Withholding Tax (WHT) regime in Ethiopia:
