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~1ot.A. ., ;J~'T;JUll)
FEDERALNEGARIT GAZETAOF THE FEDERAL DEMOCRATIC REPUBLIC OFETIDOPIA

hM"'~ ~OD-r ~1'C c!j 8th Year No. 34

hJln hO(}-i'l~~1 .,., Iuni Oh.-rf'kf ~""'&-"Cf JllfDh&-ltfCf ~T11ft.tI
ADDIS ABABA-41hJuly. 2002
1';"1111 TaJtJf'"f 9'"tlC fl.-r mflctH' flDlTf

1PJ{&6Iij. CONTENTS

h"~ ~1'CIfiti/Iufj! ~.,. Proclamation' No. 286/2002

f.,o. "'I.oC h'P~ Income Tax Proclamation page 1867
''''''''''''''''''.'''''''''''' "K' liif.~f:E1
.
h'P~ ~1'Cllnl1jfj PRQCLAMATION NO. 286/2002
.' INCOME TAX PROCLAMATION
1'1(1...,-flC h'P~
fh.-rf'kf ~,..,,&-"' JlIfD)l&-()J,?T-flt\.tI fh.tliOlf. WHEREAS, the Declaration on Economic Policy of the
;rt\.fl. Oh1~i:~h1' f"'l"'O~''i. fh.ttiOlf. ""~~"'"f,'i Government of the Federal Democratic Republic of Ethiopia
+*'P"f') f\"'IIt,...,c'i A"'Ih,"~-r..hJlh 9'"/)&-tf.fhL'" OODtr).J inaugurates a new era in social ari'deconomic relations and
institutions in this country;
O~IlU9'" v-).;t-PJ"f opLIIlC 9'"b')f-r hv-1 OF&- ",.
ff\tD-1 f10. ..,11CFC~-r ()ODt\~'I''i O"'lh.,.tJhA O~' 10f WHEREAS, in consequence of these developments, the
Fe~-r tD-h1' hf\+f\f~ f1.{1.9'"')"","f hOlf.U'&-flTtD-f1,)"11 existing system of Income Tax needs to be changed and
adjusted to the basic principles of fiscal treatment in a free
~h ~,e, ODGIf9''f .?e~'It'Pdl1: "'11:1 , hhL"'L OODtr).J .
market economy;
f..,-fle Fe'i:') "OD'i' 0"'l1:1 ,'i f..,l1C ODU'I.i:1
WHEREAS,it is believedthatmodernizing the tax system
f148'7hof.-r ~mfl,)'i 1\.')iL.h-rtlD")-r') "'I01.;t-;t--r LITf1 and broadening the tax base promotes economic growth by
fh.,tlt;"!, 61:1-r A"'I9'"ITfTf"'U..,lI 0011'), ht\;t-OD~O-rJ encouraging saving and investment;

OiM OD')"'F-f: h,)"''' 2~(li) ~'i (Ili) ODU'I.-rfOlf.h.,.f\lD. NOW, THEREFORE, in accordance with Article 55(1)
;t-tD-~Ad and (11) of the Constitution, it is hereby proclaimed as
9'"6&-tf. li follows:
ODU'I..;t-' 1:')'.:J'l.9''f CHAPTER I
htf.A li Substantive Provisions
m.}>"" Section 1
Ii' h~e e6b .
General
,e,Uh'P~"f10."'l1C h'P~ ~1'C Un/liifj" "'111\" 1. Short Title
t\.m.,.h ,,'f"1A1I This Proclamation may be cited as the "Income Tax
I' -rC~"I Proclamation NO.286/2002"
OIlU h"~ tD-h1" ('.,.Af -rC1-9'" O..,Ab tJA.,.l1ITfTlD. 2. Definitions
Oh"''''Cf 0t\.A-'f fh.-rf'kf ;"1o'f -rC1-9'" f.,.l1ITfTlD. In this Proclamation, the meanings of terms defined in
:J>":" O.,..,.1.1000-0-r ;,..., f.,.l1ITfTlD.') -rC1-9'" ,e,,.1flr:: other laws of Ethiopia apply unless a different meaning is
f\IlU h"~ hL'fl9'" fOlf.h.,.lr-r :J>"-r'i dl1.1o'f hH.U expressly provided herein. For the purposes of this
O;t-'f f.,.l1ITfTlD.-rC~"l ,e,c;&-T'PIA; Proclamation the following terms shall have the
meanings given to them hereunder:

n~"';1 5.00 '1;1.t+ ;1tLlIJ ;r..".~. 'wiLli

Unit Price Negarit G.P.O.Box 80,001
1~ II.Sf~' ~A );t+ ;fI."I.",cii In 11+1
IU'. ,.,.. F!IdnI Neaari! Gueta No. 34 4- July, 2002 Page 1868

I- "ftm-" ..,,,+ ..,,'j'm-r "'1"'''''1'~c~+ ",,.,. l)"Person" shall mean any individual, body, or as-
"'''''OC ft.1f" "'ft, ft.. OOllmh.:\""""-l"~.tz sociation of persons (including a business represen-
O~+f'kl"h'1' Ifq- f'"'I~ 11"("f"t1t}Y.~ f'''I~ tative residing and doing businessin Ethiopiaon behalf
1Dh..:\'"tAr(,..:\f
of the principal).
I' "~c~+" ..,,,+ f'''It,- 11"(,.f"Ut}Y.~ "''if,.,.,- 2) "Body" shall mean any company, registered part-
h-I1', .,.,. f.,.OII".,Of"lich'i ",...,oc .,.,.
hh-I1', .,.,. h.,.OII".,Of"lich'i ",..,nc ;1C nership, entity formed under foreign law resembling
"'011""t. f'1f~'i nm--l" ".,c /h." OIIcpl+ f"'*~011 a company or registered partnership, or any public
~C~+ mt.r "''i:f..r t'OII''''P''''' f.:\..,+ 1"'(,. enterprise or public financial agency that cmies out
t,-C~+ mt.,. '"'''0(1 ~C~+ 8\11"").n~ ,business activities including body of persons cor-
U1C
,,,, "t}.:\ OtIDGJh4, n~""f'kl t.DoJt'1' f""1~ 1(,. porate or pnincorporated whetOeu'createQ.ar recog-
f-U"t1.~'J tlJh.A ~'i ",.,. n-tcp(,.R..,. n~"" nizedunder.,a 1~~,Jlf!?r~~~n Etbio~ja ~e1sewhere
fokllDt.9"n"'ft ".,C ;""1''''OIIcpl''' .,.,. 6m-:"'i and any foreIgn b6dy~s" business agent doing
11"1 n..nrq.&IMr ~')~ '~C~..,. ''''L'f'''~i1' . business in Ethiopia C:)O
~~alfof th,~rinqipal.
~m.r60.:\' : .3}. ' 'Association of persons''Shall mean~ as5ociation
",." ...,.,1l ",,,..,. 11.:\ 'If ).0.....
..,...,n, m,.,. +"
r:. "f' ..,,, ft (I~ of individualsor,an 8S$.qciationthat includes one or
"""'0(1''''If''' "'~ "mf..r h"'~ more members who are not individuals, but not
0."" "11""'"f-LtArc .,...,nc ft.1f" "" t,-c~""" including any association falling within the de-
O.,.ftm(lto+C"t-" m-h"1'f"'f,t'I.,.-t:..,...,0(,.+' ".eta ~.
finition of "body".
r,9'" 4) .."Related person" means:
."

j!. """"f.~+ lft'fm- ftsP"f" .,,,..,.;

(i) ri-L'1'C' ft.. At;
u)
f,ltJf''''Il.'1'C'. ftm- "''i:f..9''
m,e.,.
,,) 4. "'m""",
" f'''tlf,n..,.
""11"0"" f"t"f.:\ fq",,~(,. .,.*,.. mt.r
(ii) 11"",((,. "'~9" ~fi, flf.u. .'11\",((,.
. (i) a natural person and;
(a) any relative of that nafurafperson';-'o'f
t,OIIt,-.
(b) a trust in respect of which such relative is
or may be a benefj9iary;or
tDt.9"
(ii) a trust and a person who is or may 1?ea
beneficiary,inrespect of that trust;~r '

"'*9"
"'m.+"t f"~ m"r A.II" f"t"f.:\ ftm-. (iii) a partnership,joint venture,or unincorporated
(iii) '"lICh" ..,..,nc' f;1(,. .:\-?+ ",,,,,oC' f;h.., association,or body or private company; and
fft..~..,. OIIof1"" lft'li ~c~ mt.,. (a) any"memberthereof; or
'"'I'"
h-q"i~" '
(b) aoy otherperson wherethatperson and a
II) ",~lf.tJ "11.:\ f(l'~ m~""r ,,0,.1 .
memberof suchpartnership,'j61l1tveit-
A) ~')~u.~:J-eD- f"liCh'i ""JOC' f;J(,.
.:\..,..,. DYtJoe -t.r n/h., f"eD-~"" ture, or unincorporated association ~r
body, or private company as the case
OIIof1"" 'I" ~C~..,. m,.r f"'l.:\ h-I1,1
'" may he, are related persons in tenn~of
.1\11'" f'1I'~'i. .,9:fm-9" ntl.lI A")+~
'thisdefinitiOn;or
"""f.~+ ''':feD- "sP'" n-t.:\ n"''''l
., (iv) an incorporated com'pany, other than a closed '

f"tifL' "'ft fteD-'

(iv) 11., hlf~ I'C7'4. 71') Oit.,..,.c n/h." fft..~..,. (a)'& person;otherthan an incOrporated Corn-
-0(1+ r"'(amm- ~C~..,. ~'i'" pany, where that person or that person ~nd
u) 0,ft1 fft..~+ .., ,. h"'''mID-.t'e~+ Oi1++e a. pe~on a person related to thefust
tD.er "0 "ID-~t; OIlO+c-..r mentionedperson in tenns of this de~
on~"""m- finition controls 10 percent ormo~ of; .
lIDcpl+ htUJ ft. ;Je "'I'j.~+ Ift1fm- ltfP"T'
(0 O,,")~ 1rl1'}1 ""''1' ,"m-'} 1;9"/1 fOllitm"" (i) the right to vote in the first mentioned
--of1+' company; or, . ,

(ii}f''''~,) h-Q'}1 t'l1::l'/.\ mt.r +C~ f'ODh (ii) the rights to distributions capital or proflts
4-d..:\ ODo(1+0+'1';1' m.er o,,'~ mt.,. of the first-mcQtioned company. either
h",}1; Oft,e. 0 If)?, h-I1'}I"~ OIIt'lh.:\ directly or through ooe or more interposed
11"
""'i'~ Irq,,,, f1leb't, ...,...,oeDJt.r I1""~t,. companies, partnerships, or trusts; or
(b) any other incorporated company in which
"'"*r "..,t}~~+,
I "fClt,"" (",.,.,COtID+)~'t hH.l 0"" f1tt- the first mentioned person refelTed to in
0-'1.(1"0+ '1.ft.' (a) or that person and a person related to
,,) n.,.t,. d.~'" (u) Oov:fOD~1 that fU'Stmentioned person in tefms of this
''''m+(am- (aID-tDt.r
.e.u It.. ~'i" Oft.O TC1-,. tlDCPlT hft.uftm- ;1e defmition controls 10 percent or more of:
"'I,j.~+ '",, ftm- n/h.., (i) the right to vote in the first .mentioned
t'rI"~"" -of1"" ,
oompany, or f.'
O"'(am" 1r11'}1 m-lt"1"
(i) nh-Q'}Im- ""''1' '''''',,' ~/1 f-ltmT
.
-0(1+' "
 ,.,. 34 4111 July. 2002-Page 1869
11t' iUr:n ~ );Jt+ ;J1t.1IJ.1'C O!iI\~ 31 on !ifni Federal Negarit Gaz.eta -No.

(iL) . OOD1:OD&1f"'m.,.{t~"} \1-1I"}1 t]"(;t-~ m,,'I" 'I" (ii) the rights to distributions of capital or profits of the
+Ct;: fODhof.L~ 011-0+1 fIrst-mentioned company, either directly or
O., ;t- m,,'I" O,,"}.(" m,,'I" h",,}.(" 0"" Olf). ').
through one or more interposed companies, part-
\1-Q"}I9"f OIIt]h~ IIA "1li~ \1-11"}li f"lichli lli
"7'"fOC m,,'I" IIA""t- .,.9:'1" ""7t]~~+ I-r nerships, or trusts; or
TC{t"}-r ("p'c 00ll.r-) hli hlt.1 0"" f IIf
L'
O"lur"}oT 1.tt.1
n
tit) "7"}'1~'/" {t~. "U {t~ hli O"'t- L"~ (u) (c) any person where that person and the person referred
f"'ooAh"'~ {t~ m,,'I" o"'t- L"IA (A) f"'OIIA to in (a) or the other incorporated company referred to
h"'~ Olh"'lf{t~~-r OIIflT f.,.{tmm.1:C~-r OflU in (b) are related persons in terms of this definition; or
-rC1-'I" OOIPl-r "'''}7-~-r f"T~ {t9"f If~~
f "''''m ~ 0"t If"}0 -r 1.tt.! m,,'I"
00) "7liT~'/" {t~1 OflU -rC1-'/" OIIIPl.-r O.t-t- L"IA', (d) any person related to the person referred to in (c) in
(tit) h"'ooAh"'~ {t~ ;JC "'''}7-~-r fAm. II'lf. terms of this definition; or
O"tlf,,} O-r 1.tt.i
f"''''ml
~. "1.9-.("lj" "71\-r1 "Relative" in relation to a natural person; means:
(i) ..,I\{tfl hli f-rP.C ~"'1: (i) the spouse of the rpeson; or
tlOII"';f:
(ii) 0"'1':r m""" m,,'I" CD":r"f f"t"'m~ (ii) an ancestor, lineal descendant, brother, sister,
m "}.("'/". h U-r! .,..-r: h it-r: f h it:,- mf.9"
"
" " uncle, aunt, nephew, niece, stepfather, step-
f"'l-T lA~i fh"}1:t- "II-r: fh"}1:t- hli-r:
fh"}1:t-IA~: mf.'I" f..,A{to- lDf.'I" f-rP.C ~"'1~ mother, stepchild, or adopted child of that person
f?-JlL7 IA~: hli f1-Jl~ IA~") O"'OIIAh.,. or of the spouse, and in the case of an adopted
f1-JlL7 "ltP.1.9"ff mf.9" child the adoptive parent; or
(iii) 01o-it "''''W n f+ooAh"'~ "7"}'1~'I" {t~
(iii) the spouse of any person referred to in paragraph
fTP.C ~"'1 hli Allt' -rC1-'I" "L'09" "71'1~9"
f1-JlL7 IA~ h?-Jl~ "ltP.1.~ ;JC fOll1:ootf (ii) and for the purposes of this defInition, any
h,,}P.A~f t,.JIO/..AII
"CA 1J9"'.("li adopted child is treated as related to her adoptive
parent within the first degree of consanguinity.
6) "Business" or "Trade" shall mean any industrial, com-
""}..,.("" "7A-r O"7li:f~'I" {t~
i' "f""''''~ P'("" lD"'I" mercial, professionl or vocational activity or any other
h"7'1~~-r ATC~ f"thlilD1 fn.1~itTt: f,,}"'.(": foo-f
OJf.'I" f'fIIA? 1-0 P't- h1~it?f\ lD"'I"f On.-rf"A-f activity recognized as trade by the Commercial Code of
n..,~ Ih.., h1" ,..,~ P't- iJ~~li f.,.{tm~ "7liT~9" Ethiopia and carried on by any person for profIt.
h1~it?f\ ~~I
"''' 7) "Taxpayer" shall mean any person subject to tax under
l' "..,flC hof."" "7A-r OflU "cp~ OIIIPl.-r ..,flC fOllhLIA
..,,.;t- IAO-r "71'1~'I" {t~ ~~I this Proclamation.
:f. ""'IflC 10. f"7 .("l..., ~"L ~-r f"'II}AO-r {tm." 8) "Withholding Agent" shall mean any person with a tax
- """
"7A-r ",''1~ OflU "cp~ OOIPl.-r..,-oC {t'Oit{l10. collection obligation under this proclamation.
f"'~l'" ~"L~-r fAO-r {t~ ~~I 9) "Permanent Establishment" shall mean a fIxed place of
ii- "09:"t~+ f"tIPt- ~C~-r" "7A-r h1~ {t~ f1"'~ business through which the business of a person is
p't-m.1 Ooo-~ lDf.9" OhLIA f""l.fhli~10-r 9:"t
wholly or partly carried on. The following shall, in
f1"'~ P't- {l;J- ~~:: f"th"'~-r O.,.A" 09:"t~-r
f"tIP(,. f,,}"'~ .("C~-r OooQ~ f.:rlD?~1I particular, be considered to be a permanent establish-
ment:
(a) an administrative, branch, factory, workshop, mine,
u) f,,}"'~ P't-~ fhit.,.P."C "7iJh~: ~C1"l.~:
of.fltt]f N:hth P't-9';f f""l.hlilD).O-r P'~t-: quarry or any other place for the exploitation of
AflU ".,~ ""'Q-o~-r hitt]A~ ~l.it "7liT~9" "''' natural resources, and a building site or place where
f.,.LI'C' U-o+"f ...~'I" "f. 0"t~~0-r V-);;J-
Ih,,}' f"t1~QO-r (l;J- lDf.9" construction and/or assembly works are carried out.
f"tIf;J~O-r P'~t-
f.."lI;J- mf.'I" f0ll111}m9" P't- f"thlilD10-r
P't;:t-I (b) A person shall be considered not to have a per-
A) "'~ (tm. 09:""l.~:" f"tIPt- ~C~-r fAm.'I"
manent establishment if that person:
f"tIlAm. hflU O;J-"f f.,.OIIAhoJ:-r1 it;r f"tfh (i) uses facilities solely for the purpose of storage or
lim.1 hll'~ ~~I
(i) .("C~oJ:1 f t-"" flf).-r1 iJ:J'9';fli if.,. {I1"f A"7h display of goods or merchandise belonging to that
"'T-r lD"'I" Olioo-li~+ A"'ltf-r -o;r f"tm'" person;
{t.1I',,}i (ii) maintains a stock of goods or merchandise belon-
'/" 0 -r
(ii) ft-"" fll'~~1 fiJ:J' m"011 if.,.1' h'l""f-r ging to that person solely for the purpose of
f"7J',lfm. 0 00;J If"}A"7it"'OIII' lD"'I" 0 lioo-li~-r
storage or display;
A'" Itf -r -o;r {t.1I'''}i
(iii) ft-"" fll'''~''} fiJ:J' m~'I" fif.,.1' h'l""f+ f flf~ (iii) maintains stock of goods or merchandise belon-
{t~ O"''/''l-r "l."-r ~itl' ...~'I" "" ging to that person solely for the purpose of
0"'''
"}Jlm.~ A"'.(" l.'" h If., 1
h processing by another person;
fA~,,) f,,}"'~ P't- {l;J-m.1
(iv) f.,.m{t., P'~t-
A"}..,.("P'~ f""l.~~ C):J'9'T"} (iv) maintains a fIxed place of business solelly for the
'-tmWO-r
tIJ~'/" if"'tnT"} At1fJ4'I'tfmf,'I" OIIl){9'T1 A"7{t purpose of purchasing goods or merchandise or a
lI{to.1-o;r flf., ",,}"If.,1 collecting information for that penon's busiDesa;
'JJt 111::1" lJ.6.11. ).76"" .7l1tIJ 4t1'C
.
<DR ...~ n +1 Illfj! 'J.,..
(V) f.,.wM P'tt-Ir 1 ~(J){" f,}'"1f: P' Ir f1;rlD-'} f"'l.m
"'9"0~ ~'}"l1: P' 1rlD- f"'l.m:"OO-lI'"1~"'"f'}
wy.9" ~ff.V- P' 1rlD- -n:F f"'l.1'"1H- "''"1C}c:"f'}
~"7hiJW~ hln: "lD-::
th) hff.U O"y. 0.,.1r k1.A. (u) ~iJ (~) f"'''1llD- 0. tjC9"1
wh.A.1 hff.U O;r"f Ok1.A. (IP) f"'oP~h'rlD- 'r~"''''l.
f"'l.If'}O-r'} 1r00') "fl\- f"'l.IPIr'} wh.A. "Y.bQ.9"CI
h')1:'}i (lm- wtll\- f"'l.lPlr hl1''' wy.9" owh~m- (lm-
1l9" m-A.foPL89" P'A.nJ,} 1~lD-iJ Y.U')') P'A.nJ~')
hHm-~c: f"'l.m"'9"O-r hl1'''' aJ'l~ wh.It- ~COo')
wtll\- f P' Ir ~').p1l:J>ll.lD-') O"'l.lhiJm-,)O-r f1;r
09:"'l.":" f"'l.lPlr 1:C~~ ~ '}~~m- y..f>mlrA.::
I1'tj9" wh.It- P'lrm-') f"'l.lh'im-,}O-r f.,.mM
P'lt-Ir fflm- 0.11'')9'' M:"'l."-r ~,)1."'l.1P1r 1:C~:r
OOlJlll.f>'I'?--r hff.U O"y. Ok1.A. (fI) O.,.HlH?--r
f P' Ir ~').pll:J>(l.sP"f".,.wf1'1 hl1''': O.,.wf1'1 P'tt-Ir
lf1m- fP'1r ~').p1l:J>(l.Oh.-rf"kf 09:"'l."-r f"'l.lPlr
f,)"l1: 1:C~-r hf(ljlD-9"I
oP) "7')~m-9" (lm- 01."'" Om"""" f\'1"'l.'li') wh.A.
wy.9" 1r00'} "fl\- 011ll.1P1rO"7iJ:flD-9" """ wh.A.
hOlJ'l~"-r f,)"l1: P'1r ~'}""1l:J>ll.') O"7hiJW~ -n~
~,)1.ff.U flt--r wh.l\-"f f,)'"11: P'1r ~')""1l:J>ll.m-')
f"'l.fhiJm-~-r oPf.O~ f,}"l1: P' Ir:fm-') O"'l..fhiJm-
).O:r w.p:r 'lA.I1''' Oll+.,.C 09:"'l."-r f"'l.lPlr
1:C~-r ~')~~m- hY..f>mC9"I
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h-C},}f ~'I''I'C P'C f"'l.lPlr OoPl1'~ 9"tl'} f~ -n:F
h').c;. ftb"m- 09:"'l."-r f"'l.lPlr 1:C~-r ~,}1.I1'''
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~~-r f"'11 C}f.I1',)9" h"7iJ:flD-9" 9",}~ 01'~ 1'}H1I
f.,.h
wf.9" O'}f."-r OOlJiJ:flD-9" oPA.tl ~"l-nC h4-~
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y.bQ.9" irA. i
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oPlPl-r O"'l.wm--r 1.,){1"foPlPl-r "7iJ:flD-9" w~ ~'1
,,"I\-"f .,.+iJ'li 'I....,(1"f h.,.+ .,0. 0:\" f"'l. +l m- f1 0.
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0 "'l.(lm lD- oPoP tf oP tVl-r 09:"'l." -r
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u) "C}fltJDo'llA.I1''' .,.+nJt" "7~-r oD1.O~ foo-f
p'A.miJ fA.w(l1.: IA~ oo-f O"'l.my.~ "7'litj"fiJ
oP...,tf~"f f"7Y.m+9" Oh'}1: '}oP-r 1.ff. m-ll1'
Om.p""lD- hcli "'iJ~ ~"7Y.OA.1' 1.ff. f"'+ml
.,
m- I
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~) "f",w(l" h1A.'"1I\--r ~oPllm-r Om-A.f"'l.+mC
(lm-" "7fI:r P' 1rlD-'} Olrft- f oP9"lr-riJ foP'"
nJmC oct P' A.nJ'} O"'l.(lmlD- m-IA oPIPl:r
P' /rlD-') f"'l.1hC;lD-'} "lM,-n "lD-::
Ii:. "f"l-nC f1~P'lAnJ'}" "7~~ ft...f...1r1A h1C lD-ll1' 10.
f1~P'lAnJ'} 'PiJ oP/o.~ }"C;O"'~I~ fh1ti: tltt-I\-"f
f.,.!':!t'1JOo.pC"}81tt- R"/0..,.".1'-},.
'}}tv-9'" fft"lA.It- f10.
.
(lllltn. h "''' -r 'i :fID-SI
. Federal Negarit Gauta - No. 34 4'" July, .2002 Page 1870
(v) 'IJ,1aintains a fixed place of business solely for the
purpose of caIT)'ing on, for that person's
business, any other activity of a preparatory or
auxiliary character.
(c) Notwithstanding the provisions of sub-Articles (a)
and (b) above, where an agent, other than an agent of
an independent status to whom letter (e) below
applies, acts on behalf of a person and has, and
habitually exercises, an authority to conclude con-
tracts in the name of that person and has, and
habitually exercises, an authority to conclude con-
tracts in the name of that person, that person shall be
treated as if it has a pennanent establishment in
respect of any activities which the agent undertakes
for the person at the place at which those activities are
carried on, unless the activities of such agent are
limited to those mentioned in letter (b) above which,
if exercised through a fixed place of business, would
not make that fixed place of business a pennanent
establishment.
(d) A person shall not be treated as if it has a pennanent
establishment where it merely carries on its business
activities through a broker, general commission agent
or any other agent of an independent status, provided
that such agents are acting in the ordinary course of
their business.
.
(e) The fact that a company controls OTIScontrolled by
another company shall not of itself constitute either
company a Dennanent establishment of the other.
10) "Income" shall mean every son of economic benefit
including nonrecurring gains in cash or in kind, from
whatever source derived and in whatever fonn paid
credited or received.
11) "Taxable Income" shall mean the amount of income
12) subject to tax after deduction of all expenses and other
deductible items allowed under this Proclamation and
Regulations issued there under;
"Employee" shaH mean any individual, other than a
~ iJ
contractor, engaged (whether on a penn anent or tem-
porary basis) to perfonn services under the direction and
control of the employer;
(a) "Unskilled Employee" shall mena an employee
who has not received vocational training, does not
use machinery or equipment requiring special skill,
and who is engaged by an employer for a period
aggregating not more than 30 days during a
calendar year;
(b) "Contractor" shall mean an individual who is
engaged to perfonn services under an agreement by
which the individual retains substantial authority to
direct and control the manner in which the services
are to be perfonned.
13) "Tax Authority" shall mean the Federal Inland Revenue
Head Office or any of its branch offices estblished in any
part of Ethiopia and the tax authorities of the Regional
States.
 11; il7f..fc-il JJ..trA ~,?t-r ,?l1tTJ 4:1'C .zi~ fI~ ?Ii 4"J Iitffj~ 'H". Federal Negarit Gazeta-Mo. 34 4. May, 2002.-Page 1871

B!' ""tu\-rC" h'i"""t~lt'-"C" P?l't'-" f'l")lf-fl h'i" 14) "Minister" shall mean the Minister of Finance and
fh..f1tf"t AP?'-" "t~lt'-"C'i" f'l")lf11 h'i" fh..f1tf"t Economic Development and "Ministry" shall
AP?'-" "t~lt-f:C 'i"Tro- mean the Ministry of Finance and Economic
I~' "f O~ -r qOD.-,." P? l't.-,. f h..-rr- k I OD")""I P''-'' Development.
f {l~'-" q OD.-,..,ro-; 15) "Fiscal Year" shall mean the budgetary year of the
n;. "fY.l.~ 'u' "I11C h4-,e" "fY.l.~ 'l't' ""I11Ch4-,e" Ethiopian Government.
h'i" "fY.l.~ 'm' "I-OC h4-,e" OtLUh'P~ ODlPl.-r 16) "Category A taxpayer", "Category B taxpayer",
(109 mm e.'1.(1 r.,.r.llJTro-") ,eftf ft-::
'-"C"'9" and "Category C taxpayer" shall have the respec-
tive meanings given to them in a regulation to be
OJ(}-} issued hereunder.
f:' f-ht'P?H'
ii. ,eu h'P~ Oh..-tt>-kf "'P~ fU'''' (}sP'f 0h..-rr-k1 ,3. Scope of Application
.
ro-It'f'9'' (f" hh.. :"r- k f ro-{J;1.fJ 1) This Proclamation shall apply to residents of
1"':" 1 0. iI.,e T t.., "t
,e(f'i"A:: Ethiopia with respect to their worldwide income.
~. 0h..:'.r-k1 "'P~ fAU'.,. (}sP'f1 OTODl'thT h'PJf.
2) The Proclamation shall apply to non-residents of
-t-t..,"t f"t(f"ro- h..:,.r-A'1 ro-lt'f' fJ'I"''-'' 10. iI.,e Ethiopia with respect to their Ethiopian source
11;1-,e(f'i"A:: Income.
2' "111 C f OD h t.. A ""I!!..:1' 4. Obligation to pay Income Tax
P?1~ro-9" OtLU :It"l f"trit.. 1 10. 111 (}ro-OtLU h'P~ Every person having income as defmed herein shall pay
OTy'''11tD- ODlPl.:" ""I-OCfODht..A ""I!!..:1'hl'tO-r:: income tax in accordance with this Proclamation
~. "'P~
6-:-- P?")~ ro-9" "It\ (}11 Oh..-rr-k I .,'P~ .,ro- f"t fJt\ro-: 5. Residence
- u) 0h ,.r-k1 ro-lt'f' *"t fODtf~1 h~t-?i' ft\ro-: 1) An individual shall beresident in Ethiopia, if he:
(a) has a domicile within Ethiopia;
t\) 0h..-rr-k1 ro-lt'f' f"tflfOJ'-"l.ro- P?~k1 (1:1'
(b) has an habitual abode in Ethiopia; and/or
1t\ro- h'i" IOJ,etJO
(c) is a citizen 'of Ethiopia and a consular,
m) fh.. :,.r-k I H.""1"'-" 1t\ro- h'i" hh..-rr-k I ro-6J!'
0 he1 (}'I\C: O"l" t\-"'I1:h OJ,etJO0 TOD"'''',e P't-
diplomatic or similar official of Ethiopia posted
TOD~(I f"tlPt- fl.(f"): abroad.
.,ro-::
~. OhP't- ,N':" OJt-'-" 1.H. ro-lt'f' Oh..-rr-kf ro-lt'f' 2) An individual, who stays in Ethiopia for more than
""*C'f' OJ,e9" OODODil.t\lt hiififE <f>'i"'-"Oil.,e ftf l. 183 days in a period of twelve (12) calendar months,
"It\(}1l t\tL1ro- f:1'hlt HOD")Oh.:"r-kf ro-lt'f' "'P~ either continuously or intermittently, shall be
h1y'(f" ,e~mt-A:: resident for the entire tax period.
3) A body shall be resident in Ethiopia, if it:
C. ~C~:,. 0h ,.r-k1 "'P~ .,ro- f"tfJl'tro-1
U) 'P'i"~/o.-t: Oh ,.r-kf ro-lt'f' h(f"1 .
(a) has its principal office in Ethiopia;
t\) t\ro-'f' f"t,lth'-"A ro-.,,). t\ODltm'-" f"t'fA (b) has its place of effective mangement in Ethiopia;
fhODt-C hi)A 0h..'-"fk1 ro-lt'f' fl'tro- hU''' h'i"/ and/or
OJ,e9" (c) is registered in the trade register of the Ministry of
m) h")Y.h""lfJ11.,-t: 0")""I~'i" h..").&;.It-r~ "t~lt-f;C Trade and Industry or Trade bureaux of the
OJ,e9"OfhAft- f")""1~ o.C'sP'f f")""1~OD1I111iI.,e Regional Governments as appropriate.
fTODH10h(f"1
Q' ""'P~ f(f" (}ro-" Oh ,.r-kf "'P~ fAU''' (}ro- 4) "Resident person" includes a permanent establish-
")1ll.'-" f(f"ro-") O*"t.,.-,. f"tlPt- ~C~.-,. ment of a non-resident person in Ethiopia.
,eaJ.tJOt-A::
~. 110. tJO")6J!' 6. Source of Income
OH.U h'P~ ODlPl.:" ""I11Cf"tht..AO'-" '111. Oh'lHtJ Income taxable under this proclamation ahall include, but
...,eOJ(}")htLU 0:1''f fTHl.H~'-"") ,eaJ.tJOt-A1 not limited to:
U) h-P'f'C f"t1~ 10.1 (a) income from employment;
t\) h")""1~P't- h")-Plt:t>fI.f"t'l~ 10.' (b) income from business activities;
m) fP?lI'i"'i"'-" P't- f"tlPt-. OD-tL<f>~ OJ,etJOltTCT~ (c) income derived by an entertainer, musician, or
O"lA tth'i"m.,ro- P't- f"t111ro- 10.'
sports person from his personal activities;
OD) "'P~.,-t: Oh..'-"r-kf ro-lt'f' 1A(f" (}ro-O*"t f")"If:
(d) income from enterpreneurial activities carried on
P't- ~C~.-,. hP?tt~.,.-,. h"tfh'i"ro-.,ro- f")""1~P't- by a non-resident through a permanent establish-
f"t111ro- 10.'
ment in Ethiopia;
0') Oh ,.r-kf ro-lt'f' h"7.1~ *"t f")""1~ Ft- f:C~:" (e) income from movable property attributable to a
T")<f>...:t>7i
")11l.'-"f"t 'I~ '10.'
permanent establishment in Ethiopia;
l.) hP?,e")<f>...<f>(}. ")11l.+'f h'i" hT<f>6i1.sP:r:fro-fT'Il
(t) income from immovable property and appur-
'10.' hcJ:tJOh11'-'" h""l11C'i"h'i" hJ.>.")f"t'l~ '10.'
hP?,e")<f>...<f>(}.
")11l..y..'f hil.fJ h'i" P?'i":fm-tJO t\.iI. tenances thereto, income from livestock and
inventory in agriculture and forestrj, and income
018-0'-"f"7.'1~ '10.' ".,H.U ")11l..y..'fOh..-rr-kf ro-lt'f'
f"t'l;. hlthU''' ~l.l\' from usufruct and other rights deriving from
fa) OkY.A (IP) fTODl\h-t:'-"") ")11l..y..'fOOD7i'1'f"t'l~ immovable property is uch property is' situated in
Ethiopia;
10.'
(g) mcome from the alienation of property referred to
in (e);
 .,It /iif'.:f(tl ~&-l\ ~;J&+;JnllJ4l1'Cc1i!!
In
n"', !fiU!! "9". .
Federal Negarit Gazeta - July, 2002-Page 1872

if) ~'P&H: Oh.-rr-kf fl1'~ h-ll'tf f"7.fh~lt:l\ro- (h) dividends distributed by a resident company;
fhhft.M X"cif. .
(i) profit shares paid by a resident registered partner-
+) ~'P&~-I: Oh.-rr-kf fl1'~ f"'ODH'lO f7ich'i" "710e ship;
f"7.!h~lt:l\ro- f-rClt: X"eif. (j) interest paid by the national, a regional or local
0) 04 l'..t.A ~'i" OhAA OD'}"'lP':J'+ lD~r Oh1-"7 Government or a resident of Ethiopia, or paid by a
ODlI1'~Y:C:'f lD~cr Oh.-rr-A"f ~'P& fl1'~ (}ro- non-resident through a permanent establishment
lD~cr Oh.-rr-kf ro-lI1' ~",& 11.e11',}9"Oh.-rr-kf
that he maintains in Ethiopia;
ro-lI1' I1l\ro- *"7. f'}"'lY: P't,. Y:el-:" f1'ht.1\ (k) license fees (including lease payments, and
lDl\Y:'
+) ft.lI 011'~ ~'le tt'" (}ro- ~'}-tm4>crO+ f"'(}m royalties paid by a resident or paid by a non-
U Y: hlt:f (01\.11 OD1J+ ODm4>cr')Q;1,crc:) resident through a permanent establishment that
~'i" he maintains in Ethiopia.
Oh.-rr-kf ro-lI1' ~'P& Olf~ (}ro-m.ecr Oh.-rr-kf
ro-lI1' ~'P& 11.eI1',}crOh.+r-kf ro-lI1' I1l\ro-*"'l.
f'}"'lY: P't. Y:el--r f+ht.1\ ft.mtr OD1J+') O"7h
t.f-r.f"7.'l~ 'In..
i. 7. Foreign Tax Credit
Oro-'T' h1e f+ht.I\'} "'l1JClll\"7l1l1l1
(;. Oh.-rr-kf ro-lI1' ~'P&fl1'~ (}ro-Oh'}Y:f"'l1JC Hoo') 1) If during the tax period a resident derives foreign
ro-ll1' cr'}t;Q: hh.-rr-kf ro-Q.). fl1'~ 1n. 111 source income, the Income Tax payable by that
~,}f.l1'~' OILtJ 1n. I\.e Oro-~ h'lC ooht.A resident in respect of that income shall be reduced by
0"7.111ro- "'l1Je oom'} ~'P&ro- Oh.+r-kl ro-ll1" the amount of foreign tax payable on such income.
ooht.A h"7. 1l1ro- "'l1Je I\.e .e4>~lll\:J'A:: Oro-~ The amount of foreign tax payable shall be substan-
h1C f+ht.l\ro- "'l1JC~,}f."'l1JC ro-Uft."7l1:J'tb-tI' tiated by appropriate evidence such as a tax assess-
h+h~.e '"1J "'l1JC +4>'i"7i00f.l..,.'} O"7.f l..7"'l1' ment, a withholding certificate or any other similar
fcrllhc lDl.4>-r lD.ecr O"'l1Je I1I\P'AIlJ)' H'}Y: document accepted by the Tax Authority.
++I1~~-r I1l\ro-hol\+1n. "7l1l.~ ool..711' hI\O+:: 2) However, the reduction of the Income Tax provided
I' I1'lfcr hILtJ Ol\.e O'}o-ll h,}4>'" (;)oolPl.+ by Sub-Article (1) shall not ex ceed the tax payable
~(}ro- "'l1Je Oh.+r-kf ro-lI1' ooht.A I1I\O-r f"7.'" "'l1Je in Ethiopia that would otherwise be payable on the
I\.OA1' h.e'fAcr::
foreign source income.
r' OIP'}ml.Y "m" 1n. I\~ f"'l.ht.l\ro-') "'l1Je 3) In the case of a taxpayer subject to Income Tax on
ooht.A II\O+'} "'l1Je h~.e O",ool\h+ O'}D-ll
h '}+:t (;) oolPl.-r f"7.f.l.1ro- "7'i":fro-cr +4>'i"7j Schedule C income, any reduction of tax prescribed
"'l1JC' .etJ :"'i"7i 11.ec;e c;c: Oh.-rr-kl ro-ll1' by Sub-Article (1) shall be limited to the tax that
I\.ht.A f"7. 111ro- "'l1JC 00 m '} f"7.lD(}'} 11'C;. IIt\.i: would otherwise be payable in Ethiopia computed as
f"7.hlj"(D~ro- OILtJ h'Pl- h,}4>'" ~~ f+OOl\h+ro- if Article 28 (loss carry forward) of this Proclamation
(11...,t. ') "7if.71c) h~I'}~,}'&;' h 1e f"'11ro-'} +e~ applied separately to each foreign country in respect
~'i" h.Uf? O+'i"mA~,}f."'l.ool\h:" +f.C1- ~ro-:: of profit and losses derived from sources therein.
2' OH.tJ h'}+:t f+t.4>f.ro- ++'i"7j "'l1Je' 1n. lD.e9" 4) The reduction of tax prescribed by this Article shall
-rClt: f+110+'} ~f'}~'}.&;. '} h1C 0 "7.00 1\h+ be calculated separately in respect of each foreign
O+'i"mA (1D(}"-r.eC;CO:J'A:: country from which income or profit is derived.
:!;. f"'l1Je 'J~~"''f 8. Schedules ofIncome
~tJ h'P~ O"7.h+l\ro- 'J~~+ 0"'001.0- ht,.+ lP'}m
This Proclamation provides for the taxation of income in
t.1I"'f "'l1JC~'}-'tht.A ~f.~".7A;
accordance with four schedules, as follows:
b' lP'}mt.Y 'V'. hoo+me f"7.1~ 1n.. 1) Schedule 'A,' income from employment;
j. lP'}ml.Y '1\'. hf1.-r h.t,..e f"7.1~ 'In.
2) Schedule 'B,' income from rental of buildings;
f:' lP'}ml.Y 'm'. fhAA oo'}"'lP':J'+ O"7.flDffio+
f1mC oo&.-r ODm4>"7.! hlt:I'i" ~eif P't. 1n. 3) Schedule 'C,' income from business as defined in
"'l1JCh'P~ P'C f+ouf.O I1AI1'~Oll+4>C Oh,}4>'" Article 2(6), but not including activities covered by
1(1;) h+11\fJ--r f'}"'lY: P't,.fJ'f f"'l.1~ 1n.. the Rural Land Use Fee and Agricultural Activities
2' lP'}ml.Y "00". holt-'f 1n.fJ'f f"7.h+t\-+'} Income Tax Proclamations issued by regional states;
Q;1,crC'. 4) Schedule 'D', other income including income from:
v) ft.mt. oo1J-r'} O"7ht.f+ f"'l.1~ 1n.. (a) royalties;
1\) hh.-rr-kf ro-'T' h"7.(}1' h1A"'llt-+ f"7.1~ (b) income paid for services rendered outside
1n.. of Ethiopia;
m) ObY:A oo-ht. ro-1:Y:e hif'i"L~-r f"7.1~ 1n..
(c) income from games of chance;
00) hhhft.M Y:cif'
IP) *"7. I1AI1'~lJ-t.:J'h'}1Jl.-r h.~~ f"7. 1~ 1n.. (d) dividends;
(e) income from casual rental of property;
I.) OlDl\X"1n..
(}) h'}"'lX" P't. .7e I1A""fH (f) interest income;
fl1'C:J'A 'P.7
(g) specified non-business capital gains.
b~:" 1':"cr.
i' O~ cr11f& f"7"f.t."7 "'l1J~-r 9. Foreign Exchange Transactions
O~ MIf& O"t.f.t."'l "'l1J~-r f111 1':"9" lD~9" All net gains and losses arising from any transactions in
ff.t.(} h...,t. 1\"'l1JChh~t.A ft.I1A "'l1J~-I: O+h'i"lD foreign exchanges shall be brought to account for tax
~O-r f"'l-flC 'JOD-r fDoll1' ~,}f.+111':"9" lD~9" ~1f. purposes as additions to taxable income or deductible
f.t.(} h...,t. I1'lf ou11\:t hl\O-rp losses in the year in which they are realized.
1X"ii1f.~fG'r UoIrA ~;It'''' ;lUll) ~1'C c!j1I~?)~ .,., Iufj ~'9'" Federal Negarit Gazeta- No. 344111July, 2002-Page 1873
htj:A I
SECTION n
flP'tnl1f "u" ,0.
Schedule' A' Income /Employment Income
hOD"'tnCfOlf.'~ '0.1
10. Taxable Income
I. ..,l1C fOlJ.h.tAO-r ,0. 1) Every person deriving income from employment is
i).
~ DfI'}?far9" (tar Ooocf>mC 9"tof-r OOlJ.J',.fCD- .

liable to pay tax on that income at the rate specified

Dfle;:far9" 10. ,,~ hH.U O,+:f Oh'}cf>~ Ii) O.t.ooll
in Schedule A, set out in Article 11. The first Birr
h-t-ar lP'}ml1r "u" oolPl~' f10. "'l1Cf.htt:"A::
150 (one hundred fifty Birr) of employment
OoP+mC f0lJ.1~ foo1.ootfCD-l1C H:l (h')~ oo.y.
income is excluded from taxable income.
h9"" 11C) f10. ..,l1C hOlJ.h.tAO~'
. 10. arl11' 2) Employers have an obligation to withold the tax
h~t}-t--r9"J
DfI'}?far9" cf>lf)t l\-t-cf>llJtar ho>J.htt:l\CD- h~.r'} from each payment to an employee, and to pay to the
I'
~'}~ t1tt:f ,,~ "'11~,} oo+.,l1' f1..,..,{tCD-'}..,l1C Tax Authority the amount withheld during each
Ofm~ l\..,l1C h1110.CD-t'lf\P'AIlJ'} 10. UlJY:l.., calendar month. In applying the preceding, income
hf\O-r:: hH.U O,,~ f\-t-"1lCD-h.t (109"f.,thl'l. mce; attributable to the months ofNehassie and Pagumen
fA1-D110. Oh'}~'''-r -t-m:J>/r' ~')~ h'}~' mc 10. shall be aggregated and treated as the income of one
~.,. m t.A II month.
I~. f..,l1C UlJl1h.tf oPllJ); 11. Tax Rate
lP'}ml1r "u" Schedule A

hOD"'tnC fOlf.'~ fOlf.hll(\C- Employment income Income Tax

fmc ~QD(I}1f "'-fiC nOD"'~ (per month) payable
hl1C ~l1hl1C Over Birr to Birr
0 150 h..,l1C ." 0 150 exempt threshold
151 650 10 151 650 10
651. 1400 15 15
651 1400
1401 2350 20
1401 2350 20
2351 3550 25
2351 3550 25
3551 5000 30
3551 5000 30
h5000 O,,~ 35
Over 5000 35
Ig. hoP+mC f0lJ.1~'} 10. l1l\oom{t'}
12. Determination of Employment Income
~. hoo+mC f0lJ.1~ 10.= hoo+mC O'r~ 1'}Hl1 m~9"
1) Employment income shall include any payments or
01,e.'1-r f-t-11 Dfle;:fCD-9"t1tt:f m~9" 1':"9" gains in cash or in kind received from employment
l1.11',}' h+~"" :"1'C f-t-11'} 10. ~e; m1.k-r by an individual, including income from former
f\oP+mC hl1+~"" fo>J.1.l..,t1tt:f'} ~Q;},9"t.A:: employment or otherwise or from prospective
employment.
I. ..,l1C fOlJ.h.tAt'I:far 01~"-r fOlJ.{tm 1':".,.,:f ~e;
2) The type of taxable fringe benefits and the manner
~"H.U 1':".,.,:f fOlJ.{t~O-r rr);,+ Oo>J.~l1-rC':f of their assessment shall be determined by
9"t1c n.-r OOlJ.mllJ1.,}11~m{te;A:: Regulations to be issued by the Council of Minis-
i:' 01.oPm1l ooAt1 f-t-11 1':"9" 00jn.-f:'} mt1/r' ters.
O-t-l\f~ f1,+sP:f l\OO11-r fOlJ.1.l1CD-'}~e; /b/r':f 3) Income received in the form of wages does not
include representation and other similar expen-
-t-oP""~ mQ.1"sP:f'}(OUIJ10t.ce-t-..,t'lC':f. ~')..,~'} ditures (on social functions, guest accommodations,
l\Dfll1-t-e;1~ fmm-r'} mQ.1"sP:f m.H.-t-) h~Q;}, etc.)
9"C9"::
13. Exemptions
Ii:. h..,l1C ." i1f\DfI ~l'" The following categories of income shall be exempt
from payment of income tax hereunder:
fOlJ.h-t-'-"-r 111sP:f OH.U hCP~ oolPl-r ho>J.h.tA ..,l1C
(a) income from employment received by casual
." ~11'C;~I employees who are not regularly employed
u) ODfl'}?far9" fhP't. rrl\-r (IID mt.-r 'lH. arl11' provided that they do not work for more than one
l\h')~ +If)t hh'}~ (~) mc f\Ol\m 'lH. f"1l\1f\ (1) month for the same employer in any twelve
DfI'}?far9" t'll\00-f -t-+lf) t f0lJ.f11 CD- (12) months period;
fAIT"
(b) pension contribution, provident fund and all forms
111' of retirement benefits contributed by employers in
it) O+lf)?sP'f fOlJ.cplf) hlPt.-t-?fCD- fmc 1.oPm1l an amount that does not exceed 15% (fifteen
percent) of the monthly salary of the employee;
I~ TCll''''' !AOf\tn ftn-l,+ OD"'~f TC'~'''''.
(c) subject to reciprocity, income from employment,
L 1~ ~Cj"CjTID""'.e.H'.ftn-l;f-_1'~"i
received for services rendered in the exercise of
th) +oPitit,e. o-~;J- l\h. Tf-k far f'} .,..til.,., l1.1~'
their duties by:
 1X" ii(~f~i ~~A ~,;J~T ,;JILIlJ{}~
t>'%"" Iuni '1'9'".: Federal Negarit Gazeta-No. 344111July, 2oo2-Page 1874
(i) fJl Tft-D71:I1'i" f~1lt.I\9''f lDh.lt.'fi
'h'i" ,.' (i) diplomatic and consular representatives, and
(ii) OD71~lD-9'" 1..9'"qlt.' 1t.,;Jlt.f-1' ~1l11\9'f
(ii) other persons employed in any Embassy,
1Df.9'" fco-~ tt1C OO1'?r'T co-lI1'
Legation, Consulate or Mission of a foreign
+"'1't.co- fH.Y1 U1C "'~f. ftPf.~iJoo-'i"
fJlTft-D7-f:11 f.lt~ Uf: fYtI- 1Df.9'" state performing state affairs, who are national
0'Jt\9'" o+~ ttlP~C 1Df.9'" Ao<Jf: OOIPt.T of that state and bearers of diplomatic pass-
tt1l'l~lD-1 'Lit h'?1IC ~, f(f). fl9':r., ports or who are in accordance with inter-
++1't.co- OtPf.{}m-CPTCO- tt1A'?lt...fo"f national usage or custom normally and
9'"111yo}- ftPf.Y1"f.CPTCO-10,Jp:r., usually exempted from the payment of in-
uP) O+t\f. h10. ~, 'h1Jl(f1'
come tax.
(i) OH.UttCP~ O+t\f. lJA1'7i7ilt 1Df.9'"ilA-I' (d) income specifically exempted from income tax by:
{}t.n Oll+.,.c Ott.Tf-kY co-lI1' OP'~ I\f.
(i) any law in Ethiopia, unless specifically amen-
q", ih1 'fl
(ii) 0'Jt\9'" o.,.~ lI9'"9'"~-fo'fi1Df.9'" ded or deleted by this Proclamation;
(iii) OtPf.tllo}-cr 001..,. 1D~9'"- 0+ 1.t.1 (ii) international treaty; or
lI9'"9'"~o}-f+~"'1. 10.1 (iii) an agreement made or approved by the
IP) ftPf.tllTC''f 9'"l1c n.T lth.l1ljtPf.' t\o<J10t.'f Minister.
1Df.9'" t\ttll+~1.C 9'"111.f-fo1"-OllU ttCP~ 10. (e) the Council of Ministers may by regulations exempt
+1It\- /)CO-:"'i" f1'I'Imco-') "'I'iTCO-19'" 10. any income recognized as such by this Proclamation
01.')11 ~, t\..f1.C'? f.'fl\A:: for economic, administrative or social reasons.
t.) hH.U O.+'f h+nt.ncrT ,;JC 01'.f.fn lttt,)f: I'Ico- (f) payments made to a person as compensation or a
ftPf.~09'" lJ"1IDf.9'" lIfI1'+:-
gratitude in relation to:
Ii. o+.,.q~ I'Ico-I\f. 01.t.fI fttlJA "'~o}-I
(i) personal injuries suffered by that person;
j. 0lt.I\ fico- I\f. Of.t.fI f'JOT tt1.,;J::
(ii) the death of another person.
I1~A r
flP')mt.1r "t\" 10. Section III
hn.o}- h.~f. ftPf.1~ 10. Schedule 'B' IncomelIncome From Rental of Buildings
Ii' '?1IC ftPf.h~AOo}- 10. 14. Taxable Income
OD7'i"TCO-9'"u.~.+ h1'h~f n.T 0tPf.1~ 10. I\~ '?1IC IncoI]le tax shall be imposed on the income from rental
f.h~I\A::
of buildings.
I~' f'?1IC D?l1hkY All
15. Tax l<.ite
h+ht.~ n.-fo'f 0tPf.1~ 10. I\f. ftPf.h~ltco- '?1IC
fD'/.lDfI~co- fD'/.uP1.0CO-'i" ftPf.h~ltco- hH.U O.+:r. The tax payable on rented houses shall be charged,
01'
uPt\h+co- All ~co-:- levied and collected at the following rates:
u) Oih'? ffllD-~T OOi1T h1'fltlJTtD. f:C~-fo'f (a) on income of bodies thirty percent (30%) of
,I\f. It.11"1'?i1C htPf.h~AOT 10.
10. I\~ c!iTCfl1T taxable income,
IIPI\... OOO-f i
(b) on income of persons according to the Schedule B
t\) O'?t\flf1'f 10. I\f. 1'1.11"1hH.u O.+"f O+oolt
h+lD- 1P1mt.1r ''It'' OOIPt.T i (hereunder)

lP')mt.1r ''It'' Schedule 'B'

'?1IC fD'/.h~AOo}- f'JOOo}- ftPf.h~ltco-. Taxable Income from Rental Income Tax
fh.~f.10. f10. '?i1C Ooo-fo~ (per year) payable
h1lC 'hllh 1IC
Over Birr to Birr
'0 1,800 h'?1IC a 0 1800 exempt threshold
1,801 7,800 10 1,801 7,801 10
7,801 16,800 15 7,801 16,800 15
16,801 28,200 20 16,801 28,200 20
28,201 42,600 25
28,201 42,600 25
42,601 60,000 30 42,601 60,000 30
h60,000 Ol\f. 35 Over 60,000 35
II' "HIC fD'/.h~AOo}-1 10. lIt\OOID{}') 16. Detennination of Income
ii' 00.0}- h.~f. 10. I\f. fD'/.h~t\co- '?1IC ftPf..+flOco- 1) Income from rental of building shall be computed as
hH.U O;r'f O+oot\h+co- OOIPt.T f.1f'i"AI follows:
u) 0.-1: mf.9" '?0.lD- h~/):J>co- f+h~f 'h11.(f~, (a) if the tax payer leased furnished quarters the
flJ:J>lD- mf.9'" fuP"1~.fco- h.~.e. hm:"I\I\co- amounts received attributable to the lease of
10. ,;JC f.1.OD~AI furniture and equipment shall be included in
income.
":"-~,~!L);1,~t?,(~1Ir_C,j}8_~.k.~~~IR{n'.?::,c,
.,,;
.,.'
A) ,~b~U O~b6-rT fOt11(1)o 10. fo.1: .111\0.""
A."cD- hb~,l', bOtbLAen- f~J. ";1' f(l.t\m
- b"~"'b~,l',"'en- fOt,h~~ "H1C h~T ..,-n~1.
--fD}.b~it-:,.O~,.~-r f10. A~~:-r",l', ~en-~-
th) . ..,-flCfClll.tt~~0-r10. OOtIP"O""1.tJ. fOth.,.ft-""
bm"""" 10. ",l', "'+'i1i ,l',"I.;Jft-;
{if h1n. ..,-nc Oh.,.+C b.,.h&.fen- 0."'" ;JC
,.,.bLA fOD~"" ;C'J'OC-h'ift1t1'
0""'"
:1'hlu
(iif 00111-0 It':''t,l',rF ..,-nC h~f"T Ao."'~1
"o.-r bJtC; "ODUftl oy,,7)f OIfm1'1'i
lf~c~C; liD.,.\1.1 (.IlTtf'Lf1i1) fOtt1'1
bo.-r' ho.-r bJt'i hODUttl hOt 1"fen-
fh.~,l', 10. h11; h9"il.,.'1en-1
m"""
(iii) ~1I1-n AOt,l',tt-1-nC h~f"T' ..,-oc h~~
1D1J.1.~:r:1 'ODJlll.~ "71.;J1'1' ~llh~I\
1:l.ll Ou.tJ hCP~ f.J.OD'\hi:-r 1"PT
~,}1."'mO-k t1'~1D-fh.~~'} 10. A"7"'1""1
Ah.~~ ,..,1;' F~ CPll-r'i
~1:t>llJtc'Len-1 ""7ll+m!:\'
ID"'-~T "'+'i1i ,l',1.I.;Jft-IIi-+'i1i
I.,.-r ID"'-~T n~~fttJ l\,l',ID{)'"AOD~-r
1\.11(h.~") Ao.+TI Ao.-r bJt'i AODUttl
"7.(ttf"m1~'i A'hc1:'i OD"'h.l (.IlTt
llf1i'})f OHotJ h"~ h1"'~'f)r ODIPI.:"
~'}.Il"''' fl1'}tJ 1DI\1;f fh.1~~1ll
hl.ra'}'f"tt1'~en- OJ"'- OOt,l',tt--r OD1f1-n
ODIPI.-r"'+'i1r ,l',1.I.;Jfr' .
I. "'b~,l', f"'h~fen-') o.-r ODA(I ~'}.Illh~,l', fOtL:t>1;
fo.-r I1Ao.-rf "'h~~ ",-o~1 q,l',h~!:\ lll\~C(t. t1''i 2) The owner of a building who allows a lessee to sub-lease
"'.f1~1 fODhLA ;)"4o"-r ,l','iCO:1'AI'
e. Ah.~" f"tlP~ o.+T "'lPc.,.en- ~1~A-k 1D,l'," 0.-1:
~ '}l."'h~fi I1".Ai: O"t "'1;ODen- 1.11.fo.-I: 111\o.-r'i
ft1t'nen- F~ .,.*~~ fo.-I: ..,,11:1' f"'m'i++ IDW/"
o.i: f"'h~f OD"'''''1 bo.i: h.~" OOt11en- 10. ",l',
f"tLA1cD-1 ..,-OC ODhLA lAO:"'} {)en-({)~:y.) ll"l,
hl:~'lf'i f..,-oC b~t. ODI\1rk'1'C 0.-1:I\DtrSo-r +01\.
ODll"'~I:C "7ll:1'OJ" hAI1:fen-1If+O"-en- ODll"'~I:C"
O~(t. h-1--1-A OJ,,"hHoU 0"" 0"'11\Oen-ODIPI.""
f"t11iCJ)o'} pIIl.)f AOtODAb.,.cD-f..,-oC hll10. 111\P'
AIIJ1 Mll"'''''~ ..,1.:1' hAO-1-11
h~A
flP1ml.~r "th" 10.
f'}..,1; F~ -1-c~ ..,-oc
Ii. 01P1ml.Y "th" 10. fOtllJl\en- ..,-nC 1D{)1
""
b'}..,1; F~ ~'}:t>llJtc'L0"'11 ..,-oC f"thLAO-r 10.
f10. ..,-OC~f"'IIJA .e.{)O{)I1A,'
""
I~. ..,-oc f"thLAO-1- f1..,1: P'~ 10.
..,-oc f"tbLAO-1- f1..,I: P'~ 10. "'+I1,l',~-r l11en-1
ftl\-o hll11 ODCtJ OODh.,.A fOt";J1:en-1 f-1-C~'i
h."'~ tl\-o OJ,l'," f10. OD"'A~ ~'i ,l',tJ11 hCP~ ~'i
f..,-oC hll10.en- I1AP'AIIJ1 f"t!lDtlJen-1 ODODtl
OD&PI.-1- 0"71;1.'" 0~1'}JS,}~ f..,-oC "OD1 ,l',1D{)'iAI'
Ii. M-flC ODtlJ).
f{)en-.,-1-OD-o-1-f.,.{)tlJ=fen- 1;C"f:+T ..,-nc
Ii. 0""'"
h-thU\O-1- 1OJ:fen- ",l', (~1"C{)1-r) 1P"l\ OOD'"
..,-nC "h~"ft-II
I. O'}..,1: F~ f"'lP"7~ "-troT ..,-oc h~f"T
""
O"'f.11~-1-..,-oe f-thLAO-r "..,1; P'~ 10. ",l',f
hlLU O:l"T O"'ODAb.,.en- &p'}mI.Y "th" ODIPI.-r
..,-fle "h~"ft-..
Federa1~eg~t~2azeia:~No. 3141bjul~~2002-Pag~)875
-
(b) sub-lessors shall pay the tax on the difference
between income from sub-leasing and.the rent paid
to the lessor, provided that the amoimt' received
from the sub-lessor is greater than the an10unt
payable to the lessor. ..
- (c) the following amounts shall be deducted from
income in computing taxable income:
(i) taxes p~d with respect !o the land and buil-
- dings being leased; except income taxes; and
(ii) for taxpayers not maintaining books of ac-
count, one fifth (1/5) of "the gross income
received as rent for buildings furniture and
equipment as an allowance for repairs, main-
tenance and depreciation of such buildings,
furniture and equipment;
(iii) for taxpayers maintaining books of account,
the expenses incurred in earning, securing,
f\dDhm"'" and maintaining rental income, to the extent
f"'''I..1- that the expenses can be proven by the
'lOt" taxpayer and subject to the limitations
specified by this Proclamation; deductible
expenses include (but are not limited to) the
cost of lease (rent) of land, repairs, main-
tenance, and depreciation of buildings, fur-
niture and equipment in accordance with
Article 23 of this Proclamation as well as
interest on bank loans, insurance premiums.
is liable for the payment of the tax for which the sub-
lessor is liable, in the event the sub-lessor fails to pay.
3) At the earlier of the time construction of a rental building
is completed or when the building is rented, the owner
and the builder are required to notify the administration
of the kebele in which the building is situated about such
completion and the name, address, and tax identification
number of the person (or persons) subject to tax on
income from rental of the building. The kebele adminis-
tration has the obligation to communicate this infor-
mation or information obtained by the administrations
own initiative to the appropriate tax authority.
Section IV
Schedule 'c' IncomelBusiness Income Tax
17. Scope of Schedule 'C'Income
Income Tax shall be imposed on the taxable business
income realized from entrepreneurial activity.
18. TaxableBusiness Income
Taxable business income shall be determined per tax
period on the basis of the profit and loss account or
income statement, which shall be drawn lD com-
pliance with the Generally Accepted Accounting
Standards, subject to the provisions of this
Proclamation and the directives issued by the Tax
Authority .
19. Tax Rate
1) Taxable buisness income of bodies is taxable at the
rate of 30%.
2) Taxable business income of other taxpayers shall
be taxed in accordance with the following Schedule
c.
 1X"i~~f~ ~tA ~?t-1-;Ju.II)~'J'C~c~i; +lIifj",9"" F~;~fal Negaqt Gaze~:::;-~(), 34 41blqly, 700Z~P e 1876
~ ,
., , ,;;.
, ,
~::-.,;;
"':f"~:..""-- . . ,
,"""""",,, ,",
:::,
"'-.,!',. ~...
"".."_.-A~. ~
. ... .
-~ .
~
ScheduleI ~.
"''''?'"-~~ -'-" ," ",
'
'~''' """' """.
'"'- " ' ~'. .:"~"Y.', '..
'\.,
lP?m(.,v "m~!' ;~, ,.,<':
"
1of1C"f"th,IC.AO+ f4f0D+
f'~~~~ 'ffl. ,-..J
"
'- "
f'Ul"'/-ac
'.'
if"t~I\fD<
,OBD""~
';,
j: . Taxable
,
Business Income
( r, ear)
h-o,C u~lih ~;r. Over Birr - 'tQ Birr
' >

0 1,800 h"NIC ~, 0 ,1,800'

1.801 ,. 7.SOQ . 10 1,801 :1,800
7,801 16,800 . 15 7,801 'I
. <16,800
16,80 I 2&,~00 20 16,801 28,200\
28.201
"
42.600 25 28,201 42,600
42,601. 60,000 jo 42,601 60,000
" () l\g,
h60,000 35 Ov~r60,OOO
.
~.
~ ++'111 CD"'-1P"f"
20. Ded~ctibJeExpcnses
"

Oh.+f"A-I'~i1'1' "'/11C. f"7.h-'-AO-1-' t1'}"'~ Fir In the determination, of business incQme ,subject to
f"t1~ 10 O"tooM-r OH.Uh'P~ f+oot\h-l:-r 11.(1"f tax in Ethiopia, deductions shall be allowed for
~'1."'mO. rr'1m-f "HIC h'i-" mtX'l.~"f' 1171.;11'1' ,expenses incurred for the purpose of earning,
~i1h:Ft\~t.n l\''''~ F(,.m- 1n. "D7"'7-ri ",.."." securing, and maintaining that business income to the
pi&.tD- fJ'h:r-' t\ooi1m+' ~'~n.4'I1.m-' ''IT'/i1'''mA exteI1t that the expenses can be, proven by the
f.,.1.t.'1-mn1.9'T ++'111 ,,1.I.:J{ru taxpayer and. subjeCt .
. ~) .-;.
to the limitations specified by
~b. "'''''Ji M~1.t.'1- w~""f this Proclamation.
b. fOJ.,h"'{r-r CDQ;ljP"f.,..,.C;7i h"1.I.","": 21. Non-Deductible Expenses
V) OH.tJh'P~ h,"';t ~r OOIPI.-rf~C~' :"'7i 1) The follow1n{ expenses shall not be deductible:
~t..,t\:':', f1..,~ F&.tD-'}U11-r''IT'/'''7-r: (a)1he cost of the acquisition, improvement,
t\",VfA: t\lT'/1.i1~' ooA(t "oD.,'fI-r , f.,.1.1.1 ,
renewal, 'JIld. reconstructipn of business
lDQ;}.: "
assets that are depreciated pursuant to
'

't\) th-tl'}flD"'} hh"-M W"".. t\-f'eDW1Of7ich'l . ArticJe 23.of this Prqclamation;

..,..,OC ooU'l.+f"~m-' t]1;;t'A 0'/111."': (b) an increase of the, share of capital of a
tit) h~... fme 1.oow1fI~ TCI'I'}-r(hF (,. companyor the basic capital of a registered
J\,.,,+ Otllt"') f"7.1.t.'" fml.:1" I18cp(;Ao partnership; ,
0""
.""fl"C'~'}-r L'1:: (c) voluntary pension or providenJ.,Jundcqn.
00)
'

flMhla.f"'i"f ~'.Ilfm-.-1- '.,.1.1.1 fJ\h Ui,butiOnsover and above 1~% of the

A..Mg-clf ~' '.,.hLt\ f-rCtt:~c?f: , monthly salary of the employee.
fP)' tWttll.6- I)'h'l O,..,~ 1)'11"f out]hA (d) declared dividends and paid-out profit "

o-i"U1 1I1:C h"'1.:1"l'111 'CDt\!: outfJ~ 'shares;

(e) interest in excess of the rate used between
I TCll+ (v-f\-r 0-"') 0"" fl1'~f~t\f: CD~ 1 the National Bank of Ethiopia and the
I.) foo~ "hT'l' 1Iof.'},,,m- ~-rf . cOmmerciAlbanks increased by two (2)
1'1) ~:'" rtJ".}- '-f-hLt\ f-,..JI-r t].., 1\'1 percentage points. '

~I (f) damages covered by insurance policy;

i) Rff.IIJ\":E- h.,.L+1.. m-Q;t.~.Ili1 ouml)O-t, (g) punitive damages and penalties;
,,/toft.,~ 1lI~" h"'L+~tIJo118m' (h) the creation or increase of reserves.
""
r--mClOoJ:f.'} -m' "'Ita1...,m"". ".,.", provisions and other special.purpose funds
,,,,,, f"ttlJoA unless otherwise allowed by this
"'"-0 D7i1"'OU'l'i Proclamation;
+) O""mL.Y" tit" 1n."~ f.,.hL" "I11C,1 w"".. (i) IncomeTax paid on Schedule C income and
fOJ.,1.t..., f.,.Q;1.D7&~11.-r :1"hi1i
"'''''''11 recoverable V a1ue~Added Tax;
0) "..,1: 1:C~,} whit- f1:1"9'"f
(J)/J.\f 0"''''''
(j) representation expenses over and above
"oP1"fT f~'" hlP(""'~m-1.OP"'1f 10% of the salary of the employee;
j
hi TCI'I1-1- '''to,A'1' bl1''1 (k) personal consumption expenses;
.,.) MA tt:~;r mlA9'"ff
(I) expenditures exceeding the limitS set forth
:r:) OH.U h'f'~ CD"" "U" ~'P~ OUfPl.-r by this Proclamation pr Rejulations issued
n-J1:t.., R"tCDIII ~'11 h.,.1.1.1 1~11 hereunder.
0""
f"'~/.1 ~I (m) entertainment expenses;
'1) fllP1f'i"~ lJ)Q;tjP":f-1 (n) donation or gift.
1) lttn:J- mg,,. AC~#i 2) Notwithstanding the provisions of Sub-Article (1)
I. 01l1l J\'}+1r 'Oolt, ",.,.;t (li)(1) f.,."."h.,.m- (n) of this Artiete, the Council of Ministers may
n.'iCf"'I M~lt""'C'~ "..tJC f1.-r t\i'h1f11 ~ by Regulations allow donations or gifts Pl'Ovic1ed
f"","A iJC~:1' III"" lltn:1' T+'i1I )\'}.IlI1" for public use to be deducted.
t\.L:p.~ ~~AII 3) Interest paid to shareholders on loaDS and
r. qMbt\f"r~ All-I)'}!. fl'lm-r -o..('C ~' advances shall not be deductible to the"extent
f:p.~ bti:f 0"",,(" f;rblt "tID'}m-n1' Oh.,t]'S that the loan or advances in respect of which the
hll-q"),. "ht\M t]"C;rA ":1 J\&.-r"1'ti: interest paid exceeds on average dUrin. 'the tax
htn A"'~ "'i' A:p.~ hfi:,. MhL"'"0"" periOd four times the IIDOIIDtorthe sb8N c:apital.
8M: ~ J\u.~ M'" 0'4-' f"'~1l'" 1bis sub-Article does not apply 10 batab and
OlJ1hA'i"o.-~ tJ.q')""f 1\1."'L"~'" insurance companies.
,~ ii1.~f~ U-&-IA ~:J&."f-:JfLIfJ.1'C @! "~?)1+' Bifji ~'9'" Federal Negarit Gazeta - No. 344'" July, 2002-Page 1877

. hh-1)1f eD-~ fft- ibit-"f ~C~"'"f1 O"7..ool\tI."f- 4) In the case of bodies other than companies, Sub-
hflU Oltf, fhtlltf"1 il1::h~\ f"7..l\lD- tltt..., Article (3) above shall apply as if for the reference
00IPt.:J'ce 111::J'.:\ 0 "7..A f.,..,. il 0"7..11'10 -r 1.tL to share capital there were substituted a reference to
f1lHt h1~f\ (r) ~1_"J'l- .,.L'''7.. f,l1'c;A:: basic capital.
1)1' 000 .:>"' f"7.. 1~ f1"'~ iJ:f' 22. Trading Stock
..,{lC tl4.~ f11eD- 1{1. O"7..lPltO-r 1..1. O..,11C 1100). 1) For the purposes of ascertaining the income of a
Ii'
eD-it'l' l\.,.Wm 000.:>"'l\"7..1"S f1..,.(' iJ:f' f-N', person for a tax period from a business, there shall
t.1eD- mQ;t" ",~c;7i f,1.t..:>A:: be deducted the cost of trading stock of the business
0..,-0 C ~oo-r lD-it'l' l\.,. 71ill- 000':> 111 f"7..11- disposed of by that person during that period.
I'
f1.., ~ iJ:f' ~"f f .,.1.t. 1 OJ(J;\. f"7.. (}ItlD- 0 h OIJil"S 2) The cost of trading stcok disposed of during a tax
f m Q;t" it ib-r 1.. OIJl\ -r9" 0 00 .:>"1 f"7..11 lD- period is determined on the basis of the average-
f~f1.c;1'&;' iJ:f' "'P.:>OhOlJil"S OJ{J;\.~ 1-'t1PI\ O"7..fit cost method, i.e. the generally accepted accounting
"fl\eD- hm:f'I\f, .,.~I)f,~-r 1)11lD- f'Ut{l hfJ'1I principle under which trading stock valuation is
itib-r 001Pt.:" ~lD-:: based on an average cost of units on hand.
r' l\flU h1~'" hL'I09" "000.:>"') f"7..1"S f1..,.(' 3) The term "trading stock' means any business asset
iJ:f''' OIJl\ -r 09" C-r '1.1.-r lD-it'I' 'I'.p 9" 1\f, f If'l\ that is either used in the production process and
mf,9" f9"C-r hilA ~1-'t11'1 f-N',t.1 f')..,.(, Fir becomes part of the product, or that is hold for sale.
V{I-r m f,9" l\ 7if6ll' f.,. f II OIJc;:flD-9" iJ:f' ~m'::
23. Depreciation
~r' f~C~c; cpc;7i
..,{lC f"7..tlL.:\0-r1 f1"'~ Fir 1{1. l\ooOJ(}')
1) In the determination of taxable business income,
b'
~ the owner of the business assets may deduct
f1"'~ Ft.lD- V{I-r 1)l\f1.-r l\1..,.(' FlrlD- V-O.,.'1' depreciation for business assets.
f~C~c; cpc;7i 0IJ~t..., f,"fl\t\:: 2) Fine art, antiques, jewelry, trading stock and other
I' F~ 'I'O{l: f'l'1-r iJ:f'~'1' : tltIOot-OIJiJ~c;-r f"'LPot-
'l.IIJ'l.iO"f ~c; It.it-'":j' 'P .:>rlD- fOlJf,.,.')it ~c; 1.tL
business assets not subject to wear and tear and
fOlJf .:\ tt:1)TeD- f1.., ~ F t. U11.,."f1 0"7..00 l\ tI-r obsolescence shall not be depreciated.
f~C~c; cpc;7i hf,L~~9"::
3) The acquistion or construction cost, and the cost of
improvement, renewal and reconstruction, of buil-
r' f ih1' mf,9" fibit-'":j. ",'I):J'~"f 1)l\f1.-r l\0011',):
ih OJJ!.9" It.it-"f .." I):J' ~"f1 l\0IJ?i'?i'A: l\ OIJf. it dings and constructions shall be depreciated in-
~c;" 00.:\fll\0011fl-r f.,.f.t.1- OJ{J;\.~"f l\~f1.c;')~ dividually on a straight-line basis at five per cent
O+c;mA O~'I''''~ f~C~c; h~c;~it 111..ooLPt.-r l: (5%).
TC()'}-r !~CJ:c; cpc;7if,f.t..:>A:: - 4) The acquisition or construction cost, and the cost of
..,n-4.'C UIA~-r flt.I\rlD- U11.,."f fll\f1.-r l\ool1',) improvement, renewal and reconstruction, of intan-
2' gible assets shall be depreciated individually on a
tiJf,9" ~fflU1 U{I.,."f l\OIJ?i'?i'A:l\OIJf.it ~c; ooA(I
l\0011fl-r f.,.1.t.1- m{J;\.~"f l\~f1P',)~ O+c;mA straight-line basis at ten percent (10%).
ooLPt.-r J~ TC(}')-r 5) The following two categories of business assets
O"''I''''~ f~C~c; h~c;~it "1..
f~C~c; cpc;7i f,f.t..:>A:: shall be depreciated according to a pooling system
~, hflU 0:J'"f Oo.l\-r 9"~11 f.,.ool\tI-t: f1"'~ Fir at the following rates:
V-o.y."f O'l'CP':\ f~C~c; h",c;~it FC~-r ooLPt.-r (a) Computers, information systems, software
~'I'I\- O+ool\tI"'eD- 001lJ~ f~C~c; .pc;7i f,U.,I\ products and data storage equipment: twenty-
T'P .:\I five (25%).
U) lt9"1:eD-"'e'"f: fOOt.~ FC~"'T: ffltt:-r'C (b) All other business assets: twenty percent
lD-tI}..y."f~c; foot.~ OIJtlOIJ:roo"'l,f~"f ?)~ (20% ).
TC(}1-r 6) In each category as referred to in Sub-Article (5),
l\) ibl\-"f II'/c;rlD-9" f,)'" ~ F &- the rate of depreciation specified in that Sub-Article
V-o.,."f t)' TC(}1-r .' shall be applied to the depreciation base of the
7;' tlflU Ol\f, 01o-it h1.,.'" (~) l\.,.ool\tI.,.lD- l\h!') category .
~1~ 9"~ f"'m(}~lD- ThC~c; ~c;7i ooll}~ 7) The depreciation base shall be the book value ofthe
Of9"~o- l\~C~c;lD- cpc;7i ooLPt.-r 011'~lD-'1."11 category as recorded in the opening balance sheet
1\'- .,.L,,,,--t.f.l;J':\:: of the tax period:
l' f~C~c;lD- +c;1i 001Pt.-r 0:J'\1(}' HOO')oo"f.ool,f (a) increased by the cost of assets acquired or
f oo.,?f '1."1-0 "7..'" I\f, f.,.OOII10lD- f 00111{I If';J .
created and_the cost of improvement, renewal
"'11'1: OflU 'I."{I I\f,: and reconstruction of assets in the category
U) Of9"~o- fft- U{I.,."f fll\f1.-r l\0011',) OJf,'/" during the -tax period.
h.c;-'tit U{I.y."f1 l\ooooFt.-r OJf,9" ~~flU' (b) decreased by the sales price of assets disposed
V-o.y."f l\0IJ?i'?i'.:\: l\ OIJf. it : 00 A (I l\ 001 ') fI-r of and the compensation received for the loss
O:J'tJ it "00). f .,.1.t. 1 OJ{J;\..,. {J;},9"e': of assets due to natural calamities or other
l\) O:J'\1it "00). f"'OJ1~ iJ:f'~"f f7if6ll' If';)1 involuntary conversion during the tax period.
O.,.L'I'C' h1..:> l\OJf.OO- OJf,'/" 0lt.I\ tlcf!1'1'C 8) If the depreciation base is a negative amount, that
eD-Q;1. 011''' 9"\11 f-r l\lD-'I' 1\.:>mOlJTlD- amount shall be added to taxable profit and the
V11-r-"f f.,..,-r hUf "'d>"\hi Po/PI;'b ,:
~, ~C~c;eD- cpc;7i oo~.t.T titLe' 0:J'"f tll1'~: titLe' depreciation base shall become zero.
9) Ifthe depreciation base does not exceed Birr 1,000
0:J'"f fl1'~eD- (IOm1 ..,11C tI"7..hLAO-r -rCtt: I\f.
the entire depreciation base shall be a deductible
"'1.9"~ ",c:E-c;~ c'fc;7i 001Pt.-r tLe' f.1.t..:>A::
business expense.
i' ~C~c;eD- cpc;7i ODIPt.-r tI{lC !in: fOlJf,OA1'
10) If a revaluation of business assets takes place, no
0"'1.11'10:" 1.lL f,U oom1 Oh')~ 1.tL tI')..,~
F~ '1.,,-0 Itf, +~c;7i f,f.t..:>A:: depreciation shall be allowed for the amount of the
revaluation.
I' f1"'~
.,. ALII'/ I,Ft.eD-
~ i\.:,. u-o:,.
f +11 ~1f.1c;
~ 1 f.11'~:~1-'t1oo-r
.,. {J;},OIJ .,.f.C1u
1,(1)-~ i'I.-r 11) In determination of taxable business income a
"'C~C; cpc;7i ooaPt.-r "If hf,OJ(}~9":: deduction is permitted in respect of each category
of business assets for the maintenance and im-
Ii' ..,-oc f"'l.bL.:\0:"1 h1"'~ Ft,.lD- 111t.-r f.,.f.t.1 provement expenses of business assets belonging
~c; fOlJ?i'?ff :"\1\1l\~ OJ{J;l, ~1-'t.,.~it
f'l'1c; to that category for the acutal amount of the
OJ{J;\.
f,1.I.:1':\11 11'1f9" OflU ~f,~:" f"7.."'''(}lD- expenses, but not in excess of twenty percent
oom"} l\W"}.c;1.&;. f1"'~ Ft,.1{1t.-r f~C~c; .pc;7i (20%) of the deprciation base of the category at the
hf,"f.:\,/,,:: end of the year. Any actual expenses exceeding this
ODaPt.:" bl1'~eD- 'I."1{1 1) TC(}1:"l\.OA'I'
OJQ;1.f~C~c;lD- twenty percent (20%) shall increase the de-
bf) TClt1:" Oltf, fl1'~eD-1 :"\1\1l\~ preciation base of that category.
:"Ii1i ODIPt.:" btt: l\"7~t.'" f,eD-I\AJ:
 1~ li7(~(t~ t..1..~1A ~;J~+ ;JH.IIJM~~.,.') lun!! ~'9". Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1878
.
~!! f,)"'.(' P'~ ,)-o~+ 1I0J00J0C 24. 1'ransfers of Business Assets
Ii, 0')"',(- P' ~ h,).p it? f1.0J0it 'I' 'I'.p9" Itf. f cpt\ ') 11~ -r
f.,.ifm: f.,.t\mm' my,9" O"'iCf'TOJo9" t\.It 00')1f: I) When assets used in a business are sold, exchanged,
f.,.ltt\~ h ') 1.rr~: Oh ')-'tU ~f.~1: 1I0J00J0C or otherwise transferred, gain or loss is recognized
f"'"1'
'I'.p9" OJf.1J" h..., ~ h..,9" -r 0J0it 'I' fOlJ.1ll f.1f' Cf'A:: on the transfer.
I' h ') 1.1 Cf' f 00 1.~ 1. + '1.1.-r .,. ~ 'I OIJ. fOlJ.If'') IIT(I)< 2) Transfers of business assets among companies
h-ll')fsPr f,)"'.(' P'tr ,)11~+ h}'')~ OJ1.t\.ltOJo
which are parties to a reorganization are not treated
oo"'ltt\~ ')-o~1: h,) f..,. ifm },fit.f.'rc9"::
as a disposal of the property.
E' h')1.1Cf' fOO1.~1.+ 'l.1.-r "'~'l0lJ. flf'~o.)'1 flf'~ 3) The value of business assets held by a company or
llTOJo h-ll,) f / h-ll,) fsPr f,)"'.(' P' tr ,)11~-r hlb-r
h')1.1Cf' fOO1.~1.1: '1.1.+ hOO~6tJDo O~-r h~OlOJo companies which are parties to a reorganization is
f')-o~1: hf1.+ ;JC },').(' f.1f'Cf'A:: Ooolf'~9" "'tOJo the same as the value of such assets immediately
fhC~Cf' .pCf'7i 'lltl1 h')1.1Cf' Ooo1.tr1.-r OJJ.>..;-t.. before the reorganization. Similarly, the balance
m~OJo h-ll,) f Y,HCPOJ~IA::
value of any depreciation categories shall be carried
Q' "h11.1Cf' 001.1,.1.+" "'it\+;
u) ~CP~~:rTOJo Oh.+r-k.f' flf'~ fu-t\-r OJf.9" nvp.r.
4) "reorganization" means:
hu-t\ + Oltf. flf~ h-ll,) fsP"f ooCPUY.;:
t\) Oh.+r-kf ~cP~ flf~OJo') h-ll,).f' .('9"/J (a) a merger of two or more resident companies;
fOlJ.!fl'l' },h(LM CP;J(~ TCfl')+) '/9"It 000'" (b) the acquisition or takeover of fifty percent
my,9" ft\.lt-r m.pltlt hhfl.r-~"f') CP;J
'/9"It (50%) or more of the voting shares and fifty
000'" h')1.1Cf' OOlJ.J.>.tr1.OJoh-ll')f },llA flf'~
.(-C~+ O0lJ.!110J0 },hfl.r-') t\0J0'l' 117 percent (50%) or more of all other shares by
f.,. if m OJf.9" O"'i Cf'TOJo9" t\.1t 00 ') 1 f: f.,.1t t\ t.. value of a resident company solely in ex-
h,)1.lf~: change for shares of a party to the reor-
m) h ') 1.1 Cf'0 OIJ.1.I,.1.OJo h-ll ') f 0J0it'I' },IIA t\ If'~ ganization;
h-ll')f Ohhfl.r-') .('c7i h~f ~1.(' A~ 0011-r (c) the acquisition of fifty percent (50%) or more
O"'i f fl'l'Cf' f .(-9" /J .,." + c;: 117 0 0IJ.f 111~
},I),=\'): Oh.+r-kf ~cP~ hln h-ll,).f' Ul1-r of the assets of a resident company by another
OJoit'l' (2 TCfl1-r) '/9"" 000'" OJf.9" hILI resident company solely in exchange for
Olty, t\t\.1t no.
""f"~ f ~cP~ t\1f'~ h-ll,) f f.,.flm voting participations with no preferential
mf.9" f"'ltt\~ h,)1.If''': rights as to dividends of a party to the
00) Oh.+r-kf ~cP~ flf~ h-ll')f OJ1.u-t\-r OJf.9" reorganization;
hflf Oltf. OJ1.lf.,. h-ll,) fsP"f ooh'i-t..A: (d) a division of a resident company into or more
LP) h') .(' f,).., .(' P'tr .('C ~ -r f.,..,. /JIt sP:t:')
tyc:rlA: f .('c~1:,) tt-c:rA t\ftt- fl..f'h'i-Ct:A resident companies; or
~0J0:: (e) a spin-off
fflU ~f.~1: h')J.>.1Cf' ooJ.>.tr1.-r tryt\-r9" The Tax Authority shall ensure that the mer-
OJoU1.+: Ot\.1t 00 .f'1I: oo.,.ltt\ Ct:: ooh'i-t..A ger, acquisition, takeover, division, or spin-off
OJf.9" f.,..,. ~It sP"f tt-c:r A fCPCf' 0J0') f') "1f:
P'I.. h-ll,).f' tt-c:rA OJ1..f'tt- 00[j;J1C CP')~ is not having tax avoidance as a principal
~It"'i f:rhit ht\1t t\try"11'+ .f't\oolf'~,) f"111C objective.
},1I10,0J0 llt\P'IAIIJ') "'i~;J1'1' },t\O-r:: 5) The rules of Sub-Article (1) - (4) shall not apply to
?;. hflU Oltf. h')o.it }'1"'~ 6-0 f.,.J.>."""0J0 O},').,.~ the transfer of assets described under Article 23(5).
1)E(?;) f.,.oot\h.,.OJo') f').fll.} 1I0J00J0COOlJ.oot\h-r 6) Loss shall not be recognized on the transfer of a
"'~'OIJ. },Y,lf19":: business asset to related person within the meaning
}. t\h."'~ iJOJo.pCf'')itt\ooitm+ f"'~1~0J0 O},').,.~
I(!!) OOLP~+ "'')"f,.,+ llltTOJo flsP"f ootthA fOlJ.J.>.
of Article 2(4).
~..,') f,)"'.(' P'tr ,)11~+ 1I0J00J0C},f.oot\h-r9":: 25.Bad Debts
~?;. f"'i f.fl 0 fl-o iJ~ In the determination of taxable business income, a
hlL U O:r r f.,.oo t\ h1: + u-}.:r sPr fl. u:l.ft- "111C fOlJ.ht.. deduction shall be allowed for a bad debt if the
IAO+ f1..,.(' P'~ 10. OOlJ.OJfl')O-r l.ft ftryf.flOl'1o- following conditions are met:
iJ~sPr "''''Cf'7i y,1.~;Jft-:: (a) an amount cOITesponding to this debt was
u) h"'iY,flOflOOJo iJ~ ;JC ",001lJ1IJ~ previously included in the income;
flf''' 'llt-o .,.1.9"
fl.1A 01"1.(' P'trOJo 10,~+ "'f.fI hlf'~: hCf'; (b) the debt is written off in the books of the taxpayer;
t\) iJ~OJoh"1-oC h'i-~ f'llt-o 00111-0 f"'LP~H hlf'~: he;
m) iJ-':0J0') t\ "'i it 00 t\ it 0,0J0 f dt "1 h C9" jf .,. OJil Jl. and
"'"
'10. Il"'l'(-~'" ft\oo:rft- f"'~;J1m (c) any legal action to collect the debt has been taken
hlf'''::
t}. IIf.JY,11J ~C~.,.:r- f1-tf.4>J!. At! oomf/fl4:f but the debt is not recoverable.
26. Special Reserves for Finance Institutions
..,-OC fD?h~IAO+ f'i-f.Cf'')it.('C~'''"f f')"1f: P'tr 1Q
OD?OJfl10+ 1..H. Oh.+r-k.f' -od1.tr'f ll,)h OOJll} In the determination of taxable business income of
oooo~f f"'~"'~ IA~ (f-I;h~h) oomllOct.f'sP"f .,..,.e;7i finance institutions a deduction shall be allowed for
y,1.~;J ft-:: lfli9" ..,-oC fOlJ.h~AO+ f'i-f.e;') il special (technical) reserves in accordance with the
'(-c~"'r f,)"'.(' P'~ 10. hA~ oomllOct.f'OJo 'llt{J directives issued by the National Bank of Ethiopia; the
mt;J;1.O"'1.~'IOJo oom') h~ h')-'tA f.1.~;JA::
business income, however, shall be increased by
~. "''''Cf'7i fD?f.~'" ftt-c:r1A .,.It+c;: amounts drawn from such reserves.
Ii, hlLlJ O:rr O')o.it },').,.~ (I) hCf'(E) f.,.oot\h1:-r 27. Participation Deduction
lJ-}.:r sPr f1.".7.ft-f Oh. +r- k.f' OJoil'l' ~CPt f If'~ 1) If a resident company or partnership reinvests the
h-111f my,1J" f"'OOH'IO f7ichCf' "'i'"lOC .f'11'(I)<')
-rCt;: ft\.lt1 boll')f my,9" f7ichCf' "'i'"lOC tt-c:rA profit it earned to raise the capital of another
t\"'i~'" f1't\OJo hlf~ t\flU qlttry fCPt\OJo +C~ company or partnership subject to the conditions in
..,-oc h"7.h~IAO-r f,)"'.(' P'~ 10. Itf. .,..,.c;7i Sub-Article (2) and (3); such amount shall be
Y,1.~lAd deductible from its taxable income.
.1ta iii'(,~fi:'it ~Yo~A ~;J~"" ;JtLllJ ()~ ?;?;.,., Iuf1 q.9".
Federal Negarit Gazeta-No. 344111July, 2002-Page 1879

g. htttJ W,,e 010-'" h1"'ta (6) (u) f.,.oot\h.,.a>- 2) The deduction mentioned in letter (a) of Sub-
.,..,.fi7i h tI ft.f-11 0 "7.00t\ h ~ .,. t..,"7. foaz.V''Ia>-
Article (1) shall apply to shares of resident com-
htlft.M f"'11111"" h-1l1f OJ\.""f-A"f lD-"''1' 'CPt
fV'' 'hfi 01P1ml1f "dt" oolPl:" "H1C foont..A panies that are subject to taxation under Scdedule C
.,Yo:r ft\O"" ft.V'1 'hfi htlft.f-)'1 f111lD- h-1l1f and in which the investing body has a shareholding
w,e9" f"'OOH10 f7iCtifi OY"'OC 0h-1l1flD- w'''''1' of at least twenty-five percent (25%), by value or by
O~'1'C w,e9" O'P;J n.f1... 1;[; TC()1:" fhn().M number, in the share capital or the voting rights.
trz:;rA ffH w,e9" OttO:- Oo+~ OOm1 Y:9"1J
3) The deduction mentioned in letter (b) of Sub-
foo"'m:" 0011:" ft\lD- hV'' 'lD-::
E' htttJ Ol\,e 010-'" h1.,.". ii(t\) f.,.oot\h'f-a>- Article (1) shall apply to basic capital of resident
.,..,.fi7i f :"CCt: Y:C 7i1 0 "'00 t\ h .,. .,. t.. .,oaz. registered partnerships that are subject to taxation
f"7.V''lD- ft"a'(;rA OO'P",," f.,. J'.l1 0:" f7ichC; under Schedule C and in which the investing body
oy,.,nc OJ\.""f-A"f CD-"''1'''P~fV''' 'hfi 01P1ml1f
"dt" ODlPl"" .,llC footlt..A "Yo;r J't\O:" (LV'')
holds at least twenty-five percent (25%) by value of
'hfi ft"a'(;rit-1 OO'P",,"fJ'.l1lD- h-1l1f w,e9" f.,.OD basic capital.
H10 f7iCtifi oy,.,OC: f7iCtifi OY"'Oo;. oolPl:" 4) The Council of Ministers shall by reg;ulations
hV''lD- t"a'(;rA 'P ;J or",,,, o.f1... 1;[;
~ ~
TC()1:" f fH determine the manner in which the; incentive
'h 1J'.V'' 'CD-::
granted in this Article shall be applied.
Q' 0 tt tJ h ''''ta f.,. t..'" J'.lD- oy 0 l;r:F .,. t.. ., "7. foaz.V'
10"" lIClIC v-~;r (I"7.~"'''''C':f 9"nC (1,:" J'.'}-{1 28. Loss Carry forward
,ew()fiA::
h.Utt.1...t\oyif;J1C 1) If the determination of taxable business income
?i'~'
Oh1Y: f.,11C H001'111C f"7.ht..AO""1n. Ooaz.m results in a loss in a tax period, that loss may be set
ii'
f110"" 'l.tL OILfCD- f'111C H001 lD-"''1' f ;rflD- off against taxable income in the next five (5) tax
h.Ut~ 0"7. "''1''''''''' Y'''''''' (E) f.,11C HODfi:" periods, earlier losses being set off before later
h"'11lD- '111C f"7.ht..AO"" 1n. i\,e fDIJ..t"at"a... losses.
,eU'fiA:: f.tJ9" f"7.t..800lD- Ooo~oo~f f;Jm 2) If during a tax period the direct or indirect
00CD-1 h."'~ O:\i\ t"a;JmOOlD- h.Ut~ h"''''Y;qD
OOl/t"at"a... 'CD-:: ownership of the share capital or the voting rights
g. Oh1Y: f'111C H001 CD-"''1'fh1Y: h-1l1f ft"a'(;rA of a body changes more than twenty-five percent
llt\n.""~"" w,e9" Y:9"/J foo"'m:" 0011:" OCP;J (25%), by value or by number, Sub-Article (1) shall
wJ.9" O~'I'C h?;~ TC()1"" Oi\,e 0"''1';r w,e9" cease to apply to losses incurred by that body in that
"''I''''~ llAU'' 0011Y: f.,.t\wm 'h1J'.V' '1
h-1l1 flD- OILfCD- f'111C HOO'}9" V'' .,. J'.9" llfr tax period and previous tax periods.
f'111C qoo;r"" fJ'.l()O""') h. Utt. ODIJ..oot\h:" 3) A net operating loss may be carried forward and
f10-'" h1"'ta (ii) Y:1;J'l. .,.t..,"7.':" f!l:CIlJA:: deducted only for two periods of three years.
E' OI/firlD-9" ()CD- 01'1 ~ P'lolD- 'h1:" ...:N!.
f ;JmOOCD- h."'~ OOl/fiTlD-9" v-~;r Ov-t\:" 29. Transfer Pricing
fY'''''''' qoo;r"" 'l.H. h"7.4'>mo;. i qoo;r:" Oi\,e 1) Where conditions are made or imposed between
t\. if;J1Cfi .,..,.fi7i t\.V'1 h,e:fAcr::
fOl/ ,.i\t\kf 'P;J persons carrying on business in their commercial or
?;U'
financial relations which differ from those which
ii' Ov-t\"" O.,.t\f~ (t9':f oot"ahA h"7.J'.l1lD- f'}.,1; would be made between independent persons, the
Wf.9" f~f.fi,}'" '1'}~~"": f.,."(to;. ()sP:f f'}.,1;
w,e9" f~f.fi1'" '11~~"" f.,.t\ f 'h'}"tV'1 f"7.f Tax Authority may direct that the income of one or
J'.C'1 mf.9" f"7.f"'11:1: v-~;r f.,.t..ml 'h1J'.V'': more of those related persons is to include profits
f'111o;. t1t\P'AIlJ') h.,."()o;."" (tsP:f oot"ahA which he or they would have made but for those
fh1~ Wf.9" hh11: Oi\,e fU').:"1n. ftttJ q,e'li:
.., C llf.tjC tjt: t\.f"'1~ conditions. The Tax Authority shall do so in
fDIJ..:ft\lD-') :"C~
'h1"tQ;l.9"C t\.mil1 ,e:fi\A:: f.,11o;. llt\P'AflJ1 accordance with the directives to be issued by the
hIL tJ 0 i\f. 0"'1 t\8 CD-00 IP l"" f"7.w lD- h DIJ.. ~ , Minister.
il""~ O"7.()mCD- oooo~f oolPl:" ,eV'fiA:: 2) In order to ensure the just and efficient application
~. t\ILtJ h 1+ ta ..,.tIti t\ ~ 'hfi lD-m.;J-OI/ht.., 89"
of this Article the Tax Authority may make
'h'}JLf oo:f 0.,." ()~ (t9':f oot"ahA f"7.J'.l1 ro-
." ~ ~..,. 0 v-t\"" O.,.t\f~ ()sP:f oot"ahA hooz...e. agreements in advance with persons carrying on
l1lD- '1,}~~"" f.,.t\f 'h1.&;f.U'1 f"7.f...:fA 'h1J'.h entrepreneurial activities, subject to conditions if
il t..i\'l. H: v- ~;r9':f f.,.t"a.,.-I: 0"": il9"9" 'I:,. necessary, that specified conditions between
f'111 0;. IIt\P' A 1lJ1 f'}'11: P'lo 'h '}:" 4>(J. h"7.fh
filD-). ()sP~ ;JC hil.,.1:lfP t\.fJ'.C" ,e:fi\A:: related persons do not differ from those which
would be made between independent persons.
Cf}. h'111C~' "'t\0I/ 1:l'1
f"7.h.,.it-"" 1n.9'~ OtttJ h'P~ oolPl"" t\.ht..A 30. Exemptions
ii'
llTlD- h"7.111lD- f1'11: P'~ 1n. .,-{1C ." firlD-! 1) The following categories of income shall be
U) h,} 1:,} -f;tI tj {\oj( t\.,.w ()., v-~;r 'h'}"t...DI/07
exempt from payment of business income tax
OOl/1:l'1 Wf.9" h"t'" ft..m~ U"11 OOl/:"l-{1
'hfi m Q;\"'} t\ 00"'''''' f"7.f...:fit- h IP~C':f1 hereunder:
P'~ ",e OOI/'PA f"7.()'I' 7iAOI/:": (a) awards for adopted or suggested innovations
t\) OOl/fiTlD-9" oo...tI fi\'" "''111C i\hfiW)' (tsP:f and cost saving measures, and
f"7.() 'I' 7iA 01/"": (b) public awards for outstanding performance tax
dt) OJ\.""f-kf CD-il'l' 81+ O"7.lPloO:" ih..,:
Oqt\9" O+Ct: il9"9""""i w,e9" "7.~ilTor any field.
0"7.fJ'.C1CD- m,e9" 0"7.t..:"J'.lD- il9"9"":" (c) income specifically exempted from income tax
OOIPI."" O.,.t\f. '111C 'h'}.&;,eht..AO:" by the law in force in Ethiopia, by international
f.,.1.1.11fll treaty or by an agreement made or approved by
I' f"7.h.,.tt--r OP'~TlD- h;JIlJ"7. f"7J1~"" 10.
01P1ml.V ~'dtn OOIPI..'t h"7.hLA ..,-fiC ~,
the Minister.
f.U'fiA" 2) The revenue obtained by:
 1~ /iittfif ~Y-oIrA ~.76T .7H.flJ (t).
~~ .,.'} IHfjQ q.9". Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1880
u) f~Y-oIrA hlJ ftJAA oo'}<?P';rT h'}-'trr9" (a) the Federal, Regional and Local Governments of
fhT-1 ooil-t-~.(-C'T foo'}<?P'T oo/fl..y."f:
t\) fh':tlf-tay -flch.Ir'e 1l1tJII Ethiopia;
(b) the National Bank of Ethiopia
tJtt:A l;
from activities that are incidental to their
flP1ml1r Uoo" 'In./ Iblt-"f 'In.sv"f
operations shall be exempt from tax on Schedule
iJJ/i. fLmlr 0011T1 ODl/hlrfT fD?'I'\ 'In:- ~---
C income.
fi' ODl/1~lD-9'" fLmlr 0011T1 ODl/hlrfT 01''11
SECTION V
'In.. I\f. 1\9'"ilT Ooo.y. (1\9"l1T Ooo.y.) <?l1C
,e.hLAO;rAII Scheduled Income/Other Income
~. <?-flC +'}(1 'In. fDl/.(-l<? ;}It&.~T f-t-flJt\OT (t(J)- 31. Royalties
OILtJ 11CP~ O-t-w(t~lD- f1.H. 1~1I lD-il'l' fTm'"
(tlD-1 <?lIC ""(1 000Y1l t\<?lIC hil1n.lD- oo/fl.T 1) Royalties shall be liable to tax at a flat rate of five
fDl/il;rw:"lJ foohLA <?Y-o;rht\OT II percent (5%).
[. h~~ ~CP6'''': 0lD-~ h'lC lYe;' 2) The withholding Agent who effects payntnt shall
-t-"'Il~ ~CP6~rf:
Oh.Tf"kY lD-il'l' fIn h'}~ln : -t-"'Il~ O'LU withhold the foregoing tax and account to the Tax
hCP~ O-t-m(t~(J)- f1.H. 1~1I lD-lI'I' fLmt- 00,1'1' Authority within the time limit set out in this
Ot7?hlrfT tt11lD- 'In. Itf!. fD?hLt\lD-'} <?lIC
.ehtt:ltA :: Proclamation.
3) Where the payer resides abroad and the recipient is a
Q' OILtJ q.e~T f-t-hLt\lD- <?lIC ;rhll hllU h'}q,
il..cJ>1'I.f-t-'Il'lD-1 'In. Oowz.,oot\hT foo(J;l,G7i resident, the recipient shall pay tax on the royalty
f!.rrlJ A II income within the time limit set out in this
l;' OILtJ 11CP~ lD-il'l' c'fLmt- 001l."f.'} OO?ht-fT Proclamation.
fowz.,'1~1n." O?t\T -t-'}.,.ta..cJ>7i&.A9" h'i t\~"tf" 4) This tax is a final tax in lieu of a net income tax.
w.e9'" f-tt\.ii.1r1 FC6J;I>T fD?lD-A fT'}.,.ta.4>7i 5) The term "roayalty" means a payment of any kind
&.A9'" m.e9'" f.(-9'"1J tJC'"f1 : t7?'i:flD-9" Oh'}~ receivedas a consideration for the use of, or the
(tlD- oollT t\oom+9'" f-t-(tm U~ : f,}"1~
9'"AtJT : 1~tt: w.e9'" IfDY-oA: Tlt1 : Oowz.,lI'I'C
right to use, any copyright of literary, artistic or
f-t- Y" C:COO-It w.e9'" fhoolrlT 'l.~T : wf!.9" scientific work, including cinematography films,
ft7?lJ:flD-19'" fh. '}.&;..ilT6 : f1"1~ wf!.9" fUff!.'}lI and films or tapes for radio or television broadcas-
00"'6Y m.e9" 0h.1.&;..ilT6 : 01"1~ wf!.cr: ting, any patent, tradework, design or model, plan,
0",.e1il h-t-'Il' A9'"'(- fT(tIl(tO ooljf') secret formula or process, or for the use or for the
oom"'9'"1 Wf!.9'" foom"'9'" OOllT'} Q;},9"C' right to use of any industrial, commercial or
Dl/lJ:flD-19'" fP'~-X-,h.tt:: fh.~'I'Oll Wf!.9" fUf.e scientific equipment, or for information concerning
1il P'Ir A~ 00-flT1 oom"'9",} w.e9"
room"'9'" 001lT1 t\'I':"9'" Ot7?ht-fT 9'"h'} J'T
industrial, commerciaLar..scientific experience.
fD? 'I~ t7?lJ:flD-9'" tJtt:y ~lD- II 32. Income from Rendering of Technical Services
iJJ~' f-ttJ~tJ 11'1A<?lt-T OooilmT fowz.,'1~'I~ '-'
1) All payments made in consideration of any kind of
j). Oh.Tf"kY ~CP6 t\rr~ (tsPT 'hh.Tf"k.f lD-lJ.1.
- t\-t-(tm f-ttJ~h h'lA<?/r'T f-t-LfJOOhtt:J' I TC(t technical services rendered outside Ethiopia to
1T (hFC 000"') -flC .ehLAO;rA :: .eU'}'}9 resident persons in any form shall be liable to tax at
<?lIC h'lA~i\oTf'f'LfJoot\T h4-.e hf"'~(t OO?lI a flat rate of ten percent (10%) which shall be
<l'lT t\"1l1C hil1n.lD- oo/fl.T 'In. O?~l"1 hl\OT:: withheld and paid to the Tax Authority by the payer.
~. Hf-ttJ~h h'lA <?It-T'' t7?l\T t7?'i:flD-9" flll\oo- 2) The term "technical service" means any kind of
9'"tJc w.e9'" f.f:tJe;'lt-j{ h'lA<?lt-T ~lD- :: J'
expert advise or technological service rendered.
iJJr' h6'(-A oo-hlr fD?'I~ 1n.: 33. Income from Games ofChance
fi' 06.(-A oo-hlr lD-.(-.(-C 111ilJ&. OOOIY'} (t\9"lil\.
hlt-'f'6 : h.y.9'"nlt w.e9'" ht\./r'"f -t-ootata.e h'}q,lI
1) Every person derving income from winning at
'In. fD?f'l~ Dl/lJ:flD-9'" (tlD- hllC ?if Olt.e
..cJ>I'I.SVT) games of chance (for example, lotteries, tombolas,
orr~lD- 'In. Itf!. I~ TC(tiT (hP't- h9"lIT . and other similar activities) shall be subject to tax at
ooo.y.) <?-fIC f!.htt:ltA II the rate of fifteen percent (15%), except for win-
fl' h~~ Oh1+~ ~ O-t-ODt\h-t-lD- oolPlT "111~'} nings of less than 100 Birr.
.,.,{\ Ot7?il"'lT t\"1-f1C hil'ln.lD- Ill\P'AflJ,}
DI/.(-l"1 1\t\OT II 'Ill. 2) The payer shall withhold or collect the tax and
account to the Tax Authority in the manner
r' OILtJ ~.e~T f-t-hLt\lD- "1-f1C hlltJ h 1:"il.4>tI.
f-t-'Il'lD-1 1n. O-t-oot\h-t- fooQ;},l7i provided in Article 67.
.:!:hll 3) This tax is a final tax in lieu of income tax.
.errlJAII
iJJQ' f1\tJfL.M TCtt: .(-ci'f 34. Dividends
fi' f1\tJfL.M DI/..,OC tth~Lt\lD- fhtJl\.f",) ~c7i
1) Every person deriving income from dividends from
m.e9'" ?ltL~i: f'f'm(t~ f"1A DI/..,OC howz.yh4-
tt:t\ lD- TCtt: - 'I n. fOU1'1 '"Ie;'T{D"9" () lD- 017 (J)- a share company or withdrawals of profits from a
'In. It';! TC(t'}-r (hFC OOOT)"1l1Cf!.htt:ltA:: private limited company shall be subject to tax at the
g. h~~ "1-f1<t-1.,.,{\ ODl/il"'lT l\"1l1C hil1ll.(J)-
rate of ten percent (10%).
Ilt\FAflJ1 'In. DI/.(-l"1 ht\OTI: 2) The withholding Agent shall withhold or collect the
r' OILtJ q.e~T f-t-hLt\lD- "1l1C hH.U h '}:"il.4>tI. tax and account to the Tax Authority.
f-t-'Il'lD-1 'In. O-t-oot\h-t- foot;Q,l7i ;rhll 3) This tax is a final tax in lieu of income tax.
.errlJA::
iJJ~' h111lT h.1r.e fD?'I~ 'In. 35. Income From Rental of Property
OILtJ 1\CP~ 111+X- Ii h-t-oot\h-t-lD- "1l1C hD?hL Every person derving income from the casual rental of
AOT ""1.(- h1:"lt:Jtc\. ;JC ODl/f!.'IlJ~h';J.~'} ,}lIlT property (including any land, building, or moveable
1\AC: 1\/.\c: IJD7hlrf-1- 'In. Y'I1' Dl/lJ:flD-9'"lI(J)- I. asset) not related to a business activity taxable under
q'l"flD- f~DD-1- m:"1\1\ 1n. I\.e. I~ TC(t'}T (11P't-
11,.l\.}o ODD"") ..,-oc "b~I\Ap
: Article 17 shall pay tax on the annual gross income at
OILtJ CJ.e.~""f-t-hLt\ID- the rate offifteen percent (15%). This tax is a final tax in
-HlC fDDaI.~2f "l1'lJ/.\- lieu of a net income tax.
1
11\ li1.~fitli ~1-..t,.1A .,;Jt-r ;JtLlIJ ll~ t)~.,.'} Iiifj ~'9'" Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1881

0.,.cf-07"1"1,}"11 "f. f"7.hLIA fCDf\1:10. 36. Interest Income on Deposits

01'
Ii' ",'".,.CD-9"c'\CD-n.,..,."'''1'' 1')"-{1 nr'd11CD- CDf\1: 1) Every person deriving income from interest on
:1
"f. 1\9"it-r 000'" (~ TCll'}-r) "HIC f.ht;:"1A O.,.f. 'I deposits shall pay tax at the rate of five percent
'} "',}r' 0"7it"'l-r 01\'}.,.~ :E~
I' h~~ "'11~ (5%).
11CD-OOlPl-r f\..,11C 1\it10.CD- t1t\P'IAIIJ'} 10.
'" f:l.., 1\f\0-r :1 2) The payer shall withhold the tax and account to the
~. OtUJ ~,e."-r (.,.hLf\CD- ..,lIC hCDt\1: f-f'1'flD-') Tax Authority in the manner provided in Article 67.
10. O.,.oof\h.,. fooQ;},l?i' ..,lIC f.1f'i IA :1 3) This tax is a final tax in lieu of income tax.
0~ . f.,.CDII ). f'''''Z:;1' IA '}11l.,."f'} 0'" ll.,." f\ t;: f 0'f.1:-s
1'~9" 37. Gain on Transfer of Certain Investment Property
rv-n tl U 1\'}.,. f.,." l"~ '}lIl.,."f'} Oll{l1:r CDf.9"
'" 1) .Income Tax shall be payable on gains obtained
o1i!"1" OD7it.,." f\ t;: fO'f.11 CD-'f':"9" h tl U O:r 1-
o.,.oof\h.,.CD- fD7ithL.r IAtJ ..,lIC fD7,hLIAO"" from the transfer (sale or gift) of property described
f.1f'i IA II in this Article at the following rates:
u)
.
t\'}..,f:: f\~i1til i f\o.~ f-f'!"' ,n'}'sPif' TT:
TCn'}-r (1\P't,. 1\9"it-r OOD"') i
-- (a) building held for business, factory, office 15%
(fifteen percent)
t\)fh-t1,} !sP"f 1\tJll.f',} ifJ TC()'}"" (IP"" (b) shares of companies 30% (thirty percent)
OOD"'):
(1..,1A ODtj t!'-r f.,.!tI 0."" OD711.,."t\t;: fO'f.1:-S 2) Gains obtained from the transfer of building held
I'
+:"9" ..,11C 1\f.hLIAO-r9" := for residence shall be exempt.
~. OtlU 1\,}"'''' "1i1C h.,.IIJf\t1TlD- '}lIl.,.if, f-f-1 3) The basis for computation of gains obtained from
1 CD-') 'f':"9" f\D7ll" -r f "7.! it"f t\ CD-"1-.. 0 O'f.t it the transfer of properties described in this Article
-r~"f 9"tJC n.-r OO'f.CDIIJ1. ,}il f.CD"''i1A II shall be determined by Regulations to be issued by
g. 01\,}"'~ ~() O"'ODt\h.,.ro- oolPl-r OO'f.h'iCD'}
'h'}1.1'i fOD1.t,.~-r '/.1.-r 01\.-rf'A'! ''Pt Olf'l the Council of Ministers.
h-t1'}! ro-ll'f' f"7.1.l"1 D7'iTCD-9" f1\tJll.f',} 4) Any exchange of shares in a resident company
OD"'''f\t;: i Otlrr fOO1.t,.~-r '/.1.-r -f''':rk t\If'l which is a party to a reorganization - as defined in
f\If'l h-t1'}! fO'f.1.l"1
t\ft." 01\.-rf'A'! ''Pt Article 24(4) - in exchange for share in another
f 1\ tJ ll. M 1A'P"1" h If 'I 1\ tJ ll. f''} 'h '} f..,. i'i m 1\f.4>
resident company which is also a party is not a
mC9" ::
~. O'}o-ll 1\,}"'''' () oolPl-r OIA'P"1"f"''''mlD- disposal of the shares.
1\tJll.f',} 'P;J foo~oot!CD-1\tJll.M 'P;J f,1f'i/:\11 . 5) The value of the shares given in exchange under
i' htlU O;1'"f f"'"l"~-r 11.P"f 'h'}1."'mOcf: Sub-Article (4) shall be equal to the value of the
1f'lCD-i'h'}1.tlU ! It- '}11l.,."f'} OD7it.,."t\t;: '/.y,,,,, original shares.
f"7.1.Cit h.""It,. iJCD-:"'i"'''''f''''-r h-f'11 'f':"9" 6) Loss on the transfer of such property shall be
;JC 'h'}Jti1ilit f.1.l;J1A :1
u) OtlU 1\,}"'''' ODlPl-r 0.,.1.l1 fil'C:rA recognized and be available to offset gain subject to
'}11l-r 00"'''f\t;: ! ;JmOD h ,t- Otlo- the following limitations:
1\,}"'''' oolPl-r O.,.1.l1 f'}ill"" OD"'''t\tj: (a) Loss on transfers under this Article may be used
0"'11 'f':"9" "f. 'h'}:( OD7'iTlD-9" ft." to offset gain on transfers under this Article, but
1\t.J.~'} 0"'11 10. CDf.9" 'f':"9" ;JC 'h'}.';.
may not be used to offset any other income or
ilillt 1\f.1.l..,9" :1 htlU O"f. O"'OOf\h-f-lD-
ODlPl-r !1A.,.ilil... h.""It,. ,,/:\"'CD"'' Vi. gain. Unused losses may be carried forward
CD1.k-r f\.i'i;J1C f."f"1A :1 indefinitely.
t\)01\'}.,.", I() "1Tf.'"" ""TlD- "'sP1- (b) No loss shall be recognized on transfer to
O"''''m CD--rC'J-9" fO'f.i'iL). f,"C~"'"f 0 ODil
'}:,. it:J>(). f O'f.! ;J 'f'
associates within the meaning of Article 2(4).
h" TCD- 0 "7.! 1.C'J--r 'h 7) Any person authorized by law to accept, register or
D7TCD- h.""It,. 'h'}1.O'f.il il it h. ...,t- .,. 1.C'Jo
1\,e.OJ"'f.'9" :1 in any way approve the transfer of capital assets
~. D7'iTCD-9" OtlU 1\,}"'''' "1l1C f.t-IIJf\O""'} shall not accept, register or approve the transfer
fil'C:r1A '}lIl-r 1ICD-ro-CfOD"'OA CDf.9" fODOD before ascertainig that the payment of the tax has
11111 CDf.9" OD7'iTCD-9" 00'}11: f"7 61.:" P' A IIJ'} b~en duly effected in accordance with this Article.
f","'mro- ...ro- "1il~ oohLIt-'} It! l;J"1'f'
1ICD-CD-~ '} 1\,e..,.OIA9" : 1\f.OD""'il9" i 1\10 CHAPTER II
1::"9" II Procedural Provisions
9" iJt,. t;: 1
Section 1
f1\L '09" 1:'};J1.sPif.
,. General Provisions
tJ t;:1A1\'}f:
f:'} ;J1.sP"f
m:""" 38. Powers And Duties ofTax Authority
ifJ~' f"1ilC 1\1l10. t1f\P'IAIIJ') P'lAorrr1'i "'''1t1C;
1) The implementation and enforcement of this
Ii' f,U'} 1\tp~ 'h'i OtlU 1\tp~ ODlPl:" fO'f.CDtn- Proclamation and of Regulations issued hereunder
1.'}p"f'} 0P't,. ",e. fD7'P1A'h'i f"7itL~9" ~"k'l""
f..,ilC 1\it10.CD- t1f\P'IAIIJ,} f.1f'i1A II shall be the duty of the Tax Authority.
OD7,}~CD-9" ,n"1 CD-it'f' .,. :J>t,.t flf). 1:'};J
I' 0"''' 2) Notwithstanding anything to the contrary in any
1.sP"f 0. tj~9" : f..,ilC 1\il10.lD- t1f\P'AITJ'} other law, the Tax Authority shall be empowered to
OD7'iTCD-9" 1.11 O..,lIC h~f. f"'lfr D7'}~T
investigate any statements, records and books of
CD-'}9" 00..,1\-19'"f : 1P'Ip.."f'i f'/ ,il OD1I1P1-
1\D7 l;J 1 'f' i account submitted by any taxpayer at any time by:
u) .n;J'E P'1A1I)'} f.,.llIlJTCD- .,.4>lIJlIJtsP"f'} (a) sendmg duly accredited inspectors to the place
OJ1...,11C b"'~ f'}..,f: CDf.9" fOO-! P't,. P:r of business or practice of the tax payer to check
ooo"h 1n. e; CD"1"'}f"7.!" ~ IP 'Ip.."f'} i same or any vouchers, stocks of other material
1\,}"'f:f"'~~iJ:J>sP"f'}f",~"fiJ:J>sP"f'}
OJ,e.,. f'/.""I-{1 001J"1-{1-r'}'i 1P'Ip.."f'} l\"7ODIt items of the taxpayer;
hce; 1\0000cooC f
 ., ;Jt:" ;JH.ilJ (}); ?;'~ .,.1 Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1882
'IX" {ia.tfitl ~1v("&\ Ii!f12 q.9'"

t\) ..,l1C h4.~1 1Df.9" f~"'l1 OO1I1{l:f1 he; (b) requiring the taxpayer or any employee thereof who
11''' ~:f1 w f-.9" 00 ~;r1 t\D<J..,1' :,. fD<J.::;-t\ ar1
has access to or custody of any information, records
Wf-.9" h"H.U'" foomOcp ;'Jl\fu":" f.t(}mar1
D<J1~ar19" f..,l1C h4.~1 1''''ilJt Ohoo:t f"1{lC or books of account to produce the same and to
hil10. OOP'tY 0.:" fP'(" ()q.y.:r he; ~/n.:r attend during normal office hours at any reasonably
1'1~.y. t\D?,"'Cfl-t\.} t\?--.';f- h"1fll1 Yl\rar convenient tax office and answer any questions
'PY<f:9':f OOAil h 1.!t()'Pe; f-f-fl ~."f-19" 1P.,~:f relating thereof;
h 1.!t.f'" C11 t\ D<J f: l..., : (c) requiring any person including municipality, Body,
m) D<Jlf;J;rCl.-r : f:C~T : f4.f-.e;1il -1'*9" w!!-c;o
Financial Institution Department or Agency of
D<J1~ar19" f&..1vIr&\ oo1"1P"} m$!.9" fh&\&\
00 P' t Y Cl.-r : (J;},9"C' D<Je; rar9" ()ar il t\ Federal or Regional Government to disclose par-
"1{I C
h4.f-. fD?,.far.,.ar1 OOl.;r Wf-.9" fF'1r h1:r ticulars of any information or transactions, in-
ilj>/1, h 1.!ttr9" fOOOY.C Wf-.9" fOlfOY.C "11]:" cluding any lending or borrowing which it may
.y.":j-11'ClIC h 1.!t 1 &\~ t\D<J Y:l."1 f-.":j-I\&\:: have relating to the taxpayer.
0i!' OOl.;r!p":j-1 OO'/.il'PC ilt\oomOcp 39. Confidentiality ofTax Information
fl' f..,l1C hil10.ar flt\P'&\ilJ1 : fflt\P'AflJ'" wh.A I) The Tax Authority and all persons who are or have
If., ar fD?,lPc;. OJf-.9" w h.A f., 0 c;. w f-.9" .f'<f>fT} been its agents or employees shall maintain the
t ~":j- w f-.9" 1'<f>ilJt f'1 0 c;. : 0 h. ."f-r-*' Y 1.., f: h"1 secrecy of all information except such information
fl1..,f: ;JU.fIJ ;r-rqo h1-'twilJ h;rlflfw, q.e.,:r
OOl.;r Oil1'<f>C OP' (,.rar h;JilJD?, yw~tprrlD-1 as are required by the Commercial Code of
h1f:1 ..,l1C h4.f-. fD?,oot\h-i: I\.t\,,":j-OOl.;r9''f Ethiopia to be published by trade gazette, on
t\D<J19" hl}&\&.ar I}f-.(}m OD?,il'PC oomO.p particular taxpayers received by them in an official
ht\ fl:far :: hH.U Ol\f-. f1'Y. "11ar 0. tfC9" h "}.!tU capacity, and may disclose such information only
,fh--r1 OOl.;r9'":j- t\D?,h'f'h-T oo..,t\~ f-.:fl\h-; to the following persons:
U) ;'Jl\fu";rrar1 t\OOWflJ-r hil&.l\1. hilhtr., (a) employees of the Tax Authority, for the purpose
f:l.il : t\"111C hil10.ar flt\P'AflJ1 1'<f>fT}
t9':f: of carrying out their official duties;
t\) f..,l1C ,n?--1 Ooo1'I\t\~ W1~&\ f &.oooar"} (b) law enforcement agencies, for the purpose of
(}ar t\tt:Cf: t\D<J.pl.11: l\,n"1 hil&.~D?, ht"JI\."f': the prosecution of a person for tax violations;
m) f"111C 6.'; : OO<f>-J, w.e9" wt\f: w.ec;o (c) courts, in proceedings to establish a person's
0I/e;rar19" 1\.1\ fW,)~A 1-.';r-:f OD<JfT I\.e
liability for tax, penalties, or interest, or in any
I\t\ ~/fI."" :
(0) h.-rf'k'Y criminal case;
&.(,.D?, OIf.,:fOT qt\9" q<f>lJ:
(d) tax authorities of a foreign country, in accor-
il9"9""-r OOIPl.-r (}.mf.p t\ar"1!' h1C f"1{lC
flt\P' &\ilJe;-r:: dance with an international treaty to which
~. 01tril h,)<f>~ ({i) UOIPl.-r OOl.;r Oh;rrar f1fl Ethiopia is a party.
(}9':f: OOl.;rar h1.!t(}ilJrar YY.l.1ar') 9"h1y:r 2) Persons who receive informaion under Sub-Article
D<Jil&.f19" OD?,Yil:fA h"il1'~ OOm1 t"J&\lf'1 (1) must maintain the secrecy of that informaion,
Oil1'<f>C h1J;.U Yt\ar1 UDl.;r OD?,il'PC foomO.p
;'JI\~"-r ht\flrar:: OH.U h~&\ D?,il'PC";rrar
except to the minimum extent necessary to achieve
h ').!tm O.p f l' Y.l.?-- 00 l.;r 9':f f Y.l.!L reD- I\.t\"1- the object for which disclosure is permitted. Other
()9':f h .,H.U') 00 l.;r 9':f t\01/19" 1\.1\ ()ar persons who receive information the disclosure of
1'I\A&.ar h 1J;.(}m 01/f:l..., hf-.tfCflrarr :: which is regulated by this section may not further
h~H.U1 uol.7rP':f fytt- 1P.,~:f') wltYar.,. disclose the informaion and must return documents
t\..,l1C hil10.ar flt\p'&\Il)') oPOOt\il ht\flrar ::
[. h')f:1 ..,l1C h4.f-. fD?,oot\h-i: OOl.;r9':f hH.U reflecting the informaion to the Tax Authqril\'.
ar"1!' t\ If.,. I\.it":f () 9':f h').!t ()m D<Jf: l. ..,
3) Information concerning a taxpayermay be disclosed
fD?,:rt\ar r..,l1C h4.~ il9"9""T O~m.~ (}.1~ to another person with the taxpayer's written con-
sent.
ij. f"'l1Cl1~rf.l[~ Q/\P'AilJ') 1P("1'7f'f fD?,ooc;.O:r
40. Code of Conduct for Tax Authority Employees
f P' "-9"'" flC Y.') 11 I) Each employee of the Tax Authority shall:
-
~,,"~')~ f..,oflC h{}10.ar 11/\P'&\1lJ') 1P1r-1'~:-
u) :1'C1IJ~he; -rhh/\~ : ..,l1C h4.~1 O."f'UTe;e; (a) be honest and fair, treating each taxpayer with
OM111C'-r fD?,.,.OA : courtesy and respect;
t\) ,n1o:f'): y',){l:f1 he; ooootY9':f1 f?--.';~ ~t. (b) apply the law, regulations and rulings to each
"1C OD?,OO(,.lD" OOIPl.-r P' Ir I\f-. D<Jtp&\: case on the basis the objective facts in that case,
t\lfOO~~ Wf-.9" t\w.';~~ &\~ hil1'YfT w.ec;o showing no partiality to members of his family
hf:AP' Yt\OI/f:l."1 :
m) f (,.(t.') he; fflt\fI.-i:,) f"'111C 6.'; ODlf.oot\h:r or to friends;
arm.-r fl.filh-rA OD?,:f&\ ar.,,); I\.e Yt\no (c) refrain from participating in any determination
1}1'~: that will affect his or his spouse's tax liability;
(0) f"t7 OJ.p f 0. 1'(}11 119" f:e; w f-.9" f1"1 f: (d) where either a known family relationship or a
P' (,. 'P.p9" 01'''' ilJ t ., -I: 0 D?,() m ar 0>-"');I\.e business interest might influence any deter-
1'''''':' iL!1}f:C fD?,:fA hlf., : h ').!tU Yt\ar1 mination he must, as an employee, make public
f1l9"~ "1')j."-r Wf-.9" 'PCP9" f-.4. D<Jf:l."1
(h..,llll11t\ar ,n'" 01'W(}'1ar OOIPl.-r) : (in the manner provided by regulations) such
11') Oh')"'~ rliit f1'OOt\h1'ar h,)y'1'mO<f> lftf: relationship or interest;
OI/e;TCD-')9" f..,lIC : f;rhil wf-.9" f<f>l.'P (e) Subject to Article 39 protect the confidentiality
OOl.1fODl/.il-rc oomO.p i of any tax or duty information, and
l.) OOJe;TCD-')IJD uoY.llf ht\uomf.p : Yt\oo<f>Ol\ (f) not solicit or accept any bribe or perfonn any
OJf.IJD OOJ'iTCD-')IJD ..,1IC1 hoow(}') CDf-.'l"
hoP (\11(\11 .,..., 11~ :J c fDI/.;J Q;), lbt\":f 1'1 0.
other improper act relating to the duty to
f ArT.,. .,..., llC':f') f t\ 00 J.:J.IJO1 determine or collect any tax.
1" i7f.~fTr Uvl,./.\ ~;J~-r ;JH.1l)(}~t):t"',} !Uf1 ~'9". Federal Negarit Gazeta-No. 344th July, 2002 Page 1883

I' "7'}~(Do9" f..,-flC I}"P'/,\Il)). IPI,.-t-~ i f..,-flC 2)

No employee of the Tax Authority shall act as a tax
"l'111 I}" tJDo' CD~9" h "7t}~ If lj ""71/.\1/.\ CD~9" accountant or consultant or accept employment from
f..,-flC "7it:J-CD<t., ""7H;J~-r CD~9" O..,-flC it~ any person preparing tax declarations or givinoe tax
9"hC "ODilmT (}(Do -t-.,.'I'C' ODp'/":"
"ft'" . advice.
f" 0 -r9":: 41. Co-operation of other Entities
~li' f/bfro1' ODp'~' n."'1' T{l1IC
~U,) h'P~ 1) All Federal and Regional government authorities
Ii' OP'I,. it~ ""7'P/.\ f&of..,I,./.\ h'i"
fh /.\/.\ OD'}'"P' :J-:" I}"P' /.\ Il)lj1''i'' CDh. "..:r:f(Do and their agencies, Bodies, Kebele Administrations
fH't;Q,"7~9" f:C=~"'"f i f.,.O/b ODil1'~J.'.'C'":t',: a~d Associations shall have the duty to co-operate
"7'" 0 /,. -r V-I\- h.., {I C h it1 11.(Do 11"P' /.\ Il)'} ;J C WIth the Tax Authority in the enforcement of this
fOD1'IlOC..,f..,:J-h"Il:f(Do II Proclamation.
I' U) O~..,I}~ "'mC' it~ t}/.\If~ W~9" O""OC
hMfl.(Do I}"P'/,\Il)'} f1'l,.t,OD f..,'OC 2) (a) No Ministry, Municipality, Department or Of-
auhL' 1.1i. t}/.\-t-(}m Oil-t-.,.C i "l{1C h4.~ fice of Federal or Regional Government shall
f"7.L""'OT'} ..,{lC OCD.p-l:fhL" it"ODIf).
issue or renew any license to any taxpayer
CD~9" hJtit ..,{lC h4.~'} O"7.OD"h'''' f-t-OD
WtO it"ODIf). h"'{lC hil1fl.W- I}"P'/,\Il)'} unless the applicant produces a certificate from
f-t-(}mw-'} f9"ilhC CDt."':" t}it.,.t.O the Tax Authority to the effect that tax due in
Oil-t-.,.C "7'}~W-9" L:P f: (}"lI' "7.til1:C i respect of the preceding year or years, have
", tI;J if n. :" i f &of..,/,./.\ CD~9" fh /.\/.\ ~een paid or where the taxpayer is seeking
auP'~.f n.T hJtil f'}..,f: P'I,. Uf: lIcense for the first time that he has registered
auitmT CD~9" "71.il h~1'/.\9" II with the Tax Authority unless appeal is pen-
ding, or time for payment is extended by the
.
Tax Authority.
,,) ..,1IChMfl.W-I}"P'/'\Il)'} ..,{lCh4.~ '''O-r'} (b) If the Tax Authority refuses to issue a certificate
..,f..,:J- il"ODLRtJDof9"ilhC CDt."'T f"7~(}'I'
it shall, on demand by the applicant for the
ll.1f,} il"tlV- ,"w-'}. 9"h'}'T OODHCHC
license, provide him or it with a written
0R',h.~ "m,<l:w- ~(}Il)/.\II
m) f9"ilhC CDt."'T h/.\(}'I'9" 0"7"-1: CD~9" statement of its reasons therefore.
f'}..,f: P'I,. Uf:O OD IP t.rr f..,{1C h M fl.W- (c) Any applicant who is aggrieved by the reasons
1l"P'/,\Il)'} O(}Il):fw- 9"h,} ,.,."f .pC f-t-(l1 stated by the Tax Authority for refusing to issue
",'} ~ w-9" ..,-0 C h4.~ .p~:J-w-'} Il) ~ \'1"7.1: a certificate or by the revocation of his or its
"h
t\.,"'C{I ~1-it/.\ :: license may appeal in writing to the Review
f "'l.~ilT~ P' /.\ Il)'} Commmittee.
~I'
OttU h'P~ 0/bl\-1' h,}"'?'1' h-t-(lmw- P'/,\Il)'} 42. Powers of the Minister
01't;Q,"'~ "7.tilT~ fDth1'''w- P'/,\Il)'} ~lj t.'P/.\;
In addition to any powers specifically vested in him in
U) O-t-'P'P~ U1C'"f OP'/,. it~ Ill\- (h1.."f ..,{lC this Proclamation the Minister of Finance and
faun L/.\ ..,f..,:J- ,,, ll:fw- f'}.., f: P'1,.9'"f 1'1./,.1,.11.
Economic Development may:
""OC h '}~~hL/.\ I}:fw- ""7 f:t..., f"7.,il"f/.\
(a) enter into agreement with other Government for the
il9"9" ~T h /b l\-1' OD '}.., P':J-T ;J C OD'P'P /.\ i
,,) ",'}~w-9" ..,{lC h4.~ h~-t-~ f-t-L'I'C' "f..,c CD~9" avoidance of double taxation on activities or tran-
/bit hllf: h1.;J w~9" 'l'4.T ll.1.CilO-r CD~9" sactions liable to tax in the territories of both parties;
0:f/.\1'~~i: 9"h'}'T "'~If,} hh.ptJDo Oit~ Olf). (b) in his discretion, waive tax upto an amount of birr
ODIPt.T ,"O-r'} ..,{lC 100,000 in cases of grave hardship due to natural or
9"h'},"'"f OtlU h'P~
fauhL/.\ ..,f..,:J-"ODLR9" f"7.fit"f"w- hh.p9" Oit~ supervening calamity or disa~ter, or in cases of
flf~ "f..,c f1.t.(}OTlflj ll.'11W- i hilh {lC lif7f.u exceptional personal hardship not attributable to
f"7.1.C(}W-'} f..,{lC b~ fODIPt.7I i negligence or any failure on the part of the taxpayer
m) h{lC l!f7f.u Oit~ flf~ f..,{lC b~ .,.~ t\.1f,} to discharge any duty under this Proclamation; and
f"7. "f" w- f"7.~ itTC'1' 9"h C n.:" ll.L.p f: 11:r (c) no amount of tax in excess of Birr 100,000 shall be
~If'i" /.\ II waived except with the approval of the Council of
OD) "tlU h'P~ h'i" h'P~,} -t-h-rl\- ""7.CDIl)W- 1.,}11
Ministers.
hL '09" hilLit1. flf). ODOD~'9'1' "7W-Il)-r
~"fit/.\ II
(d) issue Directives for the better implementation of
this Proclamation and Regulations issued there
~r' f..,o(IC h4.~ OD'" ck'l'C hilLit1. il"ODIf)' (lw- f..,{lC under.
U) "7'}Cj'W-9" ..,{lC fODtiL/.\ ..,f..,:J- '''0+
h4.~ au", ck'l'C fOD'7I ..,f..,:J- h"OT :1~V-') h '}:{ 43. TIN Requirement
0"''i'':fw-9'' v-~:J- h'}f: ..,-oc h4.~ hh'}f: fO"m (a) Every person having a tax obligation is required to
f..,{lC h4.~ au", ck'l'C h'}Jt~7I h~L"'f:"''''9'' II
obtain a tax payer identification number ("TIN"),
,,) ",'}~w-9" ..,l1C h4.~ f..,{lC h4.~ OD'" ck'l'C but in no case may a person obtain more than one
""''''1-r h~' h~mf.p9" II fDt1.t.1W- TIN.
m) f..,l1C h4.~ OD'" ck'l'C ""''''1:'' (b) No taxpayer is to be charged a fee for obtaining a
Il)'} 0 "7. CD(l') f1. Ii.
9"71111 0.., {I C h it1 11.W- 11"P' /.\ TIN.
IPI\.~ ODIPt.:" ~h'i"CD'i"/.\ II
(c) The registration process shall proceed according to
~. ..,o(Ie'} "',}I" 111. f"7J.'.'t..., ~itk~:" "-t-(lmw- (lw-
f..,-flC h4-~ OD'" ck'l'C ODilm+ the timetable to be prescribed by directives to be
tM-h~~ "l.'111 it~ ..,1tC+"''i''"li fDt1.t...,OT issued by the Tax Authority.
,,"~(Do9'" ..,-oc h4.~ I f..,-flC h4.~ OD'" cJ:'I'~') i 44. Supplying TIN to the Tax Withholding Agent
""HIe'} "',}I" 111. f"7 f:t..., ..,f..,:J- it"OT law- ",ilOD A person subject to tax withholding is required to
11111 h" 0 T :1..,-0 e'} .,.'} I" 1 11.f"7 f: t..., ..,f..,:J- ,,, 0 T supply the TIN to the withholding agent. When paying
(}fDof 1'\ (} (Do'}..,-0 C h'" I)-0 it" (Dof.., -fIC I)"P' /.\ Il)'} over the withheld tax, the withholding agent shall list

11l O"'l.11.C"'10T 1.H. "'-o~ f-t-"'~(}I}T(Do'} ..,-oc the taxpayer's TIN number along with the amount of tax
h"-f"T .110'" cJ:'I'C h '})lv-9'" hh!1~'}~ f-t-"'~(}(Do'} IS withheld with respect to that taxpayer.
-HlC ODm'} f"'l.1"'~ 1IC1fC h-oC' "7.pt.-o h"OT
 "R" lii'f.thrQ ~1..("A ";J~T ;Jl1.tIJ (a1 ~.,.') Iitf1Q fi.9";
ijf;. f,),?X' F (,. t..:f>
X'
f,),?X' F (,. l\D?h'lm') fOFfJofA
h ') '&;'(amm- 'r Y4: U X' f+(amm- m1,l}"
Y"'l. 0 D?,) ~ m-9" {Jm- (1
l}I\FAtIJ') InX' f'?l1C h<S.1, ool\Y U X'(a'l1.m-
hI\OT:: . ~'r-;'') DlJilooll.,l1
Ii. f,),?X' F (,. U f: m1,9" foo-Y U f: f"'L(a'r mJ!.9"
fowz.yf.,'iID?'Tm-9" foo')'?FT oo/a.T mJ!.9" 1-*9"
f'?lIC h<S.1, ool\Y ~'rC Itlt.,.l.O (am- mJ!.9" X'C~:'- I
U f: hJ!.(a'r9" mJ!.9" hY X'il9"'::
g. O')o-i'I h ~.,.~ (Ii) f1-.,., l.m- II C;>C9"t..:J>Yo-(J'l1.m-
l}I\FAtIJ') hH.u Olt1, Oh')"'~ ~r ooLPl.T h').&;.f.
C(am- 01-f.l.1m- f9"'1I1l} f1.l1. LP/b~ m.r<tm-
00001'"11 .rI\OT .,.') .rA$.l.{J ooW.,.') f"'LYoo
I\tJT ooW.,.') h1-l.~ '?l1C h~~') f'?l1C h~J!. 46. Directives
ool\Y ~'rC h ').&;..r.,.ClI h1,mJ!."'m-9"::
~~. oooo~YY''f
f1llY'i- "'Ltil:'-c f'?l1C h~J!. ool\Y ~'rC I\DIJ'?"f:'-
'?l1C h<S.r-:r- f"'LooH.,o-OT') FC'i:'-
oooo~Y fDIJm-tlJ:'- FAtIJ') 1-(a'r.y.;1-A:: f'?l1C
hil1n.m- l}t\FAtIJ') f1llY''f "'Lt{)TC f"'LymtIJm-')
oooo~Y OOLPl.T ODIJX'l.'? Of9"X'o- f"'L1---;' '?-oC
h~r-'f f"'LooH1o-0:'-') .,.') t\J&f f"'LYc'1J!.f9"'l'"l}
LP/b~ YH;JjfA:: J!.U')')9" f1.l1. LP,,"~ h,?l}l1 ItltTm-
Uf: {JlJ.1"l}t\FAtlJC;>'f YLP(,.Qi].A::
~%. hf:(,.i'f ilt\ool\m'r'l f')..,X' F (,. ') ilt\DIJ* l.'r
Ii. f,),? (,.7jm-') f"'Lt\ m-'r DIJ')<;'m-9" "111C
X' hX'
h ~J!. f 1-f.l. 1 m-') t\ m-'r 0 ciJ "''1:'- m- iI'r t\ "111C
hil1lllD- l}t\FAtIJ') D?iI;1-a,:" ht\OT::
r. f,),?X' F(,.m-') fD?Y*C'r D?')~m-9" '?lIC h~J!.
f')'?f: F(,.m-') tJ*l.mOT .,.') 'f.9"C: O!i
m-il'r t\'?l1C hil1llm- l11\FAtIJ,) DlJiI;1-m:"
hI\OT:: f,),?X' F(" h'):"iI:f>I'L O"'L*l.'rOT 1.11.
OH.Uh'P~ OOLPl.T ..,l1C h<S.~ O'ioo-f: oobl;bl.i'f
DIJ:"l.11 Yt\ 0:'-') f., II DIJiI;1-m<tY h,):" iI:J>1'Lm-
h1-*l.mOT .,.') h')iI.y. Ox "''T m-il'r DIJ:"l.-o
ht\OT:: f,)'?f: F(,.m-') h~:"iI:J>I'L hiltJ*l.mO.}.
1.11. f:l.iI ILht..A fD? 1l1m- '?l1C OH.U h ').,.~
00 LPl. T ., II m-') 1\DIJiI;1-m:" 0 +m (a., m- 1. II. m-{)
mJ!.9" hH.Y OkT ooht..A hI\OT::
r. u) h'?l1C Hoo", OkT m1,9"' O'?l1C Hoo", m-{)'r
h+*l.mm- f')..,X' F(" h'):"iI:J>I'Lt h. ')n.{):'-
oo')T hlll/'TlD-9"' f1ll9"',)~ '?lIC h~~ 10.
Y.,"f. h'l
t\) f')..,X' F(,.m- h'):"iI:f>I'Lt fh. ')n.ilTOO,)-f:
m1,9" hlll/'l rm-9"' /bit f., II 9"') Q;}:h 00* l.m-
OkT f1-1"fm- "llt
OH.Uh'P~ ooLPl.T ..,1IC f"'Lht..AOT hW.,
1llm- 01-.,-r 1.11. f,).., X' F (,.m- h,):" iI:J>I'Ll
h. ')n.ilTOO,)1: m1,9" lII/'Tm-9" ""It f10.
9"',)~ h,)~A1-*l.m 1-.,.'rC: 1,U htp~
1- t.. , D? 1,f.l..., 0;1- A ::
~t. 0011111foo YlI ..,1..;1-
Ii. hf.l.jf utltH '?lIC h<S.r-'f Oil1-.,.C Oh,)"'~ ~(~)
0 .,.1-l..,..00 m- 00LPl. TO').., X' F (,. It1, f 1-LPOI}-;'
m1,9" 000- t\- lD1,9"' 0 h&,A f"'L h (,.~ ;" '), Y''f
l1l\o.T flf.,.' f~.c'1l10011.,11 h'l (a"f.'f') foo
..,1..;1-hl\l1Tm-::
r. O')O-il h')"'R" (Ii) ooLPl.T f~c'1l1 0011.,-0'1
(a"f.'f') fooYlI ..,1..;1- YI\OT (am- hH.u 0;1-'f
f1-Hl.H~T') ool.jf1P:r- hDJ.A.y. OOYlI hI\OT;
u) *D? ,)1Il..y.'f f1-1rrOT') .,.'). f","rro:'-')
CP;J h'l hu-') Yltrm-') fOO1l111 CP;J
fD?Y 1t1, f*D? ') 1Il. T 0011111 bl;b9"c:
f')..,X' F(,.m-') Ull-r'l ()~ fD?Yc'11,(a"f:t
1\) h')..,X' F(,.m- h'):"il:f>I'L;JC 01-.rYH Of.,..,.
f",,,,lD-') "0. hCj f.,.1.l..,m-') mtJ;t. 0.,.t\J!.
h., II CjlDtJ;t.lD-,..tJ') IT ;JC 0"7YYlI'
tit) h')"'~ Ft,-m. ;JC O"'YYH f",.,rr hCj
f.,. ifffio ":f>1PT'tCj h., A.., tt-.y."f')
Ah.,. f"th.,.lt-T') f"tJ'Itf,'
FederalNegarit Gazeta-No. 34 4th July, 2002-Page 1884
45. Business Licenses
1) A person obtaining a license to carry an a business
accupation is required to. supply the TIN to. the
licensing autharity. All public badies and ins-
titutians issuing a business ar accupatianallicense
shall nat issue or renew such license unless the
taxpayer has supplied the TIN.
2) Natwithstanding Sub-Article (1) the licensing
I
autharity may nat require the taxpayer to.supply a
TIN if accarding to. the registratian schedule
distributed as per Article 43 shaws that the date far
his registratian is nat yet due.
The Minister af Revenue is hereby empawered to.issue
directives to.provide procedures far TIN registratian af
taxpayers. In accardance with thase directives, the Tax
f"'Lm{)')
Autharity shall prepare a schedule af registratian far a
TIN, which shall inter alia cantain specific dates far
registratian af a given class af taxpayers, and shall
distribute capies af the timetable to. all licensing
autharities.
47 . Change of Address and Cessation of Business
1) Any taxpayer who.makes a change af address shall
natify the Tax Autharity af the change within thirty
(30) days.
2) Any taxpayer who. ceases a trade ar business
activity shall natify the Tax Autharity within thirty
(30) days that the activity has ceased. In the case af
"''1:'-
a cessatian af activity, any declaratian af incame
required by this Proclamaatian to.be filed at the end
af a tax year, shall be filed no. later than sixty (60)
days after the activity haS ceased. Any tax due far
the periad in which the cessatian accuITed shall be
paid on ar befare the declaratian due date deter-
mined under this provisian.
'r 3) Where:
(a) any incame is derived by a persan in a tax year
from any business, activity, investment ar ather
saurce that has ceased either befare the cam-
mencement af the year or during the year, and
(b) if the incame had been derived before the
business, activity, investment ar ather saurce
ceased it wauld have been chargeable to. tax
under this Proclamatian,
this Praclamatian shall apply to.the incame an
the basis that the business, activity, investment
ar ather saurce had nat ceased at the time the
incame was derived.
48. Record Keeping Requirement
1) All persans who.are engaged in a business or trade
as defined in Article 2(5), ar wtlO awn buildings
held all ar in part far rental, except far Categary C
Y1'
taxpayers shall keep boaks and recards.
2) A persan who.is required to.keep baaks and recards
in accardance with Sub-Article (1) shall keep the
fallawing infarmatian:
(a) a recard of the business assets and liabilities,
including a register af fixed assets shawing the
date af acquisitian the cast af acquisitian, and
the CUITentboak value af each asset;
(b) a recardaf all daily incame and expenses
related to.the business activity and the matter to.
which they relate;
(c) a recard af all purchases and sales af goods and
0"'00 services related to. the business activitiy
shawing: .
1~ lifi.tfit~ ~1.6-&\ ";Jt-r ;JtLllJ {t~ t!% +'} lUng 'i.9". Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1885
. -

(i) f1'irmro-'} iJ:1'Cjf1'{tmro-'} h1&\..,fto-r (i) the particular goods and services sold;
OoPl\f-rt (ii) the name of the buyers and sellers or providers
(ii)
iJ:1'ro-'} f1n- mf.9" firm- mf.9" h1&\'"
ftoi:,} f{tm- {tsP:r.'} {t9"t f..,11C in such a manner that they can be identified by
h (t10. ro- C)I\,P' &\1lJ'} I\f,.y. h 1.itf ro- the Tax Authorities;
:1':fro- 0'7'1..f {t1- &\ h 1,1,:\'} t (iii) and using pre-numbered invoices containing
(iii) fif (J;}:') f..,11C h4.f. oPl\.f <kTC f fU' the vendor's tax identification number;
h{t+f:lfP <kTC f1'{tIlJ:fro- 1.t:{tC;U1-
d) a record of trading stock on hand at the end of the
OoPm+9"f
oP) OoP;JtI'} f1'hOlJ:t: f,..,f: iJ:1'9':r'1 'if."""f accounting period, including the type, quantity and
11If-r h Cj 1\iJ:1'sP:t: f l' 1.t: 1 ro-, m {J;\, cost of that stock as well as the method of valuation
h'}.it v-9" iJ:1'sP:t: f 1'1 oP i: 0 -r'} fI1. Q;},9" C' of that stock;
0~/\11 floP'1- oPQ;},t:if Oh~ .f~-rl iJ:1'sP:r. (e) any other document relevant for the detennination
fDfJ..f"-f. f{\'1 f: oPt:;Tf
IP) fDfJ..LI\1ro-'} ..,11C l\oPm{t, fDfJ...f{t:r.~ of the tax liability.
OIJC; :fro-9" Ibfto1- h ..,C)11.,-r .f" :fro-, 3) If a taxpayer has certain books or records in a
oPt:;TsP1-t foreign language, the Tax Authorities may require
..,11C h4.~ Oro-6J.1' h1C *'}* f1'fl;JJr. f'i/l11
E' that they be translated into one of the official
oP1'1P1-Cj {t""1- f~-r h'}1.If., h.,H,Ul oP1'1
P1-Cj {\'1"1- 0 6-(\- m {J;\, OJ\. -rr- k f ro- {tT 0 DfJ..1P t . languages of Ethiopia at the taxpayer's expense.
l1:fro- h..,l111 c)":fro- f,P'6- *'}*sP1- h{t1'C1-lfP 4) The books and records mentioned in Sub-Article
hl.itf+C11 f..,11C h{t10.ro- c)1\,P'&\llJl l\.mf.:r (2) shall be kept by the taxpayer for a period of ten
f.1-"&\:: (10) years after the end of the tax period to which
g. ..,11Ch4.~ O,(}o{th'}+'" (ID f1'flt:fI~-r') f~"-11
oP1I1P1-Cj {t.,"1-f f In--r ~"-11 h ..,C)11"-r ltl\ro- they relate.
f..,11C fIoP'} h'} {t.y. I\h,P'C 'ioP ;J--r OIJcf.f-r 49. Submission of Memorandum of Association
hI\O-r:: Companies, partnership and other business or-
~U. fOlJ...OCoPoP,P't: 1.,}11 {t1\0IJ:rt:11 ganizations shall submit to the Tax Authority a copy of
'h-C),fsP : f7iCtJCj 0IJ"'0C'1- hCj ibfto1- I\,,,,y:
f1'**OU- 0IJ...0t.-r V-~ f1'oPlPt:i:O-r'} foP1'~1.tf their memorandum of association and statutes and shall
1.111 Cj foP oP (tt::r thot;: -r tJ tJ &\ &\ .., C)
6 J.1' 1\ .., 11C notify the Tax Authority of any subsequent change
'"
h ft1 0. ro- C)I\,P' &\1lJ'}. oP {tm -rCj 0 1'h;J- ;J-f.9" 0 H,V- therein.
"f. f1'1.t:1 I\ro-T {t,'iC OIJ{t;J-m:r hl\C):fro- :: 50. Public Auditors
j. 1>.Il1'C'1-
"7'}~ro-9" 1>.Il1'C f1.l0~ro-l 'ioP;J-ce 1) Any auditor, when requested by the Tax Authority in
-6' oPC9"C'ffimro-l tTC-r O..,11Ch{t10.ro- ~""11 c)1\,P' writing shall submit the audit report of his clients.
&\1lJ'}O~thot;: {t,mf:r OIJ:rt:-o hl\O-r :: 2) Where any auditor fails to submit the report within
I' Tf4:ro- 0+t:00-r ~thot;: O1'11\Oro- 1.tL ro-{tT the time specified in the letter referred above, the Tax
OIJl~ro-9" 1>.Il1'C tTCi:,} C)f+C11 ..,11C
h{t10.ro- C)1\,P'&\IlJ'} f1>.Il1'~ L:1'Y: h'}.Il{tt:lI Authority shall notify the Licensing Authority to
I\L:1' Y: (t{J;\,ro- C)I\,P' &\1lJ'} f {t;J-ro-:1'&\ :: withdraw the license of the auditor.
tJ t;:&\ o-I\-r SECTION IT
h1'h4.f. ~"-11 I\f. ..,-oc'} +'}t\ 10. Withholding Procedures
fOlJY:t:.., ,P'C'ii' 51. Withholding of Tax on Employmentlncome
jli' hoP+mC 0"'l.1110. I\~ fDfJ..hLl\ro-'} ..,-OC +'}t\ 10. 1) An employer shall withhold tax from every "payment
{t 1\ OIJ Y: t:..,

li~ OH.U htp~ O..,&\~ h..,-oC ." h'}.IlIT'} f1'1.t:1 to an employee, unless the payement is expressly
It&\lf., 0 {t1'+C OIJCj:fro-9" +llJt 1\1'+llJtro- hDfJ..h made tax-exempt by this Proclamation.
t;:1\ro- tJ t;:1 I\f. 1'1 0. ro-'} ..,-0 C +'} I' OIJ{t+ t: -r 2) The obligation of an employer to withhold tax has
hl\O-r :: priority over all other obligations to withhold any
g. +llJtro- OOD+mC hDfJ..1~10. I\f. ..,11C +'}t\ 10.
0"7f:t:.., t:1f: fl\O-r ..,1.;J- : 1\1P6-1'~ro- other amounts from payments to an employee.
hDfJ..LOOU- ht;:fsP1- I\f, 1'+Cj7i oP1.t:.., ltl\ C):fro- 3) An employer shall pay the withheld tax to the Tax
Ibfto1-..,1.;J-9'1- :Pf:DfJ..ff.'it:tp&\ :: Authority within thirty (30) days of the end of each
E' +llJtro- +'}t\ f{t+t:ro-'} ..,-oC hhf'}~'}.J;. roc
oPQ;},t:if h'} (t.y. C)~-r en +Cj-r ro-{tT 1\..,11C calendar month, and each payment shall be accom-
h{t10.ro- C)1\,P'&\IlJ'}10. -177f:t:.., hl\O-r :: OH,U panied by a statement with respect to each employee
'if."-r 1'+'}t\ f+t:ro- ..,-oC 10. ODfJ..1.t:..,O-r1.tL who derives taxable income for the month.
0 m~ ro-{t'1' ..,-oC fDfJ.. hL&\ 0 -r 10. 11 "f.-r'} 4) The statement referred to in Sub-Article (3) shall be
1P6-1'C;U1-lIClIC fDfJ..f"-f. oPt:;T 1'lf,tf oP:rt:11
in the form and furnished in the manner prescribed
hl\O-r ::
g, hllU Ol\f, O'}o-{t h'}+~ (E) oPlPt:-r fDfJ..{tmro- by the Tax Authority, and shall contain the following
oP'" 1\~ f..,-o C h (t., o.ro- C)I\,P' &\1lJ'} ODfJ..m{t., ro- information:
:Pc~Cj h'-':\'} fDfJ..+C-o IT'i fDfJ..h1'~-r'} oPt:;TsP1- (a) the name, address, and TIN of each employee;
tIPfll hI\O-rI
(b) the amount of taxable income derived by each
v) ~~,}.J;. '} 1'+llJt 119"i hY:6-if hCj f..,11C
h"-f, ODl\f <k'1'C f employee from the employment;
1\) hJ"}'-;,}.J;. 1'+lflt hOD+mC f11ro-'} ..,11C (c) the amount of the tax withheld from that income,
f"thL&\O-r 111. ODtn'}f and
dt) hH.o- 10. I\f, #'}t\ f+lro-'} ..,-OC tlPm'} f
tIP) h..,-oc." f1'1.l1 #lfItro- f11ro- 10. (d) the amount of any tax-exempt income derived by the
tlPm"}f employee.
 1'" ii1l~fft t..1..Ir/.\ ~:M-r ;JILilJ (}1 3'~"" Ii!f1~ 'i.9". Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1886

n. /)~?'"f m1.h1C ODt1(}-()-r 1.tL ltt\Dtht./.\ f1l1. "lllC 52. Collection of Tax On Imports
~. /)~?'"f t\1"1Y: mf,.h1C ODt1l1-0'-'" 1.1t f1"1Y: 1) A current payment of income tax shall be collected
-rClJ: "IlIC' .eht./.\t):f'P/.\ :: Ottu 'i.e~"" fDt(}O
(}OW-"IlIC ~ h..,.h<i-.e 'lltll I\.e on Schedule C income at the time of import of goods
(I ~ 1 f,..,.t.
"""" for commercial use, and the collected amount treated
"lllC 1'''''I'C' "lllC h<i-~ O'iov1: ovbQ,t.i'f ovht./.\
hDt1f)w- f"lllC ovm1 I\.e ~1Jt'+(}1It\-r as tax withheld that is cr~ditable against the tax-
.ef,.t.;J /.\ :: payer's income tax liability for the ye<1r.
g. OH.U h1.,.", OVIPt.'-'" m1.h1C ODt1l1- /)~?'"f I\.e 2) The amount collected on import of goods shall be
fDt(}O(}Ow- f1"lY: '-"'ClJ:"l'OC hltOVlilil.CD't\/)~w- three percent (3%) of the sum of cost, insurance, and
Oht.t\w- 'P;J fovY:1 ht.(11~ ~c; fov~~"r mlilil. freight ("CIF value").
(l\..h.e''''lJ:) I\.e fDt.+(}lI
oov.,.) .elYc;/.\::
r
TC(}1:'f' (Y'lt:'f. 3) If the amount of income tax collected on the import
of goods results in underpayment ofbusiness income
E' mf,.h1C ODt1l1- /)~?'"fl\.e f1'ht.t\w- "lllC:
tax due for the year, as determined at the time of
"lllC h<i-~ flt.+m",w-1 1l1. OVIPt.:'f' ODl/Y:t."l
declaration of income tax, the taxpayer is required to
h""m(}~w- "IlIC f~(} ~11.1Y~: "I'OC h<i-f. /.\~~1:1
pay the difference with the declaration. If the amount
~1JthlJ:/.\ .e1.t.;J/.\:: m1.h1C ODt1l1- /)~?,-:;. I\.e
f..,.ht.t\w- "lllC O'iov1: ILht./.\ hDt1f)w- "lllC represents an overpayment of income tax due for the
fOt\m ~11.1Y~ f"lllC hlt1l1.w- f)t\F'/.\ilJ1 'lltl1-1 year, the Tax Authority shall after ensuring the
hilJC'" 011/.\65]. f.t-ht.t\w-1 "l'OC 0J\1"'~ ~?; accuracy of the books and records refund the
0""1t\~W- 1.1t ~c; h~:\1 t\"IlIC h.;.~ .eovAlt taxpayer the amount overpaid within 3 months
t\;rA:: period.
~. OH.tJ h1"'~ OVIPt.'-'" fDt(}O(}Ow- "lllC~ f"lllC 4) The tax collected under this Article shall be recorded
h4-~1 lt9": hY:lri'f ~c; f"lllC h4-.e ovt\.f ~'I'C and accounted - for using the taxpayer's name,
Ooom"'9" 00001.111 ~c; 'lltl1-1 Ottrr OVIPt.'-'" address, and TIN; provided, however that if a
oof1l ht\O'-"':: IYlf9" "lllC h.;.~ fovOV1l1l1..fw-
taxpayer is not required to obtain a TIN the records
1.tL f)t\oo Y:t.ft- 9"h1 f'-'" f"lllC h4-.e oot\f ~'I'C
f/.\fH ~1.~1Y~: f"lllC h4-.e oot\f ~'I'4-1 h"l~'" shall be kept using only the taxpayer's name and
"l1l4-1 h.t-h4-.e 'lltll I\.e ""(11l1. t\o<J.ff,.C1w- address until such time as the taxpayer supplies a
()w- ~ IthDt(}'I' Y: t.lt 9"111 f)w- fDt h c;m., TIN to the collecting agency.
w-
O"lllC h4-~ lt9"c; J\Y:Iri'f 11;: .elYc; /.\:: 5) For purposes of implementing the provisions of this
~. Dt~lt'-"'4- t\ttu h1"'7\ J\t.'109" "t\1"1Y: fDtw-t\- Article the Minister shall by directive define the term
/)~?'"f fDtt\W-1 tht."I '-"'C7-9" Ooo006f "for commercial use."
.emltC;Ar: 53. Withholding of Income Tax on Payments
2[' h..,.h4-.e 'llt(1"f I\.e "IlIC1 ""(1ltt\Dl/lt"'t.t 1) Origanization, having legal personality,
~. Oilt"l f(}w-~-r OVll'-'" f""(}ilJ:fw- Y:C~1'-"f: f001 " govern-
ment agencies, private nonprofit institUtions, and
"IF''-'" oo/o..,."f: t\'-"'ClJ: f/.\"'**oo- f"lA
~c; 001"1F'.+lf fAIY). non-governmental organizations ("NGOs") shall
Y:C~"'"f Y:C~"'"f: fDt~
withhold income tax on payments which by
It'-'''C'"f 9"hC 0.'-'" Oo<J.fmilJw- f,.111 "IlIC """"(1
h..,.m(}., Dl/c;:fw-9" hlJ:f I\.e Regulations to be issued by the Council of Ministers
"'6 ~ 1Jt1.t."IO'-'"
"l1l4-1 .,.,(}w- Dl/lt.,.t.'-'" J\t\f):fw-:: are subject to withholding Tax.
I. h..,. h <i-.e 'llt (1"f 1\f, .,..,., (I .,. 6 fDtf,. t.1W- "111C 2) The amount withheld shall be two per cent (2%) Of
fm.p1\1\ ..,.h4-.e 'lltll ~ TC(}1'-'" (rrt\'-'" 000"') the gross amount of the payment.
.elYc; /.\:: 3) Within ten days from the last day of each month, the
E' "l1l4-'''''(11l1. "7Y:t."l .ft\O'-'" (}w- Om4- w-lt'l' withholding agent shall transfer to the government
h..,. h t. t\- 'lit (1"f I\f, ..,..,., (I .,. 6 00 f,.t. "I f Dt 1 f)w-1
the amount required to be withheld on payments
hm~l\.e 'lltll hCD4- fooQ;1,t.i'f .,., "f.9"C' f)t\--r
made during the month. The withholding agent's
hF'C .,.c;-r w-lt'l' t\"IlIC hlt1l1.w- f)t\F'AilJ11l1.
aggregate monthly transfer shall be accompanied by
"'IY:I."I J\t\O-r:: h.,.h<i-f, 'l1t(1"f I\f, "IlIC1 ""(1
1l1. f"'iY:t."I ;)I\k"'-'" ft\O'-'" (}w- Om4- f(}O(}Ow-1 a statement lising separately each specified person
hm~l\.e 'llt1l1l1. Oo<J.ff,.C"IO-r 1.tL hlJ:f f..,.t.O to whom payments were made; the person's TIN; the
00t\-r1 f~.f1.c;1~ 1 (}w- mf,9" Y:C~-rlt9": oot\f monthly total of payments made to that person; and
~'I'4-1 ~ 0 m4- w-lt'l' t\..,. m'" (}w- () w- f ..,.ht.t\ w-1 the amount of income tax withheld results in
11"11 hm~l\.e Y:9"C: ..,..,.c;7i ..,.f,.C1a f"'t.0w-1 government with respect to that person.
"l-oC ~c; O~f1.c;1~ (}w- lt9" t\"IlIC hlt1l1.W- 4) Ifthe amount ofincome tax withheld on payment to
t1t\F'/.\ilJ11l1. f..,.f,.t.1W-1 'lltll fDtflt.e 1IC1IC specified person results in underpayment of income
"'I.}>t.-o ht\O'-"'::
tax actually due for the yeary as determined at the
~ . h.,. h<i-.e 'lit (1"f I\.e f..,..,. .,()w- "111C 0 'i 00 1:
time of declaration of income tax, the taxpayer is
ouhLA h~OI.O"'" '-"'hht\~ "IlIC f~() IYlf f"'11
required to pay the difference with the declaration. If
~11.1Y~i "IlIC h<i-~ 1l1.w-1 Oo<J.flt.+w-.}>O'-'" 1.tL
OA~~T fDtt.t\1W-1 "IlIC 1l1. "'iY:t."l ht\OT:: the amount. of income tax withheld results in
h.,.h<i-f, 'l1t(1T I\f, f.,..,..,(}w- "IlIC O'ioo1: overpayment of income tax actually due for the year,
ouht.A ho<J.1f)w- Ol\f, IYlf f"'11 ~11.1Y" "I-oC the Tax Authority shall refund thetaxpayer within
hlt1l1.W- f)t\F'AIIJ1 O-oA6liJ. f.,.ht.t\w-1 "IlIC the time and in the manner prescribed under Article
Oh'+", C"i O"'1t\Rm- 1.tL ~lj" h~:\1 ft"lllC h<i-~ 76.
f,oDAitft.+ A::
1~ liif.~ffi ~~~A ~.7t"" .71j,1l)1'1);'?)~"'")Iitf1~ q.9'". Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1887
"
~. (lILtJ h")'" ~ 00 lP l"" h1-h cf.,f. "1111 I\,e. ..,-n ~ ") 5) If a withholding agent fails to withhold or under
.,.")(t 1n. ftryY:l.., "'~;1' !f\{l"" 1'1m- 1-.,.")(t 1n. withholds he shall be made to pay the full amount of
00 1.l.., ! f\ (l""") ..,11 C {llID-tt- lD,f.9'" (l hL A .,.") (t
the tax to the Tax Authority.
1 n. ! I\1.l1 ,,") 1. If ~ ..,11 ~") lID-tt- (l lID-tt- f\..,11 C
hi11n.m- 11f\,v'AIl)") 1n. ,,")It!1.C'" ,f.11.~A:: 54. Withholding of Schedule' 'D" Income Tax on Payments
:jQ. flP")ml1f "00" 1n. f\11f\001l1: (lOl/.h&.oA{l"" 10ft 1) The payer of any payment subject to tax under
.., 11C') (I {}f\ ol/{}.,.l1- Schedule "D" shall withhold from the payment
"")
~~ tryej,tm-l}" IIlP')ml1f "00" OOlPl"" ..,1IC fOl/.h&.o
the amount of tax required by Schedule' 'D" .
A{l''''") 1n. f\11f\001l1: fOl/.hCi:A 1'1m-1 (llP")ml1f
.., 11C h 1-h cf.~ ~..,-n 2) The obligation of the payer to withhold tax has
" 00" 00 lP l"" f 01/.&.of\1 m-")
I\,f. .,.") (I try {}"'l"" h f\ (l"":: priority over all other obligations to withhold
.., ~;1'1 hcf.~
~. hcf.~ !f\{l"" ..,1IC .,.") (t ftryl1.,.t."" amounts from payments to a payee (the taxpayer).
h 1- h cf.~ 1 n. I\,f. .,.") (\ try l1"'l"" il f\ {l"" f\,f\
tryCj:fm-l}" "'~;J- "'~OI/.~"" ,f.tf t.lf'A:: 3) A payer shall pay the witheld tax to the Tax
E' hcf.~ 4'")(t !l14'lm-") ..,-nC h"!")~").I;. lDC Authority within fifteen (15)days of the end of
00 bQ, l7i h") 11.y. 11tt-"" ,i: 4'Cj"" m-11'1' f\ .., -n C
each calendar month, and each payment shall be
h i11 n. m- 11f\,v' All)") 1 n. O?Y.:l.., h f\ {l"":: 11f\If ~l}"
{lILtJ q,f.~"" .,-.,.")(t f4'lm- ..,1IC 1n. {lOl/.1.l..,{l""
accompanied by a statement with respect to each
.., 11C f 01/.h&.oA (l"" 1 n. !1 -r...,.") taxpayer who received payments during the month.
10ft {llD~ m-11'I'
..,1IC h cf.f':f 11ClI C fOl/.! ta,f. 00 ljf 1- !,f.Jf 00:" t.1I 4) The statement referred to in Sub-Article (3) shall be
h f\ {l""::
in the form and furnished in the manner prscribed
Q' hILtJ {ll\,f. (l")o.l1 h")4'?\ (E) OOlPl"" fOl/.l'1mm-
00'" f\ 6liJ. f.., 11 C h 111 n. m- 11f\,v' All)") (l 01/. lD 11~ m- by the Tax Authority, and shall contain the
:"C6Cj h ';1.:\") fOl/.4'C1I Iftft fOl/.h1-tt-""") following information:
00 t.jf 5P:f 00!1I h f\ (l""! (a) the name, address, and TIN of each taxpayer;
u) f"!")~").I;.") ..,1IC hcf.,f. l19"t hY:~7i "Cj
f..,-nC hcf.,f. 00f\! ~'1'Ct (b) the amount of payments subject to tax under
f\) (llP")ml1f "00" OOlPl"" ..,1IC fOl/.h&.oA Schedule D;
(l""") hCi:! oom"):: (c) the amount of the tax withheld from the
dt) hhCi:!m- I\,f. 1-.,.")(t f"'lm-") ..,1IC oom")t
payments.
~. f\..,-nC hcf.~ hCi:! (l0l/.4.09"{l"" loftt hcf.~ f\"!")
~").I;. ..,1IC h cf.,f. f..,-nC h 111n. m- 11f\,v' A Il)") 5) At the time of making a payment to a taxpayer, the
ft01/.lDM m- h ';1.:\") ..,11C 1-"'") (t .,. t 00 1.l.,.") payer shall furnish each taxpayer a tax withholding
f OI/.!l.7"''1' f 9" 11helD l"''''' ,r, 1\Il) A :: ,e.tJl}"
certificate (in the form prescribed by the Tax
fl}"l1hc lDl"''''' (l")o.l1 h").,.?\ (~) f1-"lHlm-")
OOljff ..,1IC hcf.~ 1-.,.")(t .,.t fH-1.l1m- f..,1IC Authority) showing the date of the payment and
try
00 m") I\,f. :,. &.;1'm-") f\ :"l1l fOl/.:fA ODIf ~ ") t "Cj stating the information listed in Sub-Article (4); the
:,. &.;1'm.") try:" t.1I f 01/.:f A (l""") h ';1.:\") fOl/. 1 A6
taxpayer's right to contest the amount of tax
oolf") hf\{l""::
}. ..,1IC 1-4'")(t"'t oo1.l.,.") fOl/.!l.7"'mm- f9"l1hC withheld; and the manner of doing so.
lDl4''''' {llP")mt.1f "00" ODlPl"" ..,1IC (lOl/.h&.o 6) The tax-witholding certificiate is proof of the
A{l"" 1n. I\,f. 1-4'")(t f\4'lm. ..,1IC tryl1ljf ,e.IfCjA:: amount of tax withheld on payments subject to tax
OD 11 m""
:i~. f 00 ;1' lDet! OJl"''''' 11f\ under Schedule D.
"f"'1IC h{}1(lm. 11f\,v'AIl)') n1-hcf.,f. ~ta1l I\,f. ..,1IC
4'") (\ ftry l1"'l"" ;}I\L ~..,. f\ 1-1'11l):fm- 1'1?':f f OD;1' lDet!
55. Issuance of Identification Card
lDl4''''' ,f.I'1Il)A:: The Tax Authority shall issue identification cards to
:i}. f 1-&.0000m.") h Ci:! Cj .., -nC 1-"'") (t 1 (l 7D1.l.,. ") Withholding Agents.
fOl/.! l.7"''I' () ~1: " -
56. Record of Payments and Tax Withheld
'Ii "'11C "")(1 1(l ftry Y:l'" "'~;1' !f\{l"" Ow n,,!") 1) A withholding agent shall maintain, and make
~1.1;. f..,l1C Hoo")t
U) 'f1'UllD- hCi:!5P:f"): "Cj available for inspection by the Tax Authority,
f\) h"~ILtJ hCi:!?':f 1-.,.")(t f"'lm.") ..,-nCf records showing, in relation to each fiscal year:
fOl/.!ta~ f~ta1l 1'1~p.:f") fOD!," "Cj f..,1IC (a) payments made to a payee, and
h111n.m. 11f\,v'AIl)") 9"COD~ ,,")Jt!f-C..,I1:fm.
ftry :"l1l ..,~;1' h f\ {l"":: (b) tax withheld from those payments.
i!. ..,1IC .,.")(t 1n. ftryY:l.., ..,~;1' !f\{l"" 1'1m-hILtJ 2) The withholding agent shall keep the records
- {ll\,f. (l")o.it h")"'~ (Ii) f1-HlH~""") f~ta-n 1'1~p.:f
referred to in Sub-Article (1) for five (5) fiscal years
h"'l}1I~"" ill\:fm- f..,-nC IIOD")ODt;Q.lif h")it.,. f\i:~
M-nC qoo~ trycf>f""hf\{l"":: after the end of the fiscal year to which the records
f..,-nC h111n.m- l}f\,v'AIl)") ..,-nC .,.")(t 1n. relate.
E'
ftry Y:l.., "'~;1' ! f\{l"" 1'1m- h ILtJ (ll\,e. (l") o.l1 3) The Tax Authority may require a withholding agent
h")"'~ (6) f1-IIlH~""") 1'1~p.:f \'11: "CO-
(lOl/.l'1mm-1>6 "Cj lJo);.;1' ")It lJo9" (lOI/.lDit ~m- flol1. to furnish a copy of the records to be maintained
A ~ ~..,. ,,") Jt!4'C-n ll.m,e.:" " ,e.:fl\A:: under Sub-Article (1) in the manner, form' and at
2~' (l;1'ho- lloo~ m-it'1' fOl/.&.of\1m-")..,-nC itf\tryit1-ilhA the intrvals prescibed by the Tax Authority.
he.. ftryY:l.., ..,~;t' 1f\(l1' ()m-lll\f\II1'
"''''IC ""W1(l 57. Adjustment To Tax Due For Year
f 00'1 {}.., ~;t'
And Withholding Agent's Indemnity
-
O' 1-"")(1.,.t f1-f-l1m- ..,1ICfODt;Q.liff..,-nC h"FJ'
hln{l"" lJo);.;1'{lit1-"'Cf 1-.,.")(t .,.~ f1-f-l1 ..,I(IC 1) Except for tax withheld with respect to final taxes,
hCi:! ({lh")"'~ :Ii: lD,f.9" {lh")"'~ :I~ ODlPl"" withheld tax (or tax paid currently under Artide 53
{lflol1.tD- f1-h&.of\ "'HIc lD,e.9" M")"'~ :II or Article 54 or collected on import under Article
ODlPlT (l1n. iJ:1>?'"T I\,e. f1-h6.f\ ..,-nC) ..,l1C
hcf.~ (ltl.!m- f;1'hit HOD")m-it1' ll.htt:t\ fD?,,111(Do
52 is included in ascertaining a taxpayer's tax due
.., -nC {l"7.1'11\(l"" 1.11 fOl/.I11-"" ,f.lflj t\:: for the tax year.
 '1St lin.~fit~ UoI,.A ~;J6"" ;Jli.1lJfl1 ~ .,.")
Iiif1i! ~'9'". Federal Negarit Gazeta-No.34 4111
July,2002-Page 1888
I' "111~ .,...,.'} 1 (1. f.,.. f. ~ 1 0"" fllJ)c .,...,.") 1 (1.
f""f.~1lJ)c "111e " h")JlhLhlJ)c '1'fcJ: " 2) A withholding agent who has withheld under this
f"'~O h")f.If~
OH.tJ hCP~ OOLP~"" h""h~f. ~lt11 I\f. "111e +")" Proclamation and remitted the amount withheld to
fll"'~ hiJ h"111e hll1(1.lJ)c llh, AIlJ'} 1(1. ff.~1 the Tax Authority is treated as having paid the
()lJ)c 1 (1. f.,.. 1.~ 1lJ)c") "111e h.,..+
~fl 0 ..,. fllJ)c h,} 1. withheld amount to the payee for the purposes of a
hLI\ .e~mt-A::
claim by the taxpayer for payment of the amount
h~A Y'll'-"
f"111C ~...'n h.(I,(l1' ooelfsP";f withheld.
Y~' f~l'\11 hff1' HY.. SECTION ill
ji. OH.tJ hCP~ O""1.~11lJ)c OOLP~'-" Oh'}~' f"111C Tax Accounting Principles
flOO'} lJ)cll'J' "111e h~~ f1~ A .,..111\- f :1'flOlJ)c'} 58. Method of Accounting
lD.e9" f17'lJ)c'} 1(1. 1\D?~;J1'J' hHOO~ 0:\1\ rD?(}(l 1) Subject to this Proclamation, for the purposes of
() 0 lJ)c lD.e9" r D? h Lh lJ)c
~ It11 0 h m.4' 1\f. """'11 ascertaining a person's income accruing or derived
.e~'-" f1or;. r~lt11 h,ff1l OOClfsP"f'} OOLP~'-"
OD?~. ~ "1 0 fIOD~ h'} 1..,..fl 0 fl 0 lDf.9" h '}1. .,.. during a tax period, the timing inclusions and
h L 1\
"'~'J'C' h,}1.h"1Il11~~ 01(1.H. h'}Jlf1' lD.e9" deductions shall be made according to generally
OlD{J;}.h'}Jl"'~ll .ef.~;JA:: accepted accounting principles,.
I' OH.tJ h'}"'~ '}(}oll h,}"'1t(ji) hiJ (C)r""J.'.~11lJ)c 2) Without prejudice to Sub-Articles (1) and (3), and
h,}J.'.""mO.,. (J'tjt r"111C h1l1(1.bJ.-71l1\, AIlJ')
f.,..l\f r~l'\11 hff1' , 1,. I\.e h'}JllJ)cA I1AL.,.J.'. unless the Tax Office prescribes otherwise in par-
Oll.,...,.C D?,}~lJ)c9" "1'Oe h~.e ~ltn-'} 0'J'6. 1'}H11 ticular case, a taxpayer shall account for tax purposes
h'} .p 1l.4'11. I\.e 0.,.. ODLP~ of' lD.e 9" 0.,.. ()11It (1.iJ on a cash or accural basis.
""h~.e ~1'\11 I\.e O""ODLP~"" f~lt11 hff1l flY.. 3) A company shall account for tax purposes on an
00 f1' hI\O""::
C. 1\"111C hh~LA fl.llA h-1l"),(1 ~ltn-') O.,..fl11lt(1.iJ
accrual basis.
4) A person may apply, in writing, for a change in t~at
""h~f. ~1'\11 I\f. O""OOLP~T r~l'\11 hff1l flY..
OOLP~'-"00 f1l hI\O'-":: person's method of accounting and the Tax offIce
Q' D?,}~lJ)c9" (}lJ)c r~l'\11 hf f1l HY..lJ)c') I\OOl\lD'J' may, by notice in writing, approve the application
h '}JlL'" Y;I\'-" r"111C h1l1(1.lJ)c'} 111\, AIlJ'} but only if satisfied that the change is necessary to
OoJ1.tt: ODmf.p .e";fl\A:: r"111e h1l1(1.lJ)c 111\,....
AilJ'} .,..I\CPlJJ: flY.. f"111e h~~'} ~1'\11 O'-"hhA clearly reflect that person's income.
rD?fl'\.e ~lJ)c 111\- fl..f9",}O'-" l\lJ)cm'} OD"'Of\o'} 5) If the person's method of accounting is changed,
OOJ1.tt: fll:1'lJ)c.4'A:: adjustments to items of income, deduction, or credit
~. r"111C h~~ r~l'\11 hff1l H1. h'}.&;.l\lD'J' fl.L.,.Y; shall be made in the tax period following the change,
r1(1. e{)"-:;' I'\.eOOH1n- ~1-':J.'.+~ lD.e9" OY;;JD? so that an item is not omitted or taken in account
h'}~.eOOfl1n- 1\D?Y;~"1 r..,l1e h~~ r1(1. C{)fI";ft
.,...,. iJ7i lD.e9" f :1'h II D?1111 if ~ 1'\(1-:;' I\.e 1\lJ)cm
more than once.
h.,.. J.'.~ 1 0'-" f"111 e fI OD')
+'1' I\- 111\lJ)c f}00.-,. lJ)cliT
59. Cash-Basis AccountinJ?
"'1(1.lJ)c D?ll.,..l1hf iLJ.'.~"111TlJ)c.e111A:: 1) A person who is accounting for tax purposes on a
YU' OTto 1'}fl11 h '}.pll.4'11. I\.e rTOOLP~"" f~l'\11 hf.f1l cash basis shall acoount for amounts to be included
flY.. in calculating that person's income when they are
ji. 1\..,11C hh<S-LA fl.IlA ~ltn-'} 0'J'6. 1'}Hl1 h,}.p
received by, or made available to that person.
1l.4'11.I\.e OTOOLP~"" r~lt1J bY!1I1. rD?.eHlD-'}
2) An outgoing or expense is incurred by a person who
"1'OC h~f. 1(1. I\DfJlll\'-" "111C h~~ r.,...,.ol\lD-'}
lD.e9" Olloo- f""ffll\'-"'} r1'}fl11 OOm'} 0~1'\n- is accounting, for tax purposes, on a cash basis when
lJ)c liT D?11.,..'-" h 1\ 0 .-,.:: it is paid by that person.
I' 1\..,11C hh~LA fl.IlA ~ltn-'} 0'J'6. 1'}H11 h,}.p 60. Accrual-Basis Accounting
1l.4'11.I\.e O""OOLP~"" r'Llt11 h,f!1I fl1. rD?.e.1I
"111C h~f. lD{J;}.hJ.'.~1 rD?lll\lJ)c "111e h~~ Ol,.(}. 1) A person who is accounting for tax purposes on an
rD?LOOOlJ)c h~f fl.1f'} ~lJ)c:: accrual basis shall account for amounts to be
:s. 0.,.. ()111'\(1.iJ .,..h ~f. 'LIt11 I\.e 0""00 LP~ .,.. included in ascertaining that person's income when
f~"'11 hY Y1I flJ!.. they are receivable by that person.
ji. 1\..,11C hh~LA fl.llA 'Lltn-') OTfl11lt(1.iJ 2) An outgoing or expense is incurred by a person who is
"'h~.e
'L1'\11 I\.e O""OOLP~"" r'Llt11 h!!11 fl1. fD?.e.1' ~ccounting for tax purposes on an accrual basis when it
"111e h ~.e' 1 (1.lJ)c'}0 owz..r LP" 0'-" 1..If. 0 II00- 0.,.. flll ISpayable by the person.
1'\(1.~'-" r.,.. ffllJ)c'} f1'}H11 OOm'} 0'L1'\n- lJ)cllT
D?11.,..'-"hI\O'-":: 3) Subject to this-Proclamation, an amount is receivable
g. t\..,11C hh<S-LA fl.IlA 'Lltn-'} O.,..flll"(1.iJ .,..h<S-.e by a person when that person becomes entitled to
'L"11 I\.e r.,..ooLP~"" r'Llt11 hYf1' fl1. fD?.e.1I receive it, even if the time for discharge of the
"111e h~f. lDaJ.. hJ.'.~ 1 fD?1l1\ lJ)c 0 II 00- O.,..h <S- entitlement is postponed or the entitlement is
.e ~.-,. r.,.. f fI fl. If'} ~lJ)c:: payable by installments.
C. OH.tJ hCP~ O.,..f. ~11lJ)c OOLPI.'-"h '}Y; 4) Subject to this Proclamation, an amount is treated as
'L"11 O"1l1C
h ~ ~ .,..fll1 It (1. ~ lJ)c fD?1l1\ lJ)c f ooh Lf lJ)c 1..tI. payable by a person when all the events that
f-t'I\ 1\L lD.e9" h ~f lJ)c fD?LfJOOlJ)c O"'lD () ~
h~f?,";f ""h~tt:1\- (1.1f'}9" "111e h~~ 'L"(l-') determine liability have occurred and the amount of
I\OD"'OA 0011"" 1117'0'-" 1..li. ~lJ)c:: the liability can be determined with reasonable
2' OILtJhCP~ 0"'J.'.~11lJ)c OOLP~"" h'}Y; 'Llt11.,..h<S-.e accuracy, but not before economic performance with
~"11 ~lJ)c .,..11ft- fowz..fHlJ)c hhtt:flJ)c 9"h'} f'-" respect to that amount occurs.
f(J'~lJ)c "11.:1' O..,.hhA f:1'fD+ fl.1f'} ~lJ)c:: .elJo'} 5) For the purposes of Sub-Article (4), economic
h,}:( "11.:1'lJ)c f:1'fD+ (1.1f'}9'" hILtJ ~lt11 OOLP~'-"
flf~lJ)c fh.f1'iD?. .,...,Ile hoohiJOJ). 0,..,. h")f..,.. performance occurs:
h~f. 'Llt11 hf.!1f9'"a:
~. h'}cH, h'}+St (2) hL709'" fh.h'iD? .,...,Ile
""hiJm~ fD?Ill\lJ)cI-
11\ ~ffi lJ,/rofA
.
~;M+ ;JJl.tIJ (l).
. ~ . -.
-
. ._- .. -.
n
.
-
+1 !iifj '-9"". Federal Negarit Gazeta-No.34
4th July, 2002-Page 1889

v) h1fA..,tt-r-"f1 'hfi 1-fil+"f1 o.,.oot\h.,. h1A (a)

with respect to the acquisition of services or
..,it-of: O.,.{lm m,,9" 1-filof: "'"1 'l.JI. "ID-:: property, at the time the services or properties
t\) 01-fil+ oom"'9"1 O.,.oot\h.,.,-filof: Off9" are provided;
OCPt\O+'l.JI. ~ID-i (b) witn respect to the use of property, at the time
th) ""0"7'i:f1D-9" "'t\-"f 11-).;J-sP"f ..,Yu;J-ID-1 the property is used; or
t\OOtDtIJ+ '''7.!il"fI\(lJ-1 oo-tr h~f ..,-oc (c) in any other case, arthe time that person makes
h4-~ OLOooO+ 'l.JI. "l1D-:: payment in full satisfaction of the liability.
hil.,. f:tlD ilt\.,.f.l.,. h~fsP"f 61. Prepayments .
~li' Without prejudice to Article 21 of this Proclamat1?n, a
OllU h'P~ h1.,.'" ~li ''''f.~111D- 'h1f."'mO.,. lftj'i deduction for an outooing or expense incurred on a serVIce or
t\oo~+ /\.11 '.,.LOoo h~f1 a1.9"C' "7fiTID-9"
h., fA""1\-+ aJ"9" other benefit which :xtends beyond twelve months including
+
hhP' /ro 11-t\ tD/ro+ ",e. t\ "7."'''
cost of lease of land, shall be allowed proportionately over the
"7c;:flD-9"
"''' 1'~9" '.,.f.l1 1'~OO-
tD{;L\..,.+fi1i .,.L'''7.
P' /ro "7.1D- tax periods to which the service or other benefit relates.
'''tll' ~ID-i h 1 fA..,I\-of: tD"9" ""
fAO-1-,..,.oC "001 "'h4.~1\- ~ID-i:
:!:'g. 00.0-1-1 il"oom'~ 62. Claim of Right
1) A taxpayer who is accounting for tax purposes on a
b'
- ""I.oC hh~LfA {l.flfA '1\0-1 O'I'&. 1111-0 h1~
il:J>(&' O",oowl.,. ''1\.0 hf f'U 111..f"7.f..11 cash basis shall treat an amount as received and an
"I.oe ""
h4." 11110- t\oo+OfA f Ch'" 00.0+ .ft\irr outgoing or expense as paid, even though that person
tD,e.9" h~f t\ooL09" ..,Yu;J- f"O+ 00(1""" is not legally entitled to receive the amount or liable
000..,t\6 '''11l~fA 1'f4: 'hil\1+l0 f:lil mfctlD- to make the payment, if that' person claims to be
11"0-1 ,00+OfA 00-0+ tD,e.9" foohLfA f Ch"l legally entitled to receive, or legally obliged to pay
"IYu;J- ''''t\0+ 0.11'19" h1"tU ft\ID-1 '1\-0 the amount.
'h1f.10. tD"9" 'h1f.tD{;L\.oof'U ht\O+:: 2) Where Sub-Article (1) applies and that person later
g. 01o-il h1.,.'" (li) ''''~1llD- .,.L'''7. hlf., 0:\1\ refunds the amount received or recovers the out-
00 fA f' f.,. \1 tD,e. 9" aJ {;L\. going or expense paid, an appropriate adjustment
11" 0-1 ,.,.+ Ot\ ID- {lID-
'1\.0 'h1"t00t\il f.,.f.l1 'h1f.lf., 11110- shall be made to that person's income c+the tax
'''''.l1 period during which the refund or recovery occurs.
0.,..,.11 tD"9" tD{;L\.ID-0.,.00t\{l0+ f..,'OC' "001
lD-il1' f"'"1'lD- 10. Olll1- ooWl+ ooil.,.\1hA 3) A person who is accounting for tax purposes on an
h"O+I: accrual basis shall treat an amount as receivable and
f. "..,-OC hh4.LfA ll.llfA '1t0-1 O.,.(}-fil\o. 'i .,.h4.,e. an outgoing or expense as payable even though that
- '1\.0 O.,.oowl.,. f'I\-o hf f'U "1.. f"7.f..11 person is not legally entitled to receive the amount or
""
'1-oC h4." 11"-fi t\oo+OfA f Ch'" 00.0"'- ft\tD- liable to make the payment, if that person claims to
tD"9" h~f t\ooL09" ..,Yu;J- ft\O+ oolf.,., be legally entitled to receive, or to be legally obliged
000..,t\6 1'f4: hil\1+l0 f:lil mfctID- 11"0-1 to pay the amount. '

foo+OfA 00-0+' aJ,e.9" 'oohLfA ,fCh"l "IYu:r 4) Where Sub-Article (3) applies and that person later
f..,.(}
f"'t\O+ o.lf19" 'h1"tU ft\tD-1 '1\-0 'h1 ceaSeSto claim the right to receive the amount or to
-01\0. tD"9" 'h1f..,.h4." 'I\-fiOOf1' ht\O+:: claim an obligation to pay the outgoing or expense,
.01o-il h1.,.'" (r) ''''''"lID- .,.L'''7. hlf., 0:\1\ an appropriateadjustrnent shall be made to that
mfctlD- 11"0-1 fA.,.OfA "11lfA tD"9" h~f person's income of the tax period during which that
fooL09" "IYu;J- ht\-o~ 0"7t\+ ,+lOtD-') 'I'f4: person ceases to make the claim.
f.,1\ 'h11.11''' l' f4:ID-11l .,1\0'''' f"l-oC 1I001ID-il'I' 63. Long Term Contracts
'"11D- 10. "'"0. Olf., hl;l.:\1 'h': l1.,.\1hA 1) 1n the case of a person accounting for tax purposes
,,1.l;JfA:: on an accrual basis, the timing of inclusions in and
:Er' t\l1r9" ,'l.H.ilt\ "7.'" ~ ID-I\-"f deductions from income relating to a long-term
contract of a business of that person shall be
lie t\"I.oC hh4.LfA ll.llfA '1\0-1 O"'{l-ol\o. fi .,.h4." accounted for on the basis of the percentage of the
'I\-fi "'00 w l'" f' I\-fi hf f'U 111.. f"7.f.. 'U contract completed during any tax period.
""
..,-oc h4." t\l1f9" 'l.H. h"7."''' f1"1f: P'/ro ID-A
;Je O"'ff" h1f: '11-0 010. ID-il1' oo:t: 'h1f."7. 2) The percentage of completion is determined by
11.,.+ tD"9" .,..,.fi1i 'h1f."7.f.l"l '''7.tD(}''1D- comparing the total costs allocated to the contract
Oh1f: f"l-fiC 11001 lD-il1' hlD-,tr aril'I' r"'m'i+ and incurred before the end of the tax period with
the estimated total contract costs including any
"'1D-1 Ooo+~ O"7il"+ "lI'fi fAux
variations or fluctuation.
Ooo"'~
-
e. hl1r9" 'l.H. ID-fA ID-il1' ''''m'i''''''1D-
f"7.tD(}"1D-fID-tr1 m~"" CP;J 'hfi h"l-oC "00'"
3) Whereduring the tax period m which a long-
t~rm contract of a business is comp1eted the
"7t\ctf 'l.JI. 04C.+ f.,.f.l11D-1 tD{;L\.' f.,.f.l.,. person carrying on the business:
"'Iil.,.l1hfsP"f1 hfi f'P;J, ID-It) ID-lf:1 a1.9"C' .
(a) incurs a loss; or
h","oo"'lD- m~"" flD-tr 'P ;J hlf"lD- ;JC O"7,,'OC (b) has an unrelieved loss available for carrying
,e.lffi fAII
forward under Article 28(1);
r- "..,f: .P'/ro fl1f9" 'l.JI. ID-fA O"7.mfi"'~O""
f..,-fie "001 lD-il1' f1"1f: p'/ro1D-1 f"7.!\1'f.tD- .
~ which is attributable to the long-term contract,
(lID-t\l1f9" 'l.JI. h"7."'~+ ID-I\-"f ;JC 0.,. f f"' the Tax Authority may allowthe loss to be:
V) fh(}li tD"9" (c) carried back to preceding tax periods, and
t\) ffA.,.\1\1(} 'hfi OtLU hCP~ h1.,.'" ~:E 1o-il (d) applied against an amount of income of a tax
period not exceeding the amount, by which
h1+'" (li) oowl+ f"7.il:J1C h.Uf/ro ft\tD-
'h1f.lf~1 inclusions in the income of the business relating
th) f..,-fiC hil10.ID- 1lt\P'AtlJ1 h.Uf/roID- tD1. to the long-:term contract forthat period exceed
hitf.+ '..,-fie ,00;J-+ h1.tl"'PaJCI 'hfi deductions therefrom.
".) t\l1r9"" 'l.JI. h"'l."''' ID-fA;J C 0.,. f flf Oh 1 f:
'..,-fie IfOD1 h10. h"'l.!"ID- aJtJ;1"'hil\1fA
Oitm f:lil h10.1D-"" 'h1"t\1\1il
f1.C;JfAlJ ""
 '''' li?(~gj ~1.t,.1A ~.?~..,. .?tLtlJ .U t!~ .,., Iiifj!! ~.,...
Federal Negarit Gazeta-No.34 4111
July, 2002-Page 1890

g. "'I: "HICh4.,e.0"'1: f..,l1C "00' m-ll'l' 0''''1: 4) A loss .incurred by a person in carrying on a business
JPt,.CD- ~':t>ll.4>fI. CD-ll'l' f"tl.?'I'OOCD- h.Ptt,.
during a tax period is attributable to a long-term
h'..,1: JPt,.CD- f~1r9'" 1.ff. CD-lt-'f .?C ~'Jl.fl11
contract of the business to the extent that deductions
"'II:~'" f"t:rl\CD- O..,l1C 1I00~ h'..,1: JP t,.CD-
allowed in ascertaining the income from the business
f~1r9'" 1.ff. CD-l\"';f.f'f-011CD-' 1ft l\"7ll""" f"'~
.,.1.CD- mQ;l. 1ftCD-' l\ooCDlt' OOIP~"" relating to the long-term contract for that period
h"'1.~"" exceed inclusions in ascertaining that income.
'UIf1'f fOl\m ~'1.11'~ ~CD-::
5) In this Article, "long-term contract" of a business of
~. OH.U ",.,.'" CD-ll'l'"f'..,1: JP t,. f ~1r9'"1.tL m-lAto.
a person means a contract for manufacture, ins-
"'Il\"" JP t,.CD-h"'1: 00 ~ 0"" 1. tL ", ll.,. 0 I I mt,.""
CD-ll'l' ,e.mfi.,..4>1A .,.l1ft.. h"t100"'CD- Oll.,..,.C tallation, or construction, or, in relation to each, the
0"'1:00~0"" f..,l1C "00' CD-ll'l' llA"'mfi.,..,. performance of related services, which is not com-
f"'l9'" ~..,.! f oo""hlA m,e.9'"f..,' I};t' JPt,. ~, "lV-9'" pleted within the tax period in which work under the
h~~'lU .?C f""ll1 ",IA..,ft..:,. ~CD-:: contract commenced, other than a contract estimated
h4:l\ ~/",,:" to be completed within twelve (12) months of the
1ft' lll\"7ll;J-m:t>~fi ""OC' lll\oumlt' date on which the work under the contract commen-
;-Q' f..,llC ~oo:,. ced.
li' O.,.l\f v-~;J- ~'''l~O9'" taIA1'mlt~ Oll.,..,.C' ..,l1C SECTION IV
f"tm(},o"" 1.,f. ("f..,l1C ~ou""") "7l\"" f01::" Declaration and Assessment
~oo..,. It.11''' ,e.U9'"hch9'"ft, li .,., ~llh ()~ c!}.,., 64. Tax Year
I:~ll 1ftCD- 1.ff. ~CD-:: 1) Unless otherwise provided, the period for tax assess-
I' f..,'OC h4.r-';f. f..,l1C ~oo:,.; ment ("tax year") shall be the fiscal year, that is, the
u) ..,l\ltf1';f., ~fi f7ichfi "7"10C''f, O"tOOl\h:" one-year period from 151RamIe to 30thSene.
fO~"" ~oo-J:' 2) The tax year of a person is:
l\) I:C~"''f' O"tOOl\h..,.' fI:C~1: f'"'ll (a) in the case of an individual or an association of
~oo:,. ~CD-::
individuals, the fiscal year;
E' "'IfiTCD-9'"I:C~"" 0..,11C "ll1 ftCD- I}l\JP IAtlJ' (b) .in the case of a body, the accounting year of the
0:"1:"t1 06,h.tt: talA"'~"'1.l\"" ~fi hU~ .?C
f..,l1C "ll1ftCD- I}l\JPlAtlJ' f"~"t,.TCD-' bodv. .
0""'" 3) A body shall not change its accountmg year un 1ess 1' t
lJo~;t''''f ta"""" Oll.,..,.C f'"'l1 ~oo-l:' ool\m'l'
",e.'fIA9'":: obtains prior approval, inwriting, from the Tax
Q' f'lltl1 ~001:' ~'''ll\m-'I' f"'~"'1.l\"" I:C~"" Authority and complies with any condition that may
h~.4>~.?C 0""'" ..,1.;t'9>'f "'~, be attached to the approval.
~, 1.1J'~ f..,l1Ch"'"~"~""
"ll1 ftCD-I}l\JP IAtlJ' f6,h.tt: 4) The Tax Authority may, by notice in writing, revoke
'"''''''
"7ll;t'mctl Ooo(am"" hH.tJ o",e. O'o-ll ",.,.'" (r) an approval granted to a company under Sub-Article
OOIP~"" l\I:C~-I: f.,.ltmCD-' U I: 001P~1I (3) if the body fails to comply with any of the
,e.'f"IA:: conditions attached to the approval.
~. f..,l1C h4.'- f'l"'l1 ~oo..,. O,o.ll ",.,.'" (E) CD~9'"
5) Where the tax year of a person changes as a result of
(!!) OOIP~"" .f.,.l\mm ~'1.IJ'~' l\m-ffio hoo1.~""
Sub-Article (3) or (4), the period between the last full
Ok"" I}l\CD- (]Dolr f..,l1 C ~oo..,. ~ fi ""llt- f..,l1 C
~oo..,. O"t1:9"CO"" .,., ootahlA 1l\CD- 1.tL "fooi'f tax year prior to the change and the date on which the
.?1~1 ~oo..,." 0001}1A f"t;t'm:t> ~fi O.,.l\f v-~;J- new tax year commences shall be treated as a
f"t;t',e. ,e.l1'filA:: separate tax year, to be known as the "transitional
;-~. f9'"llhC m~"''''' ~fi flP'm~1r "u" 1ft' lll\ooCDlt' year. "
65. Certificate and Assessment of Schedule A Income
~
6' "'tlJ ~CD- l\ "''''tlJ ~CD- f"tltm CD- ..,l1C .,..,.fi7i 1) The tax-withholding certificate issued by an em-
001.~"'" f"tf ~.?"'mCD- f9'"llhC m~"'''''J
ployer to an employee shall be proof that tax in the
"""tlJ~CD- ta11m- flP'm~1r "u" 1ft ",e.
09'"llhC CD~"'-I: f.,.ool\h.,.CD- ..,l1C .,..,.fi7i amount stated was withheld on the employee's
l\001.~"" "7~.?1105j. ~CD-:I Schedule "A" income of the amount stated.
I. "''''tlJ~CD-ta11CD-flP'm~1r "u" 1{1.,,~ .,..,.,,, 2) The amount of tax withheld on an employee's
f.,.~CD-fi IP ~..,. h"'tlJ~m- h"t "'Cl1
0" ,.,.'" :Iii 00 Schedule A income, paid to the Tax Authority and
00..,l\105j. .?C l\..,l1C "ll111.CD- I}l\JPlAtlJ, 1ft accompanied by the employer's statement (as
f"'1.~1CD-'l...1l' "'"(1- 1ft h.,..r.~10-r .,., 1:9'"C' required by Article 51) shall be the amount assessed
f"tOfi O..,l1C "ll1{1.CD-I}l\JPlAtlJ, f"'CDlt~ ..,l1C by the Tax Authority effective on the date the tax is
~'1.IJ'~ .,.1.C1o ~CDlt'-;lAl:1J'e:'9'"f..,l1C "ll1ftCD- paid, and subject to later amendment if the Tax
I}l\JP IAtlJ' II u.,."" CD~9'" I IA.,.ta.,..,. 1ft ODe:'
~, Authority determines that an error or omission has
f1.~ltO"" ~'1.IJ'~ "7?f?fl l\"7I:~'" ~'f"IAI: been made.
E' "'I: "''''tlJ~ 0"'1: f..,l1C ~oo..,. m-ll'l' 111CD- 3) In the case of an employee whose taxable income for
..,l1C f"th~IAO"" 1ft flP'm~1r "u" 1ft 11:r
a tax year consists exclusively of Schedule "A"
flJ'~ ~'1.11'~ 1ftm-, f"7ll;t'CD:t>..,1.;t' fl\O""9'":: income, no declaration of income is required.
. hH.U O,,~ f1'~1 ~m- (1.e:'C9'"
h'" I: O,,~ l\1J'~ 4) Notwithstanding the preceding, an employee
"'tlJ~ "'''''I'C' 1ft f"tf1~ CD~9'" f"l Tlt-"71;h working for more than one employer or an employee
0011"" I}"TCD-~l\9'" O"'tt: I:C~'f. f~ of international organization having diplomatic im-
""C
oo'..,JP;t''''' h.9'"I}lt.9>'f Dtlt.f'e:''ffi O"7fiTm-9'" munity or working in embassies, missions ana otfier
fl'1'lll\C "'*'fO'f fDtIPt,. flP'm~1r "u" 1ft
fD7.f1~ +"'tlJ~ 0"''''''' consular establishments of a foreign government
2li(r) O"'ODl\h.,.m- 1.tL
CD-ll'l' 111.m-, t,.lt- hll;t'm-cfo "'11~' oohLIA shall himself declare and pay taxes on his schedule
hl\O"":s "A" income with the time prescribed under Article
~. hh'l: O"~ l\1I'~ "'tlJ& "'''''I'C' 10. f""/J'1~ 51(3).
1Pt,..,.Ij=, +1'C' f""/J'lPt,. ltm- 1Pt,."'~m- hh'l: 5) If'an employer finds out that his employee has more
O,,~ l\1I'~ "'tlJ& fDtIPt,. 001J'~' b1.lltO-r ~fi than one employment income and if he ascertains
1ftm- O,,""CD-"'tlJ& 11A.,.lfJool ll"ODIJ'~ "7lllX that the other employer(s) have not aggregated said
I\."'CofI"-r 1ftm-, hlfJrC' "'ofI~' ~tIJ(afilArJ income, he shall aggregate and withhold the tax
thereon.
.,2t iiUf2i 1.1.U\ ~;JtT ;J",l1J(t~ ~ +1 Iiif]!! J.9'". Federal Negarit Gazeta - No.34 4thJuly, 2002-Page 1891

~. fIP1ml1f "/\" ~c; "th" 1fl1 it/\"7it:rcD:'-~c; "HIC 66. Declaration and Assessment of Schedule Band C
it/\ODID{t1 Income
i' "71;;'CD-9'"flP1ml1r "/\" ~c; "th" 1fl f"7.f1~ 1) Every taxpayer who has Schedule B or Schedule C
"HIC h4-f. f"l-oC "it1fllD- 1l/\P'Al1J1 O"7.J' income shall prepare a declaration of his income in a
1Dl1J(Do:'-R' ODlPlT' form prescribed by the Tax Authority. Taxpayers
u) qOD-j: O"'m shall submit the tax declaration to the,Tax Authority
f"~ "u" "Il1C h4-f. f"ll1C
c;++ 0"&-"" IDC 1.", lD-it'l" at the time of submitting the balance sheet, and the
/\) profit and loss account for that tax year within the
f"~ "/\" "Il1C h4-f. f"ll1C JOD-f: O"'m
c;++ OV'/\..,. IDC l.tL lD-it'l': time prescribed below:
1 fl dJc1 /\"111C "il1 fllD- 11/\P' A l1J1 "7 it:rcn:'- (a) Category A taxpayers within 4 months from
"/\0"":: the end of the taxpayers tax year.
1o-it "''''R' (ii) (b) Category B taxpayers within 2 months from
I' lUtU "''''R' ODlPl"" f"7. "'COdJc
'l...,11 qf.~"" f"7.tit""e>1' 9'"tJc 0."" O"7..fOJlTJdJc the taxpayers tax year.
f.lD(tC;A :: 2) The type of records to be submitted to the Tax
"'11 Authority in accordance with Sub-Article (1) above
C' 010. "7{l;rlD'tfdJc ODlPl"" h1'lPI\dJc "Il1C I\f.
shall be determined by Regulatons to be issued by
O"ll1C qOD-f: lD-{l'l' Otf.U "'P~ "''''1\ ~~ ~C; ~E the Council of Ministers.
ODIPt."" h.,.h4.f. 'l.1}1l I\f. 1'.,.c;7i f"'.(>,.t.1ar he; 3) The tax calculatedin accordancewith the tax declaration.
Otf.U "'P~ "'<1>1\% ODIPt."" h1.1tta'lit f1'''t.1ar
reduced by the tax with heldin accordance with
O~ h1C f1'h4t/\ ;rtJit h1'.,.~(t 0:\1\ "l'OC h4,f. Articles 52 and 53 of this Proclamation and the
OAf.~"" fOl/.4t/\"lO"'" "ll1C h1fl "7{l;rOJ't,fdJc;JC amounts provided by Article 7 (foreign tax credit) of
O"'.f.'~"" /\"ll1C "it1flar 1l/\P'AITJ11fl "7,r.:t."l this Proclamation during the tax year, shall be trans-
"/\0"" :: ferred by the taxpayer to the Tax Authority simul-
!!. "ll1C h4.f. Otf.U "''''1\ 1o-it "''''1\ (C) ODIPt."" taneously with the tax declaration.
h.,.(tl\dJc "ll1C fO/\m hCJ:/\of1'11 h 1 "(/'~ : f"ll1C 4) Any excess payments over the tax calculated accor-
"{l1o.dJc 1l/\P'AITJ1 0"''''1\ i;'k 0"'f,~11ar ding to Sub-Article (3) of this Article shall be
ODIPt."" f1flar1 "7it;rOJ'tf ""tJtJ/\:;:~"" 1lt.;J1m refunded by the Tax Authority to the taxpayer within
OJ (lime;) .,.C;..,. arit'l' 011A6li f1'h4t/\ar1 /\"lonc ninety (90) days of becoming satisfied on the tax
h4.f. ODOD/\it"/\0"" :: declaration.
(;. 010. "7{l;rOJ'tfdJc I\f. f"'OD/\h.,.ar he; O"OD~ 5) The amount of tax due for the year, as stated in the
uoh4tA f/\O"" "lonc : O"lonc "il1fldJc 1l/\P'AITJ1 declaration, shall be the amount assessed by the Tax
f .,. OJM "1 onC (/' 'I f.4'>m &-A :: If 'I 9'" f "1onC Authority although the Tax Authority may deter-
"l11o.dJc 11/\P'Al1J1 itU1''''' rof.cr fA.,.ta1'1' 10. mine that an error or omission has been made and
,f/\ OD(/'~1 ft.;J1m ~1f.(/,~ dJc..,)'.ro-1 Otf.,far therefore may issue an amended assessment.
ODm1 O"'l7i7iA f"l'OC ar..,)'. "7it;rro't,r ,e(tITJA :: 67. Declaration and Assessment of Schedule D Income
:E%' fIP1mt.1r "OD" 10.1 1) Every taxpayer who has Schedule D income, not
{}/\"7{};rID:re; "Il1C1 (}/\ODro(t1 subject to withholding at source constituting a final
fODlJ,),t.7)';rtJ{} (/''1 h1'h4.,e 'l.l}on I\,e 1'''''}(l1o. tax, shall prepare a declaration of that income in a
ii' form prescribed by the Tax Authority. Taxpayers
00l/.f.t.1dJc "lonc f"7,e7i4t ') flP'}mt.1f "OD" 10.
shall submit this declaration to the Tax Authority
f11 "7'}o;;::rlD-cr"lonc h4.f. f"lonC "{}1o.ar Il/\P'
within two (2) months from the end of the Ethiopian
A fTJ1 O"'l.f roITJdJc :r 1\ ODIPt.""1 n. ar'} "7 {}:J'ro:r Fiscal Year.
qf.~-f:,} f1o. "7{}:J'ro't,f
"/\0"" :: "lonc h4.f. ftf.U 2) The tax calculated in accordance with the de-
/\"ll1C h{}1o.dJc 1l/\P'Al1J1 fU'J.,r4' 1ar fh."" claration, after the amounts provided by Article 7
r-ftif fOf:"" qOD"" h1'me;.,..,. 1./1. ".,:: flt\ar (foreign tax credit) paid during the year with respect
f u-/\"" OJCl.tL dJc{}'I'~dJc :: to the Schedule D income subject to declaration
~. 010. "7{l;rro'tfar ODIPt."" h1'lPI\ar "lonc I\,e having been reduced, shall be transferred by the
O"lo{1 C q OD-f: ar {}'I' 0" ''''1\ 1: 00 IPt. ..,. h,} .it tata {} taxpayer to the Tax Authority simultaneously with
f1'''t.1dJc Oar~ "1C f1'h4t/\ flP'}mt.1f "OD" the declaration.
;rn{} h.,..,.H\ 0:\1\ "'tdJc'} 'l.l}o{1"Io{1Ch4.f. h1o. 3) The amount of tax due for the year, as stated in the
"7l1;rlD't,r ar ;J CO" 1.f.'H' t\ "lo{1C "il1 0. ar fI/\P' declaration, shall be the amount assessed by the tax
AITJ'} 10. "7.f.'t."l "/\0"" :: Authority unless the Tax Authority determines that
C' f"ll1C "{}1o.ar fI/\P'AITJ1 l1U1''''' ro,ecr fA'f' an error or omission has been made.
ta.,..,. 10. uo'l~1 tal\t.;J1m O{}1''''C 010. "7{};J'ro 68. ~)'tandardAssessment for Category C Taxpayers
'tfdJc I\,e f.,.uo/\h1'ar OqOD-f: ODh4tA f"7.1f1ar 1) A standard assessment method shall be used to
"lo{1C: O"lo{1Chi\1fllD- fI/\P'AITJ'} f'f'roM "l'OC determine the income tax liability of Category C
I.ftj' fAomlrA:: taxpayers.
2) The standard assessment shall be a fixed amount of
:E:E' f f.t.:4""th" "Io{1Ch4.r-'f'} 10. O~C'1' l1/\ODro(t'} tax determined in accordance with a Council of
ji. f"t.:4" " tit" "Io{1Ch4.r-'f1 f"lo{1C "l~:J- /\ODro(t'} Ministers Regulations establishing a schedule 9f
f~C'I' "lo{1C "rol}(t1 1I~ OP'&- I\,e h'}.itarA standard assessment amounts that reflect variations
f,U;J&\= in the type of business, business size, and business
I- f~C'I' "loOC f"7.tit""e>'f crtJC 0."" O"7.frolTJar location. The taxpayer shall pay the tax determined
dJc{}'1'O"'OD/\h1'lD- 01"1.f.' p'lrar q,e~"" : 7th
"'oO in accordance with standard assessment on the
01"l~ P'1r it4...,. : f1"l~ P'1r 0"7.1~0"" (l;r day of July to the 6thday of August every year, unless,
fH1 Af.H'-'f f"7.f10IlC:'- f~C'I' "Io{1C"rol}(t') the taxpayer requested and is allowed to make
1P1mt.1f UOIPt."" fI"7t:t."I f"7.OJ(t1 f"ll1C ODm'} installment payments in accordance with Council of
..,.
~dJc :: f "tt 11""e>'f 9'"tJ C n."" 0 "7.4t :,-f.lD- ODIPt. Ministers Regulations.
..,.
0 f'ltLlD- /\ODtJ4tA itAm f.,.e; itA l' 4t'" f./\
"I'(K.')
Oll#C .,oOCh4-f. f~C'I' "I11~1 OfJOD-f:hth9'"t\.
.,., 11/\ lD-1.", ar 11'I' 1 fl "71: t. "1
Ii .,., M\h th 9'"t\. c!i
"/\0"" ::
1~ (iit~n~ t..f..(,.A ";JtT ;J"-IIJ ()). 1>'%+") IitfJ2 ~'9'"' Federal Negarit Gazeta - No.34 41hJuly, 2002-Page 1892

(. fcf:C'r '?lIC oum") OP'(,. "f. fOlJ.c>f.O-r 1."- hlj 3) The period during which the standard assessment
/I.c"rlj7jfar OULPl.T fOlJ.If.,. "~fo"1' 0IJ.~i1-r't- OOlJ.f amount will be used and the basis for the revised
mfl}ar ououtf f.m()Cj /r II 0IJ.~i1.}'t- fi.7j7j l\ar"} amount shall be determined by a directive to be
fcf:C'r '?lIC oum"} l\'?lIC hi11o.ar C1l\P'AIIJ"} issued by the Minister. The Minister shall distribute the
.r lP (,.6I>J. A II
revised standard assessment to the tax Authorities.
:SU' '?lIC") 0'?9".} i1l\oum()"}
j!. '?lIC h4.~ 9""}9" qf.""" f~It.O ou1'1111j lP.,f.' 69. Assessment by Estimation
.rAfH h"},\'.If., mf.9" OOlJCjrar9"9'"h"}fT f~ltll 1) If no records and books of accounti are maintained
ou1l1{1o"} hCj lP"~"} f'?lIC hi11o.ar C1l\P'AIIJ"} by the taxpayer, or if, for any reason, the records and
fAi-+Ol\ar h"},\'.If., -: mf.9'" '?lIC h4.~ OH.U Ch'? books of accounts are unacceptable to the Tax
o.,.m().,ar Authority, or if the taxpayer fails to declare his or its
1."- ari1'r 10.ar"} f"i1;rm+ h"},\'.If.,
f'?lIC hi110.ar C1l\P'AIIJ"} f'?'Oor"} Ah O'?9'".} income within the time prescribed by this
l\. mi1"}f."1'" A II Proclamation, the Tax Authority may assess the tax
~. '?'OC O'?9".} fOlJ.m()"}O.} hi),:\"} 010.9'"1' OIJ.~i1.}C by estimation.
OOl/..mllJm.ououtf f.m()CjA I: 2) The manner of assessing tax by estimation shall be
1;' 10. "} OIJIIJuoC determined by directives to be issued by the Minister
<>J.OCh4,~ Oh"}f.' lP"}ml.1f P'C <>J.OCfOlJ.h..tAOT 10. of Revenue.
h,,'l\ff f1o. 9""}"Ih fO'J..r1~ fl.1f"} <>JlIorfO'J.m().,ar 70 . Aggregation
10.ar"} OOlJm:Pl\A f.IfCjA I: A taxpayer who derives income from different sources
e:b'
~~ f.C;J subject to the same schedule shall be assessed on the
j!. <>J.flch4.~ OILU h'P:(: O"'UOl\h.,'ar 1."- ari1'rCj aggregate of such income.
hi),:\"} f10. OIJi1;rme.rar"} f+l.O hlf., -: f<>JlIC 71. Limitations
hi110.ar C1l\P'All}"} f+l.oar"} OIJi1;rmef hi1i- 1) If a taxpayer has submitted a declaration of income
\1htr> <>JlIor"}uom()"} fO'J."1'l\ar m: quo.} 1."- ro-i1'r within the time limit and manner as prescribed in this
.,m. II f.U9" f?; quo-r
1."- uoc>mCfO'J."f.9"l.ro- f10. Proclamation, the Tax Authority has five (5) years to
OIJll;rm4?.rar U01>l.lI \1l\OT. fou{J;1l.7j +"} "f.9'"r: amend. the assessment. The five-year assessment
f.IfCj A II period runs from the due date of the declaration.
~. <>J1ICh4.~ OtLU h'P~ O.,.uol\h,,'ar hi),:\"} f10. 2) If a taxpayer has submitted a declaration in the
OIJll;rm4?far"} f4'l.OIfe;' : OIJll;rmc.rar f4'l.Oar manner required by this Proclamation, but after the
10. "}l\OIJll;rmcf hi-mf1'1ar 1.,1. 0:\" flf., h"} ,\'.If., due date for making a declaration, the Tax Authority
f<>J1IC hi11 o.ar C1l\P'AIIJ"} O?; quo.} 1."- ro-ll'r
f4'l.Om."} OIJll;rmcf hll.,.\1htr> '?lIor"} oum()"} has five (5) years to amend the assessment. The five
f.rllA :: f.U9" f?; qou.} 1.,t uoc>mC fO'J."f.9"l.ar years assessment period runs from the date the
f<>J1IC hi110.ar C1l\P'AIIJ"} f10. OIJll;rmcfar"} declaration was received by the Tax Authority.
h"'4'Ol\O.} 4'"} h"}i11'-.,ar II 3) In case where the taxpayer has not declared his
(. <>J1ICh4.~ 10.m.") f"i1;rm4' mf.9" fi-"IhOl.Ol. income or has submitted a fraudulent declaration, not
f1o. OIJll;rmcf f4'l.O h"},\'.If., f<>JlIC hi110.ar time limit provided in any other law shall bar the
C1t\ P' A fl}"} 0 OIJCj T ro-9" l\.11 dt <>Jf.,. ,\'.., 11 ar f.C;J assessment of the tax by the Tax Authority.
It f<>J,\'.ar <>J'Oor"} 0 OIJCjTar 9" 1. tf. uo m ()"} f.":f" A I:
SECTION V
h~A h9"i1.}
Assessment Notification
f<>J'OCar""~ OIJll;Jomcf
OIJll;Jomcf f.HT 72. Contents of Assessment Notification
i;~' f<>J1ICar""~ Every assessment notification shall contain the
h.r'M"}~ fetHIC ar.,.,~ OIJll;Jomcf fO'J.hi-/r.}"}
hn:LA-f uofll hl\OT; following elements:
j!. m1>"" 10."}Cj OILU h'P~ OUlPl..} i-4'Cj7i fOlJ.If 1) gross income and deductions applicable under
.,..-,."}mlJ;l9'r : this Proclamation;
~. '?1IC fOl/..h..tAO.}'} 10. : 2) taxable income;
[. .,...t'O'J.".} fO'J.e;'l.ar"} fOlJi1h..tf Ah mf.9" ou1'-~-: 3) rates applicable or percentage;
Q' f.,.h..tt\ar"}Cj 4'tar"} <>JlIC-: 4) taxes paid and due;
?;. OIJCj Tar"} 9" ou4'6I>J.m f.9" m l\f: -: 5) any penalty or interest;
}. f<>JlIC h4.~"} 119" -: hf.'(,.7j -: f<>JlIC h4.f. OUl\f 6) the taxpayer's name, address, and TIN; and
cf:'I' C-: 7) a brief explanation of the assessment and a
%. f<>JlIor"}hmlt()"} Uf.. hCj '?lIC t.cj.~ lllll\ar oullT statement of the taxpayer's rights.
h~C 0IJ1I(,.tf :1 73. Service ofTax Notices
1;(' f<>JlIC ar.,.,~ OIJll;Jomcf9'"1' llt\O'J.f.C()'O-r v--~;Jo 1) Income tax assessment notices or other notices
j!. f<>JlIC hi11o.ar C1l\P'AIIJ"} l\<>JlIC h4.~ fO'J.() issued by the Tax Authority to any taxpayer shall be
IIJTar f<>JlIC ar""~ OIJi1;rmcf9'r mf.9" l\.tr>r communicated in writing as follows:
OIJll;Jomcf9'r OO'J.hi-l\ar lH;Jo l\<>JlICh4.~ nX'ch-~ (a) In the case of a resident individual, by registered
f..e.clt/r:: letter or by delivery to the taxpayer in person, or
(u) "'4'OIJ~"oJ: On.-rfokf ari1'r l\1f., ()ar Oh,\'.(,. if he is absent, to any adult member ofhis family
Tll;Jo -:mf.9" n4''r;r l\'?lIC h4.~ Oh~ Ooui1m.} or any person employed by him at his residence,
mf.9'" h(). fl\.il h"},\'.If., -: hfl.i-()n=t: ro-ll'r ilOlJ"} or place of business or, professional practice,
~ar9" h\1l\ uom"} il,\'.l.() mf.9'" ooue;' tfro- mf.9" provided that, if, no person can be found to
f (IDef m f.9'" f"}<>J f: P' (,. n O'J.lP6oO.} P'lf.6o 4''1' r: accept such service, then, the same may be
ilO'J.f()(,.ar OIJ"}~ro-9" ()ro- Ooullm.} -: Iftj9'" effected by affixing the notice to the door or
OIJll;rmcf ro-"} fOlJ.4' 0 A () ro- \1A i-1} f.11 ro- OIJII other available part of the said residence or
;rmcf O'?lIC h4-~ oue;' tf fl.-r OC "f. mf.9" place of business.
foutj tf 0.-1: hkA Olf., mf.9'" O"}'?f.' P' 60 hou:f
(b) in the case of a resident body, by registered letter
P'lf.6o OODilm~ I to the registered address of the body or by
il) "..,.",~., oJ:On. -rf"k fro-i1 'r illf., f.'C~-r Oh,\'.(,. deli very to any director or employee of the body
Ti1;r hOlJ\1~".} O+ODH10ro- ff:C~oJ: hf:(,.7j at any of its places of business.
OOD"h mf.9'" Of:C~-I: f1'?f: P'6o n;r l\0IJ.1}ar
,,"~ro-9'" fP'6o out OJ~9'"1'+lIJt OODi1m-r:
 .,'" ji?(,tnr t.1.&.A ~;J~T ;Jftll) I'\). ?>i +') Iuf1 ~'9'". Federal Negarit Gazeta - No. 34 4thJuly, 2002-Page 1893
th) +M~~;r:Fm- Oh.,..,.r-kf "Alf~ (\9':f Oh.,T
r-kf "ftm- mh.A m1-9'" mh.fto:f O~~ OoollmT (c) in the case of non-resident persons, to their agent
m1-9'" f"71-11- I1lf~ mh.ftc OO?,lP&.OT f,)"'~ JPtr or agents in Ethiopia, or by affixing to the door or
(1;1' m1-9'" Oft." hoo:t; Olf~ JPlf.tr Oootj ~f n.ot: other available part of the residence or place of
"1-
Oooftmlf.: business of such agent if he could not be served in
11~HLU ~C9'";r9':f h,)~9'" 0"7')~m-9'" 9'"tn f."f. person;
t"aA+t)t"a flf.C~' n.."f- "7ll;rm4:f9'';f. OO?,mm-O."f- Provided that, if in any case none of these
"7')~m-9'" ;JILIl) "1- 00;t).,.9'" ft.t.09'" 1-';f'''A : measures are effective, service may be discharged
ft"7t)+O?f fmll)m- mlJJ. O""OC 114.~
"1- by the publication in any newspaper in which
1-;r(\l}A::
Court notice may be advertised. The cost of such
~. f..,-oC hll1fl.m- l}ftJPAIl)') ft..,-oC 114.f. h..,l}'O
l}ftm- OO')1~ f(\mm- "7')~m-9'" f..,.OC m-Pf). publication shall be charged to the taxpayer.
"7ll;r m4:f f O?,11.,.ftc."f.tJ-).;r 9' ';f. .,. o:LA "-m- I'\.1'r;. 2) Any assessment of income tax duly served on the
fooQ;bli'ilJ .,.t..,orz. ~."f-.rllm- 1-lflJ A ; taxpayer shall become final when:
u) ..,-oc 114.~ f..,-oC m-Pf). "7ll;rm4:f ~(\m' (a) the taxpayer tails to pay the tax due or to lodge
af1-9'" fhn.ot:;r hfl)~ pO?,-I: m-t)). h(\mOT +') his or its appeal with the Tax Appeal Commission
1..9'"r: l}ftc-r (\I\I} (c!) +lJT m-ll'J' f~II"'O-r') within thirty (30) days from the date of receipt of
..,-oC t"JAht..ft m1-9'" II..,'OC 1-"'l}~ 1-l}1i 1-"'l}~
an assessment notice orfrom)the date of decision
t"J1t+lO: m~9"
II) OH.U hr~ 0"-m4'(\m- floIt 11--0 m-ll'J' f..,-oc of the review committee,
1-"'l}~ 1-l}q. f(\mm- m-Pf). 1-..,l}~ fA+lOOT (b) the time for appealing the decision of the Tax
I1lf~: m1-9" Appeal Commission has expired; or
(th) f1-"'l}~ If.C~ n.ot: footJ;},li'i m-'>j). h(\m :: (c) the Court of Appeal renders its final decision.
E' O')o-ll h')+1\ (ID oolPl."f- footJ;},li'ilJ +t.,0?, 3) A taxpayer who does not pay the final assessment as
OO?,lf'lm- f..,-oC m-Pf). oolPlT fO?,t.II..,OT') ..,-oC provided under Sub-Article (2) of this Article is in
fAht.II ..,-oC h4.1- 'J'4.+~ ~m- :: default.
nIf.A II~ ll"" SECTION VI
nlf.f
Payment
~. ..,-oC O,fi.., O+mMm- Vf:Ouht.A fllOT lllloolf~
74. Tax Payable when Due
"7lJ:fm-9" O.,.mM +') II..,.OC hll1n.m- l}IIJPAIl)') Any tax (including whithheld or collected tax) that is to
1n. oof.l.., fllOT ..,-oc (h.,-h4.1- ~t)-o "1- "'+'){I be paid to the Tax Authority by a stated date shall be
f"'fH m1-9" f.,.(\O(\O ;rnll 'i!'9'"C) 0H.tJ- O+m(\~m- payable on that dat~. Failure to make a timely payment
+') 1n. oof.l.., hftOT :: O"'m(\~m- 10ft m-ll'J' ..,-OC')
shall result in the imposition of interest and the late
flloont.A mft~ ~lJ 1n.m- oo+65J. foont.A
"""fOT payment penalty.
"'~;1'') fllhT"A ::
ii'l:.
~- mll~ 75. Interest
b'
~ "7')~:fm-9'" ..,-oC h4.f. fO?,t.II..,OT') ..,-oC Omq.ot: 1) If any amount of tax is not paid by the due date, the
fAht.II ~,)f.lf~ : ..,-OC oont.A h~OlO"" 10ft taxpayer is obliged to pay interest on such amount
'1.9"r: ~llh"'ht..IIOT +') ~llll}A+ht.llm- f..,-oC for the period from the date the tax is due to the date
oom') "f. mft~ foont.A "'~;r hllOT II
it is paid.
~. I1H.U 0"1- 0') o-ll h ')+1\ (li) oolPlT fO?,I1t.ftm-
2) The interest rate under Sub-article (1) of this
mft~ f"7llht.,r An l}IIt.m- f.,.-o ~oo..,. O')"'~
l}')p:f JPtr Article is set at 25% (twenty five percent) over and
"1- Orllm- hlf.+~m- f"70f.~f mll~ above the highest commerciallending interest rate
ooll)).
"1- ?!~ TC(\')T ('If h9'"llT 000"') ;rnftoOT
that prevailed during the preceding quarter.
f.lflJ A::
3) Interest shall be collected in the same manner as the
E' mll~ fO?,(\O(\Om- OJII~ fO?,ht.AO"" ""OC OO?,(\O
(\-00"" ~f.~T ~m- :: tax to which it relates.
ii'7..
-.. "7t"Jt"Ji'i~lJ +oo"7i ~t)-o 76. Credit and Refund
li' f..,-oC hll1fl.m- l}IIJPAIl)') h+h4.f. ~t)-o 1) Where the Tax Authority is satisfied that tax has
"f.
++'){I 1n. f.,.f.l1m- OJf.9'" Ofloftm- f+ht.llm-
been paid by a person, whether by withholding,
..,lIC OJf.9" Oft." "7lJ:fm-9" tJ-).;r f+ht.II '?-oC :
..,-OC h4-~ ft.hlf.A h0?"1l}m- ..,lIC O"f. oolf~') installments, or otherwise, in excess of the person's tax.
fl;J1m ~,)f.lf~ : libality to which the payment or payments relate,
u) ft.ht.A h0?,1l}m- 0"1- f+ht.II ;rnll ..,lIC h4-~ the Tax Authority shall:
IIO?,t.II .., 0 T :- (a) credit the overpaid tax. against any liability of
that person in respect of:
li' OH.U hr~ oolPlT IIO?,ht.ftc lbfto:f-",-or::f
~. OH.Uhr~ oolPlT h.,.h4-1- ~t)-o "f. ++'){I (i) other taxes under this Proclamation;
IIO?,+lm- ",-oC: (ii) withholding of tax under this
E' OH.U hr~
OJf.9'" Oft.fto:f f..,-oClJ f+l'J' Proclamation;
.., -0C h 4-~ IIo?"t.II..,0 T ft."
,fi'Iv';f. 00 lPIT (iii) any other amount due to the Tax
"7lJ:fm-9" f1')HlI oom') : ~')Jtt"Jt"all"7~l'" : Authority under this Proclamation; or
II) f~t)o-,) Tnnft~~""l}l;J1m OHmlJ +lJ""loft m-ll'J' any other tax law; and
.,.trkm-') ~t)1I II..,lIC h4-~ ooooftll : hftOT:: (b) refund the remainder to that person within 90
~. hH.U Ol\f. O')o-ll h,)"'''' li(II) O"'OOfth+m- 10ft days of becoming satisfied.
m-ll'J' ..,lIC 114-~ +00" 0.') ~t)1I f""l ~ ') f.lf~ 2) The Tax payer shall be entitled to an interest set at
l}ftt.m- .,.11 ~oo..,. O')"'~ l}')p:f JPI,.
"1- Orllm- the highest commercial lending interest rate in-
hlf.+~m- f"70f.~f An "f.?!~ TC(\')T ('If h9'"llT
creased by 25% (twenty five percent) that
000"') ;rnftoO"" (DII.~ 1-ht.IIrA II
prevailed during the precedjng quarter if befIt has
not received the refund within the time prescribed
under Sub-Article (1) (b) of this Article.
 711 /ii'f.:i:f1Q t..f../rA ~.?~..,. .?/tflJ
'k'T'C c!.)Q tU;?)% <1>1Ii!f1!i
C. hH.tJ Ol\.e O'}O.{I h'}4>7i (i!) 0-r~1~lD- em(l'}
"111 C h 4. ~ 011 A 65J. fh.{.t\ lD- "111 C h '}.I;. OD t\ fI t\ :,.
OtltJ h'}4>7i ODIP~:" t\ODmf:" .e'1'I\A :: 011A65J.
f".h.{.t\ "111C h '}.I;.ODt\{1fOlJ.4>Cl1 'I'_f<l: hH.tJ
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0 Y'fI :,. q OD:" 1.lt lD-fI'1' t\ "1-0C h fl1 o.lD- Clt\P'
All)'} 07irh-~ OD.p~-O ht\O-)-:
U) f-rODI\7i '1'yet: hOlJ.4>C110:" "111C ;JC
fi-r.r Yll f"1-0C hfl1 (llD- Clt\p' All)'} t\"111C
h4.V. f"I11C lD-"1}.O?fI;J-m<l:Y h(lmO:" <#>'}_:
t\) "111~ m.e9" mt\J:. h-t-h.{.t\O:" cf>'}::
2' f"1llc M\1QtD- f1t\I"'AtTt} n1crl\
ODIP~:" O<#>~Of-rODI\7i 'l'Yet: I\.e m"1}. h(lmO:'-
4>'} )! 9"C' 0 ~~ 4' e; :" lD-fI'I' f -rOD 1\7i 'I' yet:
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t. n1crl\ n1"'~ (2) ODWt,:" n-Nlm ar..,~
:"c
f-r(l1' "111C h4..e lD-"1}.lD-f"111C lD-"1}' h '}f.[f~
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h~A (lCl:"
f"111C h(lCl(ll1 h.{.'09"
[ft. f"111C h4.~') Ul1:" flt\ODY1f
ji. OtltJ h'}4>7i O'}l1-fI h'}4>7i ($i) f-rf.~11lD- h'}f.-r
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fo<J..'{'II"10:" (Im- 0 h ') 4' 71 C'f (c ) O-r f. ~11lD-
aulP~:" 'l'4.-rc; IfCj
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t\ "10 :,. "111C he;'} 11~ ~ '} t\ ODY1f
0 au Y1f t\ o<J...{.
t\ -r f.~ 1m- -r Q;l,0?6 m {J;l t\ ODi'I.{.'} h '}.l;.lD-A
O?Y:~ "1 .e'fl\ A:: f OD'}"1
P':" IPto-rll' 'f'} t;I;l.9" C'
M'} c;m-'}9" IP to". c; f.ODm1f t\ IPto". <;:lD-
f.aum1f fODh'{'A ~I\~~:"
1\t\0:" ~I\~ O?fI;J-
m<l:Y Oauflm:" h'}.I;.Y1f 0?~~"1 .e:FI\A::
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'09" "ODY1f" OO?'1TlD-9" OD'}1Y:
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,}11~:" Oh~ ho<J..1~ (llD- "111C OD(ll1(111,)
.ew,,9"IrA :: O'}l1-fI h,}4'7i (f) he; (z) 0"'~1~lD-
aulP~:" i1A[f~ Ofl".cf>C ODY1f fo<J..:rt\lD-fODYtt-
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he; fODYtt- "'''1ClC Oo<J..h'1m'}o:" 1.11. O'}.y.
Yt\
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fTt\.fllPtoLf:" hClA h'}.1;.1~ t\.m.ec} .e'fI\A ::
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ODl/e;
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rr'i9" ,}11~1: fo<J..OI\7i hlf~ f,}l1~~,} c!tJC.e
h"19":" Dofl1'OO?fl1 Cl:" 0. ODflm O;J-f lD- 1. 11.
t\.if mm- .e'fI\A :: "'"
c. O?e;TlD-9" f". YH ,}11~:" t\ODYtt- 9"h'} I:"
frr~lD-'} f"111C ,).'; t\ODi'lJ.'} 04? elf'} f4>~
h,}f.rr~ : f"111C hfl1o.lD- L}t\P'AIl)'} h"111C h4.~
I\.e fo<J..J.t\1Dof"111C ,).'; he; htltJ ;JC
f"'"tt-
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10. m.e9" fbl\ ,}11~:" ODI1f fOlJ.:rt\lD- f"111C
hfl1o.lD- L}t\P'AIl)'} Ul11:'} fODI1f U...l1
h ,}.';t\lD- hfl4> ~'P' t\"111C h4.~ 071,h.tt: i1f1;J-
m4>lD- 0:\1\ ,elfe;A :1 OtttJ q.e~:" fD7.(lmlD-
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h4.~ l\.!.C(llD- .e1L}A rl
'HI". Federal Negarit Gazeta - No.344tbJuly,2002-Page 1894
3) Without limiting the general~ty of Sub-Article(l) of
this Article, a person may apply for a refund
under this Article. A refund application shall be
e
made to the Tax Authority in writing within
three (3) years of the later of:
(a) the date on which the Tax Authority has
served the notice of assessment to which the
refund application relates, or
(b) the date on which the tax or interest was paid.-
n1"'~ W 4) The Tax Authority shall, within forty-five (45)
days of making a decision on a refund application
under Sub-Article 2, serve on the person applying for
the refund a notice in writing of the decision.
5) A person dissatisfied with a decision referred to in
Sub-Article 4 may challenge the decision only
through. the appeal procedure as though the de-
cision were that of an assessment. L
SECTION VII
Collection Enforcement
77. Seizure of Property to Collect Tax
1) Subject to Sub-Article (4) of this Article;-if any
person liable to pay any tax imposed by this
Proclamation is in default under Article 73(3), it
shall be lawful for the Tax Authority to collect such
tax 'and such further amount as shall be sufficient
to cover the expenses of the seizure J by seizing any
property belonging to such person. Seizure may be
made on the accrued salary or wages of any
employee, including a government employee, by
serving a notice of seizure on the officer who has
the duty of paying the salary or wages.
2) For purposes of this Section; the team "Sezure"
inCludes seizure by any means, as well as, collec-
tion from a person who owes money or property to
the taxpayer, Except as provided in Sub-Articles
(3) and (6), a seizure shall extend only to property
possessed and obligations existing at the time the
seizure is made. The Tax Authority may request a
police officer to be present during seizure. Where
the Authority seizes any property as provided
hereinabove, it shall have the right to sell the seized
goods at public auction or in any other manner
approved by the Authority within not less than 10
days after the seizure, except that when the goods
seized are perishable the Authority can sell the
goods after any reasonable period having regard to
the nature of the goods.
3) Whenever any property on which seizure had been
made is not sufficient to satisfy the claim for which
seizure is made, the Tax Authority may, thereafter
and as may be necessary, Qroceed to seize oth~r
property, liable to seizure, of the person agamst
whom the claim exists until the amount due, together
with all expenses, is fully paid.
4) Seizure may be made under Sub-Article (1) ofthis
Article on employee's remuneration or other
property of any person with respect or any unpaid
tax only after the Tax Authority has notified such
person in writing of its intention to make such
seizure. The notice shall be delivered not less than
thirty (30) days before the day of the seizure.
.,~ iif.~fj~ IJ.t-A ~;Jt~ ;Jti,1I) 4:1'Cwi! I'Ik n"" Iufji! 'HI". Federal Negarit Gazeta- No. 34 4'" July. 2002-Page 1895

?;. f'"1-oC hil1n.fDc 1}t\P'Atr)'} f'"1-o~'} h()I}()-o fOU 5) If the Tax Authority makes a finding that the
1.'i:t>t;:lJ-).:t' ODcr~'} f1-l.c; h '}1.In (I'}tHl h '}.,.'" collection of the tax is in jeop~dy! a demand for
(ii) f1-ODt\h1-fDc fcli .,.') f'UL 11.-0 h'i (I'}o-il immediate payment of such tax may be made by the
h,}'" f 1-ODfth 1-fDc f c1i.,.') f'l. It 11.-0 "f, m (I:t> Tax Authority and, on failure or refusal to pay the
'"
'"111~ OJ"l.t' fDc'" h ') "l ht.A ft"7 f: l.., 'I' ,I'cf: h"'l (I'i tax, collection thereof by seizure shall be lawful
..,-OC h...~ ftODht.A U1.~ ttAl1'~ ')-ol-r'} without regard to the 3D-days period p~ovided in
(l0D.t'1I ..,-oC fOD()-o()(I- ht. .,09" ,n;J1f f,l1''i A:: Sub-Article (1) and the days provided in sub-Article
}. ft..,-oC h...~ ftllJ.ht.ftfDc') 1.ODOJ1'fOD.t'1' ht. "09" (4).
fDc(J}.'''' 1.ODOJtr h'}-'l!lI h1-1.l1(1"" .,.'} "f..9"r: 6) The effect of a seizure on employee remuneration
f"'-o~ b.c; 1-ht;:ft" hilhtllJ.,rA:t> OJf,9" f"'-o~ b.c; payable to a taxpayer shall be continuous from the
(If,C;J 9"h'}.t'-r t\.mf:t> f"7f,'fA hilhtllJ.l1''}(I-r date such seizure is first made until the liability out of
1.1t f:lil f,"''I'I\A:: which such seizure arose is satisfied or becomes
1:, hllU (171" f''''flH~'''' 1n.9''f h'i '}'(ll'Y.'f hOD,r1' unenforceable by reason of lapse of time.
~., 'irar:: 7) The following shall be exempt from seizure:
u) (lLP'}ml1f "u" h""(lC ~., h1-1.l1fDc f1n. (a) such amount of employee remineration or other
uum'} ".t'At;: LPt..,.~ ftllJ..t'1}fDc !.ODOJl' periodic income payable to an individual as
OJf,9" "7'irar9" (l1-OJ() ~ 1.lL ftllJ.1 ~ t\A 1 n.: does not exceed the exempt amount according
ft) (101J'irfDc9" fh.:"f'k)' ,n'" h'}.c;f,h(l~ f'r1.l'Jo to Schedule A; and
10.9'1" OJf,9" '}'(ll.y.1": (b) all other income and property that are not liable
to attachment or lien under Ethiopian law.
~r;. f'}-ol-r 00,1'1' fDc(J}.:"
(It;:C~' n.-r -rbt'1' f1-h(ll OJf,9" (lht..,09" I\f,.t't\ 78. Enforcement of Seizure
ii'
OJf,9" C1h '}.,. if (l1-ODft h 1-fDc ODLPl"" WPil-r'i 1. Any person in possession of (or obligated with
'" respect to) property subject to seizure on which a
fi'.t'U t]Al1'~ C1il1-"'C "7'iTfDc9" C1..,-oC 9"h'} ,r-r
fi',rrr '}-ol-r C1h~ ftllJ.1~ OJf,9" ft..,-oc h...~ seizure has been made shall, unless such property is,
O1J'iTfDc'l"..,Yv:t' .t'ft(l'''' ()fDcf..,'C1C hil1n.fDc flt\,PI at the time of such demand, subject to an attachment
A fl}'} It m,e..,. fDc f.t' HfDc'} u -0 -r f"7 ill h -0 OJf,9" or execution under any judicial process or is encum-
.t't\C1:"'} ..,Yv:t' fODt.O'l" ~I\&.~"" hftC1:":: bered by law with the preferred right of other
~. 01J'irfDc'l" ()ar f..,-o C h il1 n.fDc I}t\,PI A fl}'} creditors as stipulated under Article 30, on the
fLm f,.par h'} J.':,} f 1-.t'H '}-0l-r t\"7 ill h -0 t.:'> 1. ~ demand of the Tax authority surrender such property
'1f,l1',} OD m '} (I.., A (or discharge such obligation)
f"'l h '}1.l1' ~ (l1-.t' HfDc ') -0 l""
OD
.t'1f 2. Any person who fails or refuses to surrender any
i'm.t''t f,l1''i A:: l1'Li9" 1-m.t't~1: ft '}-ol1:
'l"h'} ,I':" hl1'~fDc f..,l1C b.c; ODm'} (C1"'-o~ b.c; I\f, property subject to seizure, on demand of the Tax
f O'/..:h'1C1fDc') OJQ;l, h'i OJft J.': Q;b'l" r:) t\..t' At;: Authority, shall be personally liable to the govern-
hf,'fA'l":: ment in a sum equal to the value of the property not
[ C1'}o-il h,}"'''' ~ h1-ODfth1-ar f..,A 1-m,r<l:~-r so surrendered, but not exceeding the amount of
C1i'Q;l,01Jt '}-ol1:'} f,rUfDc ()fDc ,)'C1l1:,} ft"7illh'C1 taxes for the collection of which seizure has been
/..:'>1.~ .t'A l1'~ar ,rt\ (I<I: 9" h ') .t'-r h l1'~ C1'} O.il made (together with costs and interest on such sum).
3. In addition to the personal liability imposed by Sub-
)\"}+'" g ODlPl-r fDIJ..t.t\1ro-"} f1"}rHl ODm"}ii TCfI"}-r
Article (2), if the failure or refusal to surrender is
('1'1""1ClOD"')Cl+Q;t"M h "}-'thlf:A f.f.l;JA::
without reasonable cause, such person shall be liable
Q' (lH.U h'}.,.?\ ODLPl:" (If,tf:t'fDc P'C .t'ftCh I '}lll:"
,rillhC1 OJf,9" (I..,-oC h...~ ftllJ.t.ft"'(I-r') 1'}rr-o for an additional charge equal to fifty percent (50%)
h..,l1 C h il1 n.fDc fIt\P' A tr)'} C11-m N>fDc ODLPl"" 1 n. of the amount recoverable under Sub-Article (2).
,r1.l1 01J'i rfDc9" () fDc tt ill h C1fDc '} -0 l"" OJf, 'l" 1 n. 4. Any person in possession of property who surrenders
tt1.l1ar 1'}"'C1 ;JC (l1-.t'.t'U f..,.C1C ..,Yv:t'fDc') I}Ai' or makes payment in accordance with this Article
OJfl} fDc ..,-0 C h... f, OJf,9" "7 ft.1\ () fDc h tllJ.t. ft shall be discharged from any obligation or liability to
'i TfDc9"
..,C1:,. M~ OJ,e.9" t]ft(l"" ..,Yv:t' ~., f,l1''iA::
the delinquent taxpayer or to any other person arising
from such surrender or payment.
~it. f'lPf-o 001'1-0 ilft01J:t>l-o
79. Production of Books
O1J'iTfDc'l" '}-ol-r f1-.t'H OJf,9" h '}"l.t'1I f :t'()(1 hl1'~
If a seizure has been made or is about to be made on any
il ft H.lJ- '}-0l"" "7 illjf fDl/.,If'} OJf,9" OD'"ft65J.f.t' H M f:
property, any person having custody or control of any
OJf,9" OD1I1-o (lh~ fDl/.,1~ OJf,9" (lcf:'I''I'~ ,PIC ,rft
fl}'} 'I'.t' cf: fL.p C
books or records containing evidence or statements
01J'iTfDc9" {tfDc (I.., -0 C h il1 n. fDc fIftP'A
relating to the property subject to seizure shall, on
-Oft"" M~ '} OJf,9" OD1I1(1-'} t\"7illjf~"" O1J:t>l-o
demand of the Tax Authority, exhibit such books or
hftC1-r::
records to the Tax Authority.
~..,. OD-o"" 'I'.t' cf:
if . C10-0"" I\f, f tIIJ..,.C -0 f.,. 1.9" -r 80. Preferential claim to Assets
~. cpft-r'i f+t\ffJ:fro- f/\.t\-:f )\Cl.l;~sP:ff:"1;"7J ODo{l-r 1. From the date on which tax becomes due and payable
h"}~+mCl+ trc;': nH.u )\cp~ ODlPl-r "1o{lC+h4.f. under this Proclamation, subject to the prior secured
h...",rnn-r +"} )\"}P'''' +hlf:t\- hfth)\t\+n-r 1."' 1;lft claims of creditors, the Authority has a preferential
.,ofIC fDDht.A "11.:1' l1t\n-r flro- VofI-r "f. 11t\P'AffJ)' claim over all other claims upon the assets of the
h-1'iTcD-'l" /\.t\-:f MsP:f f+~'I"-r~-r DDofI-rf,c;'lCPAIJ person liable to pay the tax until the tax is paid.
 ,,,/in:~f7i t.1.t-A ~.7t"" .7t1.lrJ -IITC c!.i~ flj>,1)1;.,.') Iitfj~ ~'9". Federal Negarit Gazeta - No.34 41hJuly,2002-Page 1896
2) Where a person is in default of paying tax, the
I' "'I'}"fro-9" I'lro- "HIC foohLA "l1..;rro-') 'It\oo
lDll):" 'I'ct.i'"f Iflf f i'1'1 ,,'} J.".1f~ f"lfl C h it1 Qro- Authority may, by notice in writing, inform that
'l t\ P' All)'} 0 'I'ct.:" 9"h '} .f'
.}. person of the Authority's intention to apply to the
'A i' h L t\ ro- '} "l fI C
"e; "l fI ot-'} t\ "'Ill h LA f D?J.".1.1 ro- ,,'}.p ll.4>~ f D?.f' Registering Authority to register a security interest in
llh:"t\ro-'} lDQJ. "'IllhLA "'}Jt:rA f"l'Oot- 6.';
fD?Lt\ "lO:" I'lro- u'O:" O'Pll.}.e; i' f,Jf "'}Jt~ f, any asset situated in Ethiopia which is owned by that
,)fll.~'} t\oo1l10ro- ht]A fX'th-tt: :"61111 fD?(}'I' person, to cover any unpaid tax in default, together
00 If). '} 0 OO"lt\ ~ t\ "lfI C h ct.f.. "'I {}m ,}"'<I:.f'
f,(}ll)A:: with any expense incurred in recovery proceedings.
3) It the person on whom a notice has been served
E' O'}o-ll h ,}"'X' (ID N'1 t\?ro- "'Illm,}"'<I:.f' f J.".1.(lro- under Sub-Article (2) fails to pay the amount
"l fI C h ct.f, "'Ill m ') "'<I:.f' ro- 0J.". I. () ro- 0 c!j.,.'} ro-ll'I'
"lflot-'} .f'AhLt\ ",}J.".If~ f"lflC hit1Qro- 'It\P' specified in the notice within 30 days after the date
All)'} t\OOll;JQro- flt\P'All)'} f"l'OC hct.f.. UfI:" of service of the notice, the Authority may, by
flAi'hLt\ro- f"l'OC 6.'; oom'} O'Pll:,.e; i'f", notice in writing, direct the Registering Authority
"'}Jt~ f, f,(lll)A:: that the asset, to the extent of the defaulter's interest
:"6"1'
~. O'}o-ll h'}.,.X' f oowl.:" f"lflC hit1Qro- flt\p' therein, shall be the subject of security for the total
All)'} "lflC fotLt\"lO.}' I'lro- U'O:" 0'P{}:,.e; i'f.Jf
amount of unpaid tax.
"'}Jt~f, :"6111' f(}m Itlf,): oo1l;JQro- flt\p' 4) Where the Authority has served a notice on the
All),}"'Ie;~ro-,}9"htt:.f'~f,mf,.p,}fll.~O'P{}:"e;
"'}Jt.f'1I f J.".I.(}ro-'}:"61111 ,,'} f."'Ie;~ro-9" OU.O~ Registering Authority under Sub-Article (3), the
Itf, ",}.';t\ foo.f''tf ()~~ f,ooll"lflA: .,.1.9" itA Registering Authority shall, without fee, register
fi'(}m foo.f'''r oofl:" ",}J.".i'mO.,. Iflf: f'Pll the notice of security as if the notice were an
:,.e; ro- 9"111 fl f D?L t\ 1 ro-'} "l fI C t\"'Ill hLA 0"'1e; instrument of mortgage over or charge on such
~ro-9" 00 A h- 0 to "l '}J.".i' () m 00 .f''tf lDf,9" asset, as the case may be, and such registration shall,
'}1."'Ie;~ro-9" t\.It 6.'; lDf,9" " h tt:.f If If f,~ m t.A::
" SUbject to any prior mortgage or charge, operate
itji. f"l-f1C hlD~(}'}'} t\..f'J.".e;.ptt:fD?'fA v-~;r oolfC while it subsists in all respects as a legal mortgage
f"l-f1 C h it1 Qro- flt\P' t\ ll)'} f"lfl ot-'} h ()flI'lfl fD?.f' J.". over or charge on the land or building to secure the
e;.ptt: v-~;r oolf ot-') fD?.f' ~ 9",} 0 <I:9"h '} amount due.
.f':" .f'1'1
",}f.lf~ "e; hll~';J.f, v-~;r It.f' ;J'I'9" :"611H-'} 8!. Jeopardy Assessment
fO?J."."ltt: 00 "lt\ 6IiJ.0"'l.f'.f'1I f"l fI C h ct.f.. f fl'}h ~...,fI
In exceptional cases where the Tax Authority has
"'}Jt;r1~ "e; llt\"lflC hct.f.. fct.f,e;,}ll "'}.pll.4>~
001.:4' "'}JtI'lmro- fhlli'.';f.C :"6"11 t\.(}'I' "e; "lflot- '} reasonable grounds to believe that the collection of tax
lDJt.f'ro-). 00 lD()'} f,'flt A:: f,v-'} '}j( f"lfl C is in jeopardy, and where a state of urgency exists, the
hit1Qro- flt\P'All)'} htLU Oltf, fi'oot\hi'ro-'} " hlli'.'; Tax Authority may issue an administrative order to the
J.".t. 'e :,. 61111 illl.,..1tt\ L 0:" .,.'} 1.9" c: fl t\-:" hp' C Bank with a statement of justification supplementing its
.,.e;:,. ro-ll'I' tt:/n.:,. :"611H-'} "'}Jt.f'?~.pt\:" "'I~I."l order to block the accounts of the taxpayer and secure
ht\O:":: f"lflC hit1Qro- flt\P'All)'} OtLu h'}.,.X' information thereon, and may make an immediate
f i'(}m ro-'} P' A ll)'} 00 m"'9" fD? 'ft\ro- f"lfl ot-'} assessment of tax for the current period; provided,
h lD~ ()'} "lA~ t\"'I~ I. "l f"'l. I..'; 00 1.:4't\"'I"l'1:" fI:r
~ro-:: however; that the Tax Authority shall obtain court
itl' hi'hct.f, ~...,fI Itf, i'''',}I' 0.,.1. "lflC Itf, llt\"'I.lfC authorization within ten (10) days from the date of
ff,1fl"fA .p~.f issuance of its administrative order and further that such
ji. OtLU h'P~ ooWI.T hi'hct.f, ~""flltf, "lflC "',}I'
powers may only be used to elucidate information
()
oo.f'1I flt\ 0:" ro- i'''',} I' f i' .f'II "lfI C: relevant to the assessme~t.
u) f"".f'lIro- "lflC hll1Qro-'} 'It\P'All)'} . 82. Priority of claim on Tax. Withheld
OoolDhA f,lfe;t\: 1) Tax withheld by a withholding agent under this
t\) "l-f1ot-'} .,.'} I' f.f' IIro- () ro- Itt\ 0:" 6.'; lDf,9" Proclamation:
"'Ie;~ro-9" "-It i'm.f' <I:~:,. ,,'} Jt hOC "'I ~ I."l (a) is held by the withholding agent in trust for the
hf,:rt\9"::
th) "l-f1ot-'} "',}I' f .f'lIro- I'l(Dofh(}l. lDf,9" ~...,n- Tax Authoritv:
000 ll) t.:" Itf, 0 D?1f'} 0 T 1. H. i'''',}
(b) is not subject to attachment in respect of a debt or
f.,. I. (Do I
I' liability of the withholding agent; and
"l-f1C 000 ll) t.:" Itf, .f't\ (Do: 06.'; 9" h ') .f':"
f"'l. i'1tt\L(Do lDf,9" fh(} I.ro- ~C~:,. UfI:" (c) in the event of liquidation or bankruptcyuf the
htt:A Iflf hf,~mC9":: OOOIf)'9" f"lflC withholding agent, does not form part of the
hll1Qro- flt\P't\ll)'} OtLU ~""fI Itf, fUfI:" estate in liquidation, assignment, or bankruptcy
htt:tt:t\ hooJ.".l.1- Ok:" f.e.,'l"ft\ .p~D?.f'
oo-f1:" f.lf 1.'Pt\::
and the Tax Authority has a first claim before
any distribution of property is made.
I' OtLO h'P~ OOWI.:" "lflC,} "',}I' 10. f"'l~I."l 2) An amount that a withholding agent is required
"l1..;r .f't\ 0:" ()(Dohi' h ct.f, ~.., fI Itf, .,.')
.,. I. (Do "lfl C: I' f"'l..f'll
under this Proclamation to withhold from a
U) hhtt:.f'(Do Itf, Ooo1.oo~.f' fD?"'~ll f,lfe;t\:: payment is:
t\) "l-f1C'} .,.'} I' 1 0. f"'l ~ I. "l "l1..;r .f't\ 0:" () ro- (a) a first charge on that payment; and
Ott:/ {1.:" :,. 611 11 lDf,9" O"'le; ~(Do9" to "l (b) withheld prior to any other deduction which
OOWI.:" hi'hct.f, ~""flltf, oo"'~ll ilt\O:" t\.1t
the withholding agent may be required to make
~~fI Ok:" .p~"'IJ f,lfl.'Pt\::
by virtue of an order of any court or any other
irE' "lfl C h ct.f.. llit t\ (Do'I' 0.4> law.
OtLO htt:t\ OOWI.T fi'.f'1I "'Ie;~(Do9" '}fll.:" 83. Taxpayer Safeguards
f"'l..f'lI (Do: f"'l.m 0.,. (Do: e; f"'l. 00 II., 0 (Do O"lfl C Any property seized under this Section shall be seized,
hll1Q(Do 'It\P't\ll)'} fI:r " f,1fe;t\:1 "'Ie;~(Do9"
"-It held. and accounted for onlv bythe Tax Authority. No
f OD'}"lP':" h ilt\ 0 tLu htt:A 00 WI.:" f i' .f'1I(Do')
'}fI I. :,. "'Ie;T(Do'}9" t\.1t 9"h'}.f':" 00 wI.:"
other agency of the government may require the property
0"'1~ I."l
"'}Jt(}m(l)o CDf,9" "'}-'li'ltt\t;:t\:" oomf.p hf,'ft\9":: seized under thfs section to be transferred or given over
OtLO ht;:t\ ODIPI.:to fi"" ,}-fll.:to fi'7rm ",}J.".If~ to it for any cause whatsoever. If any property seized
h1i.f'~ hi'1'1(1)o 1'}lIfI (I)oh'l' "lflC hct.f.. hD?Lt\ under this Section is sold, any portion of the proceeds in
.., O:to 6.t; Ol\f, f If ~(1)0 1') IIfI t\ '}-fl1.1: t\ (1.:"
'l excess of the taxpayer's liabilities under this section
CD-\.f'(I)o).f,oPt\~t\1S
shall be returned promptly to the owner of the property.
11" . Ii!! I'Ik~i .,., IU'!!' ",..
liitl2i U-t.-A ~;J~T ;Jtl.1IJ,4I'1'C -. ~ . .
, Federal Negarit, Gazeta - No. 34 4thJuly, 2002-Page 1897
~ . -.: -'J ?"
- " "
.-."---').'-,'" 3~ ~
'1i"~;" >--.'.'''',"'. --

, ht;:.:\ 11,.'-1- ,SECTION VIII

c'" ,''', 1I1\8IM\~ ~ '"n-M~~'f: -+itlt9'"f Rewar-ds and Administrative Penalties
...i. it+i ,.,tft -t ,Itit 1\'1'1f~"-1- ',': 84. Reward for Verifiable Information
,
Ii',
, .,-OC f"",hL~O-1-'10. O"7..~.flff """}(a O"t.fil 1) Where a person provides a verifi'able and objective
~'~"'ff' n~t-nc fD~"'!.iOI\.~ O"'1CjTlD-9'" infoqnation of tAXevasion through concealment,
"..,.,~ ta-.tltt:~:'..nIll'f.+C~l1le h4-f. "f. , under reporting, fraud or any other improper
n.,.QiI.~ ~)f'" :aOD~?t: ~;re-1- f"7..!+C{I means, the infonner shall be granted upto twenty
"~~"",~O"'m-' -Hie ~ilh VI OOD'" (t; percent (20) of the amount of tax evaded at the time
TCr"t'.rL, Jt~h ,1of\~ll.r"tO{)1) h'Jl.f"~ of collection of the said tax.
~(.;J~'" ~ ",

2) The infonner shall notbe entitled to such a reward

t. "","~1( ~~~~&-n.m-f .
where:
,
' u) f1t()c'~~~hLA- JtC1.+..Hl4-.e. tu"": CDf.9'" (a) he/she has participated in the tax evasion; or
.t.",,,,~~,,, rr&-m- 1\11; hil.:\ hi''':
"J (b) where such reporting is part of hislher em-
. rtL~'1I~..y~ +i1\.+-Y.A.1f1".e.'f~"r:
'C. ployment duty.
"'C1I~ r"'-OCI1Ar~trJ)' O"7..J'IDI1Jm- ODODtl
t.m/aCj.:\d 3) Details shall be provided by the directives of
- '
the Tax Authority
1-~~' Ah~Tf:t tr&- m-m."" 11f\"tr"t-'""li~"'1""
i' f1-o~ l1itP'A.trJ' l'\ChJ')"" 11t\m- .,.,,;J- f..,{lC 85. Reward for Outstanding Perl'onnance
, -hLA 11..:rTm-"): f\-Y.CDIJ\o-'!ac h4-r-"f hCj 1) The Tax Authority shall reward tax payers and tax
htt:.,..., t P'6- -(1:1>""A"t11t\t r"'{lc l1t\rAtrJ)' officers for outstanding perfonnance and dis-
1P~+f'f'iI~"""" "r"tn~r: charge of duties.
I. 1tc:H~ 'f1ft,,".f"7..th+C O"7..1IDtrJID"ODODtJ' 2) , Details shall be provided by the directives of the
1-mr"t'i'AtI Minister of Revenue.
1t1.,n:,'IIittlf":rmf tD~" "..,,,.,. O"7h:rCD~ r"7..hLA ~6. Penalty for Late Filing or Non-Filing
"..~' A taxpayer who fails to file a timely tax declaration is
-nV..,- ..,-oc h4-f.n~..n"'CDn'm- 1.f1 ID"11'1'
liable for a penalty equal to:
1n.., fl\11;J-CD+ ~,,}~If~ MhTt\CO-' OD~ (a) 1,000 Birr for the first thirty (30) days (or part
"'h~ltA..1 .
u).,n.lD-"} ta1h:rm-f f\".,fO+ t\OD"f.ODI,J'm-c!)+1 thereof) the declaration remains unfiled);
(b) 2,000 Birr for the next thirty (30) days (or part
CD"" ffl" h.L~ f\1f.,m- 1.f1 -OC i it"f therepf) the declaration remains unfiled);
it) .,0.m-1 itll1;J-m-f 1\".,'0+ t\.,.Q;\,"7t(J)oc!) +1
tD~" fflll- h.LA f\1I'5m- 1.f1 -OC I ittlf (c) 1,500 Birr for each thirty (30) days (or part
d.} hn." (\,,~ ""m- .,0.m-1 itlh:rm-f ,,".,rO-1- thereof)thereafter that the declaration remains un-
f\~,,}IS,,}4. 1(,,' _"'11 filed.
W +, ii(\C i ""11+
fl' "'H)C1"it.,,, n"'l\~tIJ" t"t.hLA OD+-1 87. Penalty for Undcrstlltement of Tax
1- "'W~' .,-hcn~,. 0'0. "711:r1D<tJ'm-
It,. 1) If the amount of tax shown on a declaration
It..h~.:\ f"t 111m-").,-OC 1\*"'" Ilt;J-8+ h '1.If~ understates the amount of tax required to be shown,
'''ljn., .,...c 118m")",*c 0 (1 Tcn,:,.) the taxpayer is liable for a penalty in
CD~" Otl" ",.,.R- ,o-n h">+lr I ~"1.T"'f\ the amount of 10% (ten per cent) of the
h"""'f.,...,.~n(J)o 10. h~.,.r: f.,.., ~'1.II''' "it1(\ understatement or 50% (fifty per cent) if the
111:1--+"" .,-OC,, OOD'"
. (JTC""+) OD~
understatement is considered substaintial in accor-
~h~It~rr
dance with Sub-Article (2) of this Article).
I- .,...c\14-\t """" fit:rID.,.m- ..,-oe h(;'T~ .,m-
2) The understatement is considered substantial if it
Mt",. htlu n;to~ h.,.".f\h-f:+ h1it+S;:..
fOAm ""1.II'~ ~m-f exceeds the smaller of the fonowing two amounts:
lI)n.,0."'Iit;totD4:1 -;to,:" "itO-1- ..,-oc !)~ (a) twenty-five percent (25%) of tbe tax required
to ~ shown on the return; or
1'"Cc'\':"(h?I",.il:r- 11""'''')f (b) 20,000 Bin".
1:' 1-oC h4-ttt..,q'S 1+1.0 0.11'1" .e."'I1~' f"7..-t. 3) The penalty shall continue to apply until, the
vel'" f"1q~ c'\-Y..,..q1.CD"" t;:C1;0.+ fOlIA1./. Appeal Commission or a Court, as the case may be,
1(.." " ~l1h-tn'1' ~~it fdD~ "'L~ shall have rendered its final decision.
.",.,:,. ~'~. 88. Penalty for Late Payment
...1.1\111.,. n-hLAMIIIA -+-& A taxpayer who fails to pay tax liability on the due date
.". -t-ne h '."Lf\1n, ..,-ocO;h.,0.,.. is subject to:
c'\~" 'Lu. "h1' l~hlJ\ ~""If"Mh+t\(J)o ~ (a) a penalty of 5% (five percent) of the amount of
~~O~Af ,

IIJ 1ot1~ A.hL~ h"'t ,I1(J)o.,., f\h' I; .,., hit.,,, J'A "'hL'
'
unpaid taxon the first day after the due date has
A'" .,-oc ~ TCc'\"):" (hrl1:" OdD"'): passed: and
(b) an additional 2 % (two percent) of the amount 0 f
it) htl" a:\" ItAm- AW1JS,,}~ me f-"f.ODtl +,
the tax that remains unpaid on the first day of
it""'LA fot'-., "HIC1M:" atlD-f(I TCr"t':"):
.,.1' ""'0.") rt...,-o OD".,-o ""dD11I f"7..I1JA -+-1 89.
each month thereafter.
Penalty for Failure to Keep Proper Records
i. "7'i:ftDor -,.oc hof..e.Ah"},...fT."''' ".,-OC"OD'
-", f"7..'''''' +"10.n.-r-n n.,~ n..,-n 1) The taxpayer shaH be liable for a penalty of 20% of
..",-0 ~r; ...,1\ J'A'" ),"121'"''''dJr''t~OT' the tax assessed if he failed to keep proper books of
-..oe f TCA"):" ,... ~A..f account, records, and other doc1.unmts ~gmdm.g a
.. MwflCh""o." "AI"AIIJ' 'Me '"-f. T10.", certain tax year.
,rt ,0(11.Ut: ~'i AoA-"f'w',".a,,-;y. 2) If the Tax Authority finds that a tnpayer has failed
AIM"" .,.h;f-;l-,. ~:J+ "'''11 '+t. ...,..,... for two consecutive tax years, to keep proper books
I\,I.ChO ""f of account, records, and other documents:
 ,
.,~, . ,- . ,
c ".:. . . '. -. . ~

.1~.Jia.~n~iJ.t-A ~:J~T :Ju.ITJ-I:1'Ct!j,.~ ~,~~ lil7i,:,~,~,"."JJ~alNegarit. Gazeta-,NQ.,,J4 4!!'Ju4'tc~200~~e "'.

189i

".J,
u) f"'111C,hia1n.W- .1lt\p,AII)-}' f,U"}). fOlJ.U\~ 1I'/11:J- "
(a) the licensing,authQfity,shan fOJ1hw~th
suspend the
CD~f l'I.l\tU\."f'Uf: 1'Id1.(Douo/n.."f f"'1'OC h4.f."}
f"}"'1~ Ft,. d.~~ CDJtJ'OJo).,J'"'1"'l\:: .
taxpayer's license.;Ob notificatJqR py the Tax
t\) "'1llC h4.~ T'In.W-"} f~P/ll ODlI'Hli M~ 'hCJ Authority; . ,',
\,
"

'''It-:r-~ QDasP"f OY'l1"-~OJoqOD.'}'9" J'I\"'lO (b),'~.{f in asubsequ~!1t year"the Tax Authority again
'h"}"If~: .f.U"}). f0l/.1A~ ,lI'/l1:J-cD<tJ' It''cl'IOJo
U~' 1'IQ.1.CD:"
ODlo..'}- f"'1llth4.f."} f"}"'1~ Ft,.
.finds.that t.be,~ayerhas
failed to .keep proper
~' books,' records, and documents, the licensing
U~ .f.IPCtfA::
rh) f"'1llChl1'1(t(Do llt\FAII)"} "'1llCh4.f. OD1I11l 'authbrity shall revoke the taxpayer's license on
, ,
f ODJ'1I "'1f..:J-0J0"} J' A "'CDII) OPIf)."} notification
httU ,Ol\.f.,0"'f.~1'l0J0 ODIP~."f f'1llC ,h4.f. f"}"'1~
l'I."c 110 T '
(c) A fmding byby~etheTax
Tax Authority;
Authority'that the taxpayer's
F(" U~ 'h"}Jt:J-'I~ CDf,9" 'h"}JtlPlll t\U~ , failure.justifies notifica~onof ~e licensing
1'1Q.1.0J0 11t\F A II}"} fDtA hOJo 11'/l1:J-fD<tJ' 0 If.U authontyfor purposesof suspensioQortevocationof
htp~ QDlPlT 'h"}""'l'Im f"'1llC (DoP/~1I'/11:J-CD<t,e the 'taxpayer's license shan for all purposes of this
rrcr.f..y.mt,.A:: 11t\11'~9" f"'1llC ~11'1n.0J0 llt\P'
All)"} "'111C h4.f. "'1f..:J-0J0"} J' A "'CDII) t\ OD1f)O-
PfuclaIJ1.ationbe treated as an ssessment and
f OD""l?j' 11'/l,?1651 hll'/"'1'f -I: Ok."f 1I'f11:J-CD<tJ'0J0"} notification may not be sent to the
ODI\h ft\O.'}-9":: licensingauthority until the TaxAuthQrity'sfmding
j. h.,.h4..f. ~P/1l I\.f. "'1llC .,."}(\ 10. llt\"'1~l"'1 fOl/.II)A is finat'
(/11"'651 ., ,
90: f}'enaltyfor Failure to Withhold Tax
Ii' OH.Uhtp~ ODlPlT h.,.h4..f. ~P/1l I\.f. "'1llC .,.")(\ '1), A withl10ldingagent who fails tQwithhold tax in
'In. fll'/~l"'1 "'1f..:J-J't\0.'}- 1'I0J0.,."}(\ 'In. J'I\"l accordance with' this.Proclamation is personally
1CD-"}f"'1llC ODm"} t\"'1l1C hl1'1n.(Do llt\FAII)"} liable to pay to the Tu Authority the amount of tax
1n. fll'/~l"'1 "'1f..:J- ht\O."fu .f.V-"}'h"}j( Ottu
q.f.~T fhd.t\OJo"} ~P/1l h"'1llC h4.f. ODA(\ which has not been withheld, b':ltthe withholding
fll'/"'1'fT ODllT .f.crltpA:: agent is entitled to recover this amount from the
e. h.,.h4..f. ~P/1l I\.f. "'1llC .,."}(\ fll'/l1.,.l.."f ~I\k~-r'
~
payee.
.rt\0-1- (}OJoOttU htp~ oPlPl.-r 1I'/"}~OJor ..,llC 2) The tax withholding liability imposed by this
h4.f, J't\0."f ~I\k~."f .f.crCO:J-A:: OODIf~9"' 1n.
.Proclamationshall.be treated as a tax liability for
'h"}JtJ'''C"'1 f"'mt''''OJo") f"'1llC Uom"}fOD ~CD9"
CD.f.9" +1.9" itA fhd.t\(Do :J-hl1 'h"}JtODt\l1t\T purposes of any Article providing taxpayers with
fODmf.p ODllT ht\OJo:; the right to contest the amount of tax 'due or to
C. Ott1J htp~ 0+f.~'I10J0 ODIPI.Th"'h~.e. ~"11l I\.f. recover tax paid.
.

"'1llC .,."}(\ 'In. J'I\"l1 i'llif' o"}o-l1' h"}"'~ (Ii) 3) In addition to any ~ount for which a withholding
h.,.1. ~110J0 O"'Q;},II'/Z t\'hJ'"}"'"}.I;. "''In.0J0"} "'1llC
.,."}(\ '1ft "J'1.C"'1 t\LOODOJo hii:J' llC Ii if. OD"'1i5I, agent is liable under'Sub-Article (1), an age~t who
.f.h ii:I\A:: ,
fails to withhold tax in accOrdance with this
Q' hH.U Ol\.f. h+"~11OJ- OD.,.651 O"'Q;},II'/& fOl/.h Proclamation shall be liable for a penalty of.1,000
.,.I\-."f "'1M'ln"f httU O:J-"f f"'CDI'I~(Do"}OD"'1i5I, Birr for each instance of failure to withhold the
'h"}Jthii:1\- f,"l,?l\;
proper amo\lDt.
u) , Ottu 1\"}"'~ "}o-l1 h"}+~ (Ii) ,'h"}1."'ODt\
h+(Do h.,.h4..f. ~"'1ll\f, "'1llC .,."}(\ 10. 4) A penalty of Birr 1,000 is imposed on the following
J't\OD1.I.1-"} J'CD'" CD.f.9"II'/CD.pJ't\0."f P't,. individuals:
hl1hJ~: (a) a manager who knew or should have known of
t\) Ottu h"}"'~ "}O-l1
h"}"'''' (Ii) 'h"}""'ODt\ the failure described in Sub-Article (1);
,h"'(Do h.,.h4.f, ~P/1l I\.f. "'1llC .,."}" 1n.
J't\OD"l1-"} J'CD'" CD.f.9"II'/CD.pf~OlO."f 'hCJ
(b) a chief accountant or another senior officer
h.,..h4..f. ~P/1l I\.f."'1llC +"}(\ 1n. fll'f~I.1-"} who is responsible for supervisionor controlof
FCq."f fODh:J-.,.A CD.f.9" fOD.y.lI)mC withholding procedures and who knew or
~I\k~T J't\0."f trcr h."f."ft\-"} CD.f.9" ck'l"r~"} should have known of the failure described in
(Do OU"}1 ~ 11t\ 11'/h CJCD).
0"'" n. "'111~ .,..,."} (\
1n. I\t\OD"l1- 9"h"}J'."f flf~ f~"'ll ~I\k
Sub-Article (1), or whose improper
CD.f.9" II'/") ~ 0J09" "'1\ ~I\k 11C Ii if. OD"'1i5I, supervision failed to prevent it.
.f. hii:I\ 1\-:: 91. Penalty for Failure to Meet TIN Requirements
jli. f"'1llC h4..f. ODt\J' ckTC"} llt\ODm"'9" fOlJ.II)A OD"'1i5I,
Taxpayers failing to meet the requirements for TIN are
i). "'1llC h4.f. h.,.h4..f. ~P/1l I\~ "'1llC .,."}(\ t\0IJ.!11
- subject to the following penalties:
"'l(Do 1'I(Dof"'1llC h4.f, ODt\J' ckT~"} J'I\"'lO
'h"}1. If ~ "'1llC .,."}(\ fOlJ.! 11.,.
I . (Do (Do
1'1 h .,.h4. f.
1) a withholding agent who makes a payment to a
~P/1l I\.f. r!j TCI'I"}."f (11'1\" OOD"') .,."}(\ 1n. person who has not supplied a TIN is required to .
J'1.C,?A:: withhold thirty percent (30%) of the amount of the
-e. h.,.h4..f. ~P/1l I\f, "'11l~"} .,."}(\ 1n. lI'/~l"'1
t\0I/.111(Do1'I(Dof"'1llC h4.f, ODt\J' ckT~"} J'I\.,.I.O
payment.
2) a taxpayer who has not supplied the TIN to the
"'1llC h4.f, mf.U ,,"}.,.'" "}o-l1 h"}"'''' (Ii) h"'''~
11(Do 0.,.""11'/& lIC ~ if. (h9"l1."f if. lIC) mf,9" withholding agent, in addition to what is stipulated
t\.hLt\(Do f0l/.111(Do"}'t ..,11 hv-t\ 1: h ~11"'~ (Do") under Sub-Article (1) of this Article is liableto pay
OOD"'1i5I,ODAh t\"'1l1C h111n.(Do llt\FAII)"} 'h"}Jt a fine of 5,000 Birr or the amount of the payment.
htj:A f,1.I.,?A::
jg. OD"'6AiJ."}l1t\ODl'IlIl'1lI 'hCJ OOD+1i5I, I\f, l1t\OI/."'ClI
whichever is less.
.e."'111:OS 92. Collection of and Appeal Against Penalties
hO., "'&.ce OD4-i h"'1l1C h1111l(Do lli\P'AII)"} Administrativepenalitiesshallbe paidon noticeand
OOl/.lIT 1I'/11:J-m-tJ' 'htj fhii:J' TJ'4: mJtJ'(Do). ODhLA demand by the Tax Authority and shall be assessed
"1\0:":: hl\lf~r fOD+~ hm"l'I"} 'hCJ hl'llll'lll ..,lIC and collected in the same manner as taxes. Any
OOlJ.dJl'I"}O:" 'htj 001/.1'101'1110:" "L'I09" f,oDt,.Au references, in this Proclamation,to "tax imposed"
OJf.U h'l'~ (DohT "f"'ml'l~ ..,lIC" OOlJ.A f"'m+1'I shall be deemed to include administrativepenalties
hh.,.'-;1.t,., OIl""'") ",""crt,.A::
imposed.
'J~ liit~f7illJ.t,.A ~;J6:" ;JIL"I ~'1'Ca9i f1~n +, Iif7i ,.9". Federal Negarit Gazeta - No. 34 4111
July, 2002-Page 1899

hllD+&].
'I' i1l'tIl71:I.'"
..,-fiCh4.~'} 93. Exoneration of Taxpayer from Liability
~c'
f1(l1l7i1;rtDctlCD- hllDlIDcIID~ Ok-r ..,lIC h4.~ O&-fl- In the event that errors that led to incorrect deter-
"''1''1I'1-r tD1..,."".,. CD-"'~ ~tj 1tL '09" il.ll1D~
f..,lIC mination and execution of tax obligations are corrected
foYf."Tfto i1U","'"T'} 11.11D ~,}1.11''1: h"lllC ~tj htDl't1: independently before commencemC(nt of a tax ex-
Oi1.,.+C: OH.U 1tcp~ f"'lTJl'ttDo'} IID+&]. hllDtJLA amination, the taxpayer shall be released from liability,
'I'
~1.I.;J/A:: with the exception of paying the tax and interest.
tJC;:A"tn~
ftD'}l/A 1'4..,.1- SECTION IX
,,~ foYf.LOOD- tD'}ll't-1- i1l'toYf.lID~O-r F'1- Criminal Offences
1!!' O..,-fiC
94. Procedure in Tax Offence Cases
FC~-r
A tax offence is a violation of the criminal law of
O"'-fiC"~ foYf.L~OD-tD,}~h.1- ftD'}lh~ IID-1-&].:It?-'}
Ethiopia and shall be charged, prosecuted, and appealed
0 lID"''' l'tc;: foYf.LOOD- 0 lID11'), tJ fl- foYf.lIDIPl..,.tDo : in accordance with the Ethiopian criminal procedure
foYf.;rfCD-~tj ~"'l}~ foYf.+COtDoOtD'}ll't~ IID-1-&].:It"l
law.
F'1-FC~-r IIDIPI.-r ~l1'tjA II 95. TIN Violations
:I~' O..,lIC h4.~ IIDh,f ck1'C ,,~ i1l'toYf.L09" 1'4.-r If a person subject to tax is convicted of obtaining more
117,}~CD-9"..,lIC h4.~ h1t,}1: fOhtn f"lllC h4.~ IIDl't1 than one TIN, that person shall be liable to pay a fine of
ck1'C ~,. f"'11 ~ '}1.11''1 01"tDo 0~1'}.c;'}.&;. "'Q;1,117~ not less than 20,000 Birr and not more than 50,000 Birr
IIDl't1 ck1'C /AtJ hllC t;'n.1J ('/1 n.lIC) 01l71'}i1tj hllC and to imprisonment of five (5) years per additional TIN
:I n.U ('/9"'" n.U lIC) OIl7~OA1' f1,}"11 IID+&]. ~tj ohtained.
0~1'}.c;'}.&;. "'Q;},II7~ IIDl't1 ck1'C AtJ 01t9"i1-r ~IID-r 96. Tax Evasion
'hF &--r ~+ITJ/A II A taxpayer who evades the declaration or payment of
:11;, :It..,'} 01lD1TJi1 ..,-fiC i11\hllDtJLA tax commits an offense and, in addition to the penalty
117,}~CD-9""I-fiC h4.~ :It..,'} 01lD1TJi11(ltDo'}'''i1;rtD+ for the understatement of income referred to in Article
tD109'' foYf.Ll't"lO-r'} "I-fiC lAhLl't ~ '}1.11''1 tD'}lA 86, may be prosecuted and, on conviction, be subject to
~,}1.LOIID ~~tn&-A II i1l'tI1''19'' OILU 1tcp~ 1t'}+~ it1; imprisonment for a term of not less than five (5) years.
IIDIPI.-r 1(ltDo'} 1t"'}(t Oll7ll;J'tDck 9"tJ'}l-r hoYf.lTJ 97. Making False or Misleading Statements
/AO-r IID+&]. 0"'Q;},1I7~ 1'4.""~ IIDI1')' OC;:C1: o.-r 1) A tax payer who:
(t.t.;J11' h~ ~IID-r 01l71'}ll ~P'&--r ~+ITJA II (a) makes a statement, to an officer of the Tax
Authority, that is false or misleading in a
:11;' fVll-r tD~9" 1t""1- IIDI.~ llhll7-1-l.lI
material particular; or
6' I17tj~CD-9"..,-fiC h4.~ I- (b) omits from a statement made to an officer of
v) l't"lllC 1tll1(lCD- l}hP'AITJ'} IP&-"'~ 1t,}1:,} the Tax Authority any matter or thing without
'11'11 O"'lIDhh.,. fVl1-r tDf.9" 1t""1- IIDI.~ which the statement is misleading in a material
1+1.0 : tD~9" particular;
l't) l't"lllC 1tll1(lCD- l}hP'AITJ'} IP&-"'~ il.c#>ClI
commits an offence and is liable on conviction.
hoYf.1l} CD- lID "I l't &]. tDoll1' lID "I
l't &].tDo'} 1-
1t"" 2) Where the statement or omission is made without
il.l1.C"I OoYf.1-/A1tt,J.:\'} IIDt]""-r foYf.1l}TCD-'}
reasonable excuse,
'11'(11-1i1+1. ~,}1.11''1: (a) and if the inaccuracy of the statement undetec-
ftD'}1:/A tJi1 101ID1P1.-rO;t'AII
I, f thl1 -r lID'"l't&].CD- f .,.l1tn tDo tD~9" ted may result in the underpayment of tax by an
IIDt]"'-r
foYf.1l}CD-'11'-fi f"''''tDtDo ll'toct 9"tJ'}J" fl1''1 amount not exceeding 1,000 Birr, the tax payer
~ '}1.11''1: shall be liable to a fine of not less than 10,000
v) fllD"Il't&].CD- -rtJtJl't~ lhllDl1',} il.S;.llifl-r Birr and not more than 20,000 Birr, and
.fl'tllD:rfto il.hLA f""l.1C}tDo"IlIC hllC 6 n.u imprisonment for a term of not less than one (1)
OIl7~O/A1': 1t'}(t ~'}.lthLA foYf.f1.C"I hl1''1 year and not more than three (3) years, and
..,-fiC h4.~ h-fiC t;'n.u OIl7~OA1' f1,}"11 (b) if the underpayment of tax is in an amount
IID+&]. ~tj h1t,}1: ~OD-r 01l71'}ll ~tj hY'll-r exceeding Birr 1,000, he shall be liable to a
~IID-r OIl71oO/A1' ~P't.-r f.+ITJA II fine of not less than twenty thousand Birr and
l't) 1t'}(t ~'}.athLA foYf.1.1.1tDo"IlIC h-fiC 6n.U not more than 100,000 Birr and imprisonment
foYf.OA1' hl1''1 h-fiC t;'n.U 01l71'}l) ~tj h-fiC fn.U for a term of not less than three (3) years and
OIl7~O/A1' f1'}t11l IID+&]. ~tj hY'll-r ~IID-r 01l71'}ll not more than five (5) years.
~tj h1t9"i1-r ~IID-r OIl7~OA1' ~P'&--r ~+ITJAII 3) Where the statement or omission is made knowin-
C' f thl1-r IID"Il't&].f.,.lltntDo tD~9" ODt]"'-r foYf.1l}tDo Illv or recklessly, .
(a) and if the inaccuracy of the statement undetected
'11'-fi ~ '}.It """'-r l/A .,.1.1.1 tDo 11',} .,.1Il't- tD~9"
Ohl}.(- T/A"'~'1-r fl1''1 ~,}1.11''1: may result in an underpayment of tax by an
V) fllD"Il't&].CD- -rtJtJl't~ lhODI1',} il.1.1.i10-r amount not exceeding 1,000 Birr, to a fineo f
1l'tIlD:rfto il.hL/A foYf.1l}tDo"I-fiC hllC 6n.U not less than 50,000 Birr and not more than
OIl7~OA1' 1t'}(t ~'}.lthLA foYf.l1.C"I hl1''1 100,000 Birr, or imprisonment for a term of not
"I-fiC h4.~ hllC :I n.U 01l71'}ll ~tj h-fiC f n.U less than five (5) years and not more than ten
OIl71oO/A1' f1,}"-fi OD+&].~tj h1t9"1t-r ~IID-r (10) years; and
01l711i1 ~tj h1tFC ~IID-r OIl7~O/A1': ~P'&--r: (b) if the underpayment ot tax is in an amount
1\) 1t'}(t 'h'}.lthLA foYf.1.l.1CD- "I-fiC h-fiC 6 n.U exceeding Birr 1,000, to a fine of not less than
foYf.O/A1' h.,.'1 h-fiC (t(; n.U 01l71'}i1 ~tj h-fiC
75,000 Birr and not more than 200,000 Birr, or
Uitu OIl71oO/A1' f1,}"-fi OD+~ ~tj hI ~OD-r imprisonment for a term of not less than ten (10)
O"'711h ~tj hI(; ~IIDT OIl7~O/A1' ~F&--r
1o+ITJ/A1I
years and notmore than fifteen (15) years.
 ,~ lii(itf ~1.~l\ ";Jt-r ;JtJ.1IJ ~'I'C ~ ...~ Z'?; +1 Iitf1 <HU. Federal Negarit Gazeta - No. 34 4th July. 2oo2-Page 1900

1~' '..,11 C "it 1 o.1D-"}I) t\ I'" A 1lJ"}I'" t- it t\<ry()'i"hA 98. Obstruction of Tax Administration
li' <ry"}~ID-cr ()ID-I- 1) A person who,
V) (HI.U 00 IPt.:t- I'" t-.ID-") (}<ryh'i"OJ") l\f. (a) obstructs or attempts to obstruct an officer of
"'I'~
! t\"} '..,11 C "it? 0. I) t\I'" A 1lJ"} IP t-"'~ .,..., I) C
the Tax Authority in the performance of
!()'i"ht\ OJf.9" /\<ry{)'i"hA 'lJPht. : OJf.9" duties under this Proclamation, or
/\) , '1':( "} ,,~ .,09" (}<ry'i"
TID-9" t\.l\ i.\:\ ") (b) otherwise impedes or attempts to impede the
"
!{)'i"ht\ " :
OJf.9" t\<ry{)'i"hA 'lJPht. h"}J.'.If~
OJ"}~A oo~Ooo- .,.t.;J"'(n : fI.~t.~(}:t- h11C administration of the Proclamation,
.fi.u (}<ry!"}it h'i" h11C vfi.u (}<ryf.(}A'I' commits an offence and is liable on conviction to a
f1"}H11 oo<l>65J.h'i" (}o-/\.} qoo:t- hI'" to:t- fine of not less than 10,000 Birr and not more than
f,<I>IlJA :1 100,000 Birr, and imprisonment for a term of two
~. '''7.h.,.tr:t- h'i" h~H.U") foolt{)tr Ibf\o1' "''''I)C'1- (2) years.
'111 C "it? 0. OJ."} I)t\ I'" A 1lJ"} I'" to f<ry() 'i"hA 2) The following and similar other actions are con-
.,...,I)to:t- 1f~OJ. f.OJ()~tr;
sidered to constitute obstruction:
V) f..,11C h4-~"} 10. "it?i fl"'to h"}.pit:J>(I.9'1- (a) refusal to satisfy a request of the Tax
f"7.oot\hrf; 1P~"1'"}: ~rC.y.1'"} OJf.9" 1bt\1'
O'f'i"TOJ."}9" oot.Jr9'1- t\oooocooC f..,11C Authority for inspection of documents,
reports, or other information related to a
"it? o.1D- I)t\I'" A 1lJ"} fI.m f..p ~:f>J.'.~ If ':
!t\0011:t- : taxpayer's income-producing activities;
t\) f..,11C "it1o.OJ. 1)t\I"'AIlJ"} t\'I'!<I: h"}~<I>C11 (b) non-compliance with a Tax Authority request
fI.!lI UJ.'.~ If': !t\0011:t- : to report for an interview;
th) f.., -n C "it? 0. OJ. I) t\I'" A 1lJ"}IP to"'~ OJJ.'. ..,.(} C (c) interference with a tax officer's right to enter
h 4-~ f"}..,~ I'" t- {1;r t\ 00'" I):t- ! t\ OJ."} oo.(}:t- the taxpayer's business premises.
001J.'.11:1 99. Offences by Tax Authority Employee
:m. (}..,11C "it? ClOJ. I)t\ I'" A 1lJ"}
Any person employed for carrying out the provisions
'1Pt-..,.7f"1- '''7.~OOO- '1'4-.,.1- of this Proclamaton who:
fH.U"} "'I'~ ~"};J1.9'1- t\<ryit~R9" (}..,11C "it?o.OJ. (a) directly or indirectly, asks for or receives in
I) t\I'" A 1lJ"}f.,.<I>m t. <ry"}~ ID-9" () OJ. :-
V) l1ih.., 001Pt.:t- t\.!11OJ. h"7.11) hlf:! OJf.9" connection with any of the officer's duties, a
7iA<ry:t- ID-Q;1,h.,.<I>mt.(}:t- .,...,I)C ;JC (}.,.!!H payment or reward, whether pecuniary or
(}<I>'I';rOJf.9" <I>'I''''~ I)Arn 00"}1~ f1"}H11 OJf.9" otherwise, or promise or security for that
Ibl\ qf.H' hlf:! OJf.9" it(n;r h"}~J.'.t...,t\-r fmf<l> payment or reward, not being a payment or
OJf.9" f.,.<I>() t\ : t\ h If:! ID- OJf.9" t\ it (n;r OJ. .,. it 4- reward to ~ch the officer is lawfully entitled to
OJf.9" 00!'lf f m f <I>OJf.9" f.,.<I>()t\: OJf.9" receive, or
t\) h..,11C (}"7.11OJ. 10. l\f. <ry"J,b(}C(}COJf.9" hH.U (b) enters into or acquiesces in an agreement to do or
"'I'~ ~") ;J1.9'1- ;JC OJf.9" h"'()mID- ~l\&. ~:t- to abstain from doing permit, conceal, or con-
ooAi'J9" "~"89" ;JC f"7.:f>t."} .,...,I)C t\00~89" :
<ry~ t..., : "'10. nive at any act or thing whereby the tax revenue
f"7.11) OJ."} h<ry~ t..., t\ 00 ;r<l>11
!AIf~"} ~1C t\oolf:<I> ~ : (}..,11C l\f. f"7.~89"")
is or may be defrauded, or which is contrary to
f<ry"J.1' ()C ()C .,..., I)C t\ 00 J.'.().p OJf.9" () the provisions of this Proclamation or to the
9"I'" m. C
t\ 00"'''' (}C ID-A f11) OJf.9" (}"7.11)ID- <ry'i"TID-9" proper execution of the officer's duty;
OJ.A ID-it'l' ()H.U .,..., I)C 00"'1) ()~ "} f"7.! Itf. (c) exeeds the authority conferred upon the Tax
it9"cr~-r f{)m : OJf,cr Authority or misuses such authority;
th) ()11.U "'I' ~ t\ ..,11C "it? o.1D- I) t\I'" A 1lJ"}h.,.{) m OJ. commits an offence and is liable, on conviction, to a
().,. ()
I'" A 1lJ"} ()l\f. f IP t- OJf.9" mID-I'" A 1lJ"} fine of not more than 50,000 Birr and to imprisonment
!/\""'I)11 f"'m<l>oo: for a term of not less than ten (10) years and not more
'I'4-"'~ oolf~ (}If:C~ n.:t- fl.t.;J1'1' h11C ~fi.u (}<ryf. than twenty (20) years.
(}A'I' f1"}H11 oo<l>67iJ. h'i" hI qoo-r (}<ry!"}it h?;' qoo:t- 100. Unauthorized Tax Collection
(}O'ff.(}A'I' hl"'t--r f.<I>IlJA II
lit. 1tf,~<1>~ ..,11C itt\oo{)11{)11 Any person who is not authorized to collect tax under
this Proclamation collects or attempts to collect tax (or
0'f"}~ID-9" ()OJ. (}H.U "'I'~ 001Pt.:t- 1tf.~<I>~t\-r ..,11C
OJf,cr h"}f. ..,11C f"7.;rf. Ibl\ hlf:! f{)O{)(} OJf.9" an amount the person describes as tax) commits an
t\OO{)11{)11flJPht. OJ"}1:A f ~8O If': : 'I'4-"'~ oolf~ offence and is liable, on conviction, to a fine of not less
(}tt:C~ n.:t- fl.t.;J1'1' h11C ~fi.u il<ry!"}it f1"}H11 than 50,000 Birr and to imprisonment for a term of not
oo<l>6Iil,h'i" h~ qoo:t- (}<ry!"}it h. qoo:t- (}<ryf.(}A'I' less than five (5) years and not more than ten (10)
hI'" t--r f.<I>nJAII - years.
litt! . ooC~-r OJf.9" O'f(}t.;r;r-r 101. Aiding or Abetting
O'f"}~ID-cr ()OJ. fH.U A person who aids, abets, incites,or conspires with
"'I'~ ~"};J1.9''f h"}~IlJ{). ft.~i
J'(}t.;r;r' !~ltlt. OJf.9" (}9"t'lm.C f"'I)(}t. h"}J.'.If~ another personto commit a violation againstthis
h,,}J.'.'I'"}~ID- 'I'4-"'~ fH.U") Proclamation also commits an offence under this
"'I'~ ~"};J1.9'1- (}OOllJit
'I'4--r f,t.-6O'fA:1 hH.U (}l\f. f"'Ht.H~:t-") f~8O ()OJ.i proclamation and shall be subject to prosecution, and
'I'4-"'~ oolf~ (}If:C~ (}.-r fl.t.;J1'1' ~C~;rOJ.") OJf.9" shall on conviction be liable to a fme and imprisonment
-r-011~"} /\{)m(}:t- 'I'4--r h"'OJ()~OJ. f1"}U11 h'i not in excess of the amount of fme or period of
fhl"'t--r .plll-r I)A(}/\m (}1"}H11 h'i (}hl"'t-:t- imprisonment provided for the offence aided or a betted.
f,+IlJAII
102. Offences by Entities
lill' (},(-C~1- f"7.~09" -r4--r
1) Subject to the provisions of Sub-Article (3) of this
li' O"}lJ-it ""}<I>R"(r)f"'J.'.~11OJ. h"}J.'."'m(}<I>If': :
Article, where an entity commits an offence, the
"")~ '(-C~-r f,U")"} "'I'~ (}00"'l\t\1f: -r4-:t-
manager of that entity at the time of the Commission of
't.-BOO h"}J.'.If~ -r4-of: (}"'~BOO 'l.Jf. f~C~1: I"'to
the offence is treated as havingcommitted the same
"ithJJ: 'If~ 0'f"}~lD-9" ()ID- (}~C~1: ''''~8
ODID-") -r4--r h"}f.~OO "'~-rC' I (}H.U "'I'~ offence and is liable to a fme and imprisonment under
''''Ill /\ID-.p1lJ-r .,. t.-,"7. f.1f") (};r A :1 this Proclamation.
'10 liitiifli l.1.t,.A ~;Jt"" ;Jt11J) ~'J'C o!jg (\); 1!~ +'} liing cH". Federal Negarit Gazeta - No. 34 4thJuly, 2002-Page 1901
2) Subject to the provisions of Sub-Article (3) of this
011J.{, ~1"'K" (E) f.,.1.'1.,.,ID- h11."'mO.,. Iffj -: Article, where an entity commits an offence by
Ii"
"'ICj:flD-1jO ~C~:,. OH.U ~'P~ OOIPI.:" fl.h~A failing to pay an amount of tax, including an amount
fDt111lD-1 CDf.1jO~'P~ h11...,-oC fDt~1'1.ID-1 treated by this Proclamation as though it were tax,
"'ICjTlD-11jO t\.l\ tJ C;:! ., 0. It! 1.C.., f'" I. h 11.If '1 every person who is the manager of that entity at that
1'4--1: 0"'~8000:'- 'LH. CDf.1}"1'4--1: h"'~oooO:" time, or was a manager within six (6) months prior to
'L H.. Ml'" ~'l" 0'1 0 -t-:" itY: it 1:- CD~:,. ID-it l' the date of commission shall jointly and severally, be
fY:C~-I: P'lr ~ith.!~ f'10-t- 1'19'"f hY:C~-I: hCj liable with that entity and that other person to the Tax
h/\.l\lD- 1'1lD- ;1C 0~1Y:'1:"Cj (H-CjmA f..,-oC . Authority for the amount.
~il10.ID- 11f\P'Ail}1 f\Dt~A"ID- ..,-OC hCj /\.f\":j- 3) Sub-Articles (1) and (2) do not apply where:
tJC;:!9'"f "'m!et f.lfCj ft-:: (a) the offence is committed without such per-
E" 01o-it ~1"'K" (Ii) hCj..,(ID f"'1.'111-1:-;- son's knowledge or consent; and
u) 1'4- -I: f.,. ~8 00 lD- f\ 1'1OwIt! ID-.p CDf.1jO It f. itDfl
(b) such person has exercised the degree of care,
"'lOT hlf'1 -:
f\) ~1Y: '1.,c:":j-1 01'1.4'<1: fDt.ff.l'1ID- O.,.ooltltf. diligence and skill that a reasonably prudent
v-).;r lD-it1' f1'4--I:1 oo~OIjO f\oohl\hA f.CDit~ person would have exercised in comparable
Tif' A .,.11ft- fDt., 00-1: 1'1.4'<1:9'"f1 -:.,.., 0.ID-1 circumstances to prevent the commission of
T;1:" hCj f~lPlrC 1'011 f"''l''I\O:'' hCIjO~ the offence.
..,f\l'1o- CDitf. f"'''l h11.1f'1 -: 4) Any person who refuses to supply goods or render
.,.~,Dt ~f.1f'1-0:"1jO:: services to a withholding agent, by reason of him
2" h.,.h4-f. 'Llt11l\f. ..,11C .,.,(\.,0. fDflY:I..., ;}l\k'1-1- withholding an amount of tax from the payment to
f\ "'1'1 m ID- 1'1lD- "l11 -t-1 .,., (\ ODflit.,. I. -I: IjOtJ 1 !:,. that person, shall personally be liable to a fine of not
IjO
iJ.4' f\ "'I:P 1.11 CDf.1jO ~., A"l ft- -1- t\ 00 it m -1- h 0. .,. less than Birr 5,000 and not exceeding Birr 10,000
~'1T !ltf DflCjTlD-1jO 1'1ID-h11C ~7f.u ODfl!1it 'hCj and to imprisonment for a term of not less than one
h11C Iitu O"'lf.OA1' f.,'H11 .pffJTCj h~1Y: year and not more than two years.
~OOT ODfl!1itCj hV-f\T ~oo:,. ODflf.OA1' 'hP'~:" 5) In Sub-Articles (1) and (2), "manager" means,
il)
f.'" A II (a) in the case of a partnership, a partner or
f\1o-it hCj (ID ~~'OIjO
" ~" ~1"'K" (Ii) "P'lr manager of the partnership or a person pur-
~it h.!~" Dflf\:"; porting to act in either of those capacities;
U) f"liCtJCj "'I10C1 ODtoot\h-1- f"liCtJCjID- (b) in the case of a body, a director, manager, or
"'I10C ~I1A CDf.1jOfDfl10-t- P'~ ~ith.!~ officer of the company or a person purporting
CDf.1jOhv-t\-I: ;}l\k'1-t'-"f 0~1~ 'h11.DtIP~
Iffj fDt;rf. -: to act in any of those capacities; and
(c) in the case of an association of persons, a
f\) Y:C~T1 ODtOPf\h-1- fh-fl1!1D- f P' lr 00(, -:
manager or a person purporting to act in that
P'lr ~P'h.!~ CDW/" DflCjTID-IjO/\.1\ n:1jO
CDf.1jOhh'1H.U ;}l\k'1.y."f 0~1~ h11.DtIP~ capacity.
I1'fj fDt;r f. -: 103. Publication ofNames
th) fl'19'"f1 111I.T ODl/.oof\h-1- f1111.-I: P' ~ 1) The Authority shall from time to time publish by
~P'h.!~ CDf.1jO 0H.v- ;}l\k'1-1- 'h11.DtIP~ notice in daily Gazettes a list of persons who have
fj
If fDt;r f. -: 'lID- II been convicted of offences under Articles 93 to
DfI
itljO O;J H.ffJ ~:,.qu itt\ ID-il}:" 101.
Iif E" f'f'4-.,.~"f1
Ii" f"l11C ~it.,o.lD- 11f\P'AffJ1 OH.U ~'P~ h~1"'K" 2) Every list published in terms of Sub-Article (1)
1E - fli f.,.1.'1n'T1 fCD1~A 1'4-.y."f 000~81jO shall specify:
f"'~I.1.I1TlD- 1'19'"f itljO1fC1fC Of'LH.lD- OiJf\;r4f (a) the name and address, of the enterprise or of
;1H.tn"f ;rT'l" h1-\CDffJ !1.C;JA II the person;
I" OH.U ~1"'K" 1o-it ~1"'K" (Ii) OOIPI.:" ;rT'l" (b) such particulars of the offence as the
fDtCDffJlD- 1fC1IC -: Authority may think fit:
u) f~C~-I:1 CDf.1jOf"lt\l'1o-1 itljO'hCj ~Y:lr"li-: (c) the tax period or tax periods in which the
f\) 11f\P' A il}'1- .,.., 0. 'lID- -Oft- fDtflj01 0-1-1 offence occurred;
fCD1~ft-1 ~~'OIjO 1fC1fC -: (d) the amount or estimated amount of the tax
th) 1'4--1: f",~~000-1-1 f"l11C H001 CDf.1jO evaded;and
Hoofj"f-:
(e) the amount, if any, of the additional tax
00) ltf.h~A f"'I.ID-1 ..,11C oom1 -:
imposed.
IP) 0.,.Q;1."'I (, h 1-\ h~A f.,.CD1'1'10-1- "l11C 11t\
SECTION X
f.U1'1-::
tJC;:A ~P'C Appeal Procedure
f.f."'I1~ ~"'lrl.11 p'c~-1- 104. Review Committee
(, \1"7.-1: Members of the Review Committee shall be appointed
U!! " f M1.of:;t" "111 by the Minister of Revenue or the competent authority
fhC1.-I:;r ~il)(, \1Dt-f: ~111\:" O"l-oC flf\P'AffJ'1- ;}I\k
of the regional government, as appropriate, upon the
~:Plro.'1T h11.~"lI111'1-1: 0"0.9'1- DI/.~it:"C CDf.1jO
~"'fI-oI1f\lD- ftJAA 11f\P'AffJ1 f.l'1fDflft- II
recommendation of the head of the Tax Authority.
fj
P' AffJ1Cj "'''lflC
105. Powers And Duties ofReview Committee
lif~" \1"'1.. -f:lD- itf\"'I...,. 1.lD- 1) The Review Committee shall be accountable to the
Ii"
\1Dt i;lD- m (, '1-1: f\..,-o C ~ il1 0.ID- 11f\P' A ffJ1
Iffjf head of the Tax Authority and shall have the
U) O..,-oC h4-r-"f oo.,.~ h 1-\ 'lit f CDf\Y: .,.(, following duties:
h1-\1.I..., CDf.1jOf"l-oC "l~;r h1-\"li"liA (a) to examine and decide on all applications
fDt.,.Co- "'IooAh;J=9'"f1 f\oooocoocCj submitted by tax payers for compromise of
lD-"'t). f\ ooltm T f penalty, interest, and waiver of tax liability;
f\) h"'l.o-T ~o.-f:;r9'"f ;1C ..,,1-'1:" !I\TID-1 (b) to gather any written evidence or information
"'ICj:flD-1jO f K",h.C;: DfIltl.~9'"f CDf.1jO relevant to the matter submitted;
ool.)f,,"f 00 0 0 a:
- 1'~-1iW:~fC i:i:i;;;-;;32:F;JILflJ' 'h'T'C c!i!1 M. ~% .,..} Iiltl!! 'H'''. FederaJ Negarit Gazeta - No. 34 4tl' July, 2002-Page 1902

dt) (}9"cout- ~f.. f0lf.17'ro-'} 1-P,f.. (}OIf.out\h,} (c) to summon any person, who directly or
t.1 y.: <I'C (1 fOlf.m f <f> roo'}
'I' J' <I: h '}Jt ou A ft indirectly has dealt with the assessment, to
h"1'O~ hWI')(t'} ,'JC (}<I''I':J' wf..9D <1"1':)- appear before it for questioning him about the
f)AIf~ ou'}1J,': "1'}].~.} .rt\m.'} n~:ro''}9
case under its investigation; and
oro- fou'I'/,."" :
ou) (d) to review determination made by the Tax
f"1'OC hft1QW' t1t\F'Afl)'} fomro. f"1'OC
rooOf). .). tI tI t\~: : f -t. ~ h lJ f..u'n Authority for accuracy, completeness, and
"- ~\P~~
m'O~ f.,. Om oulf'1-,} fe11Jt.,'J1'I' F'Afl)'}
compliance with this Proclamation.
f..Cjt.PA :: 2) The !=ommittee shall only review applications
~. fh(}.1::t' hfl)6ro- h"1'OC h \,.:f. fUIJA'cn(D''} submitted to it within 10 days of receipt of tax
hO,.f:;1' t\.!f.. f0lf.1.t\CD- "1.nc h4,(-'. f"HIC ro."/>, assessment notification.
e11Jft:rmcf.r (}f.t.Oro- Or <I'lJ.). (D'ft'I' ~\o.'I::J'w,'} 3) The Head of the Tax Authority may approve the
t"t<l't.(} ~ro- :: recommendations or remand the case, with his
C. f"1'OC hft1Qro- t1t\P"'Afl)'} ;}t\6. ft'JOIf..f,'(D.'} observations, to the committee for further review,
fro-Of). UI').O t\.!O.f::r w.e9" n(D'Of>'Ul')n. 106. Waiver of Penalty
tlA'"
ftUIJUIJ9"tl1!-t:,} (}ou"1t\~ 1-P,f.. h,}f.'llJ h'}Jt:rf.. The Review Committee may waive administrati\'e
t\t'JOIf.-f;ro-t\.ouA{t;.ro. f..1.t\A :: penalties in accordance with the directives issued by
",/')1,..,.
!ir.1;. au <1>65].1 flit the Minister of Revenue.
f~(1.f:~ "flit \1O'J.
of:f1o.9'r O'J.~fl""C(1O'J.!lDflIlD-auautf 107. Right of Appeal against Assessment of Income
OULPt.:r (}"1-oe h f.. "If.. f1'fl) 1\ro. hft"'P'f.t.ce 1) Any taxpayer who objects to an assessement may
ou <I>6l;J. () 00-1\- W f.. 9" () h &. A h '} Jt ~ I') e11JYo:t. f..:r, "I A ::
"1 appeal to the Tax Appeal Commission (hereinafter
iif~' f"1.nC ro-Of~'} (}ou:J>m9D f.."1{I~ ftt\e11J:rt..O ou.n"', referred to as the "Appeal Commission") upon the
ii . () e11J'} ~ ro- 9" "1-0 C h m I') (} '} :r C f'r
(}'f e11J'} ~ roo
9" fulfillment of the requirements hereunder.
"1-oC h4.f..: hlLUh:t':r, t1l\ro- '}O'ft h'}<1'7\ P"'C 2) No appeal shall be accepted by the Appeal
f
T" t. II .;...,. '} "1 ~:t' ?J 1- t"t "I t\ "1.n C f.. "1 t1 ~ -r t1 q,
"- Commission, unless:
(hILU O~t\ "ff.."1t1~ -rt1q," T.nl\o t\OIf.m<l'(}ro-)
(a) a deposit of th~y-five percent (50%) of the
f.."1t1~ e11J:rt.-of..:r-t\A::
~. hlLU 0:t'1- fTllt.H~""'} !t\"-t\ f.."1t1~: (}f.."1t1~ desputed amount is made t6 the Tax
-r t1 q, .,. <I>t1f.. ~..,. h f.. Cj t. ro- 9": Authority; and
U) "1-oe h4.f.. hht-t"t6 flf~ro-'} f"1.nc oum'} (b) the appeal is lodged with the Appeal Com-
h9"1') (}ou.y. (j TCO'}"") 1\"1-oC hft1Qro- mission within thirty (30) days following the
t1t\F'Afl)'} t"t~il.ru: day of receipt of the Assessment Notice or
1\) f"1-oe CD-""~ U1Jft;rrot.r 1\"1.nc h4.f.. from the date of decision of the Review
() f. t. (} ro- m f.. 9" () Committee.
h 0, rf:;r t'J0If. -t: ro-Of ~ () -t. 0 m
(}0 4',} ro-ft'I' f.."1t1~ t"tA<I>t.n:: 108. Date of Lodging Appeal
. f.. "1 t1 ~ f <I>t. 0 () ..,. '} <I>'} The date on which an appeal is submitted shall be the
ii f :E
f.. "1 t1]. f <I>t. () (}..,. <I>
'} ~ro- f 0If.f) t\ ro-:- date of:
V) 0 <I>'I' ;r t\ f.. "1t1~ 1- f) q,ro- f <I>t. () o.lf'} f.. "1 t1]. (a) its registration by the archives of the Appeal
0 ou111-o 0."" f TOU fl1 0 (}'r <I>'}f..1f lJA: m f..9" Commission if it is delivered other than by
t\) (}6t'Je11J'}~fTt\h o.lf,}: OTil;r 0."" fTOUIl10n..,. registered mail; or
<I>'} f..lflJ 1M (b) registration by the post office if sent by regis-
iif i! . f f.. "1 t1~ e11Jou
A h:F f.. fl"" tered mail.
f f.."1t1'f. e11J ou A h:F () u-I\ ..,. :ri{ T 1I,'J~.y. fOlf.h.,. 109. Contents of Memorandum of Appeal
t\-"" '} f! fl f..1f lJA:: 1) The memorandum of appeal shall be sumbitted in
v) "1A7\ (}If~ u-~;r ff.."1t1'f.,} ~&. ~1C: ff.."1t1'f.,}
diplicate and shall include:
9" tI '} J''''' 1-: (a) a statement of the specific subject matter of
1\) f,?>(}C h4.f..,} ft9": h~t-if: f"1-oc h4.f.. out\!
the appeal and the reason for the appeal:
ck'I'C:
(b) the taxpayer's name, address, and TIN,
dt) hf.."1t1~ e11JOD Ah:FCD- ,'J C (}h f)6 ~..,. t\. <I>C ()-
fD?,1t1:fro-'} h'?t1-o !"I:fro- f.;Jk O~f.1-: and
h'}.ltu-9" t\"1-oC hft1Qro- f)t\F'Afl)'} OU!"r
(c) as attachements, any relevant supporting
fThJ.t\(}"" f.t.O~ G:.y.t'J1::: documents and a photocopy of the receipt for
~. hlLU (}t\f.. (}'}D-ft h,}<1>'" (ii) ro-ft'I' hV-dt hT"t. the appeal deposit.
,,~..,. oP'fJA h'}~ Q ""~A ff.."1t1~ -rf)1t.ro- 2) Where anyone of the first three conditions under
f)
f..'? ~ f)f..: f T t1t\ ro-'} -r 1: t\"" h '}JtI "J.."I f..m f.. Sub-Article (1) is missing, the Appeal Committee
<f>PA:: .e"1f)~ t1f..: nh9"il"" ",c;:r, ro-il'I' f+t1 shall require the aDDellant to correct the de-
t\m-'} -r.f;I\"" .ft\il+i1ht\ h '}folf~: f<I't. Om' ficiency within five (5) days, failing of:
ff.."1t1~ U1JoPAh:F mJtlro-'1- ro-y::r f..lflJA:: w~ich the appeal shall be rejected.
HI' ff..,?f)~ O'1P,"f'} ill\oPilm"" 110. Service of Documents
ii' f.."1f)'f. l\oP1..oP6! 1.tl. hoPOe11Jrf:hil<l>~I(P: 1) Prior to the first hearing of any appeal:
v) ff..,?f)'f. U1JoPAh:F "1Af)~ (}f.."1f)~ -rf)q,ro- (a) a copy of the memorandum of appeal shall be
he11Jitf..'1""I\'?-oc hft1Qro- t111F'Afl)'} h '}Jt served on the Tax Authority by the Appeal
foe 0 ro- f..f.t.,;J.A: Commission; and
t\) f'?-oc hil1Qro- f)t\F'Afl)'} ouA '} 11f.."1f)~ (b) the Tax Authority shall submit its reply to the
1-f)q,ro- o.!<I>C-o '?At1~'} 11f.."1t1~ t1f..
Appeal COmmission while at the same time
f..(} fl) A::
giving a copy thereof to the appeallant.
I. he},-t:;r ro- .,..,. f)f.. '1"" h '}.It c; t. ro- t\ e11J
Y:t. '? fe11Jil
t..c;..,. ~~k""" f f..,?f)~ f)f.. f..IfCj A::
2) The appellant shall have the burden of proof with
a view of establishing his or its claim.
'lJr 1i1tllfrIJ.t-A ~:J~:r-:JtLlII."C 9)1 (a~n +, !iifU ,.9". Federal Negarit Gazeta - No. 34 4111
July, 2002-Page 1903

,,e..,q~ .,.q", ID-"'~ 111. Decision of Appeal Commission

li~!li'
1) After reviewing the case, the Ap~al Commission
Ii' ,,e..,q~ .,.q~ ''''lOID-").,..,q~ hOlllOlll shall issue a written decision setting out the TIN of
O~" ,,e..,q~, q,") ,.,l1C h4.,e. 0111\1 -Il'l'C:
1J)oU;,~fDo f.,.f\mO,f") +"): O.,.t}'\.fDoill1ltt}
''''1
the appellant and the date of decision, the names
~:,.") MI1\:" lIClIC 't\.+OII")Q~") il9" : ".,t}.0 of the panel members and the panel's chair
'rZ::ffDo f"'dJf\~:" "")+~"f 'D7.,1"f.0:""} th., person, and a statement of the decision.
fO'L"'I~~ fDo"'~ O~m.t;: OIIilm:" "1\0'''':: 2) The statement of the Commissions decision shall
, ,e.., it~ It''7. .,.t}'\.fDo")fDo..,~ fDo011.,1\65J.
I' "H include:
,D7.,h.,.I\-:"") ",11.,.:" ,e.'rCO;hM (a) the holding (whether the appellant's claim is
V) ''''~lltO:''"} ~9".';"'L (,,e..,t)~ q, M1.of::r
~ ~t;: Il\fDo 01111'") 11\01111''1-") : .,..,.q,e.H'
justified and accepted partly or wholly,
.f1;fDo Oou-I\- tD,e.r Oh".A OII(I''I-"}: whether the claim is remanded with instruc-
.,,+q,.~..,. .,e..,q"f. hOllOlltl .?C tD1. tions to the Tax Authority; and the amount the
. "'OC
"~(1.1& ql\P'A"I") f.fOlll\lt OII(I''I-"} : appellant is required to pay, if any, and other
(- ,e..,q~ q, t\.b~A fOJ.1t}m-"),.,-OC OIIm')
necessary detailes of appeallant's liabilities);
(tal\) "C; ,e..,q~ t}f. fOJ.mf:"q~:tD-') lblt--:;' (b) the factual findings, citation to the aplicable
1-JIf'"f 1fCnc): law, legal interpretation, a conclusion on each
l\) f"'l~1m-:"") t;:&.~1C'"fC; O,..,q"f. fDoil'l' relevant issue presented; and any dissenting
.

''''m+f\o:''') tho)"f :"C"9": ,..,q"f. O.,.lt opInion.

"70:" dJ:":" OOU-I\- O.,.~ ,. ".,ql1 ql\:ffDo (c) a summary ofthe appellant's appeal rights.
O".nJl"}~ 1;"-n'l'I\,e. f.,.ltmtD-")"Aq..,.:
fDo"'~fDo") OD7.,OIIlth..,.l1~ ,.,.ltm fYltl1 3) The decision shall be signed by the panel mem-
A'~:" 11M bers present, and the Seal of the Appeal Commis-
th) f,e..,q~q,,") ,e..,t}~ fOl/:"ll1 0II11.,."f:: sion shall be affixed thereon.
[. fDo"'~fDo''''1"f.:'' f,.q'\.m- "ql\:" LCOI/C; 4) The Appeal Commission(;may decide ,ex-parte
f~q''\.fDo "71.,.". lCt;:O;rA:: where:
0' ,,e..,q~ .,.q'\.I (a) any appellant fails to give counter reply when
-V) ,..,q~ q.r, 00-1\"" f+mC' 1.tf.9'"f It,e.1~
neccssary, or to appear before it on two
'+l ,,") 1.(I'~ dJ,e.9" ,e..,t}"f.') ta+lO 0:\1\ occasions, after lodging appeal;or
'OIIAil -Ala It'+Cl1 fL+CI
'1\) ,.,l1C hil1{1.m- q I\P' A"I') ,,e..,t}"f.
(b) the Tax Authority, after receiving the
tI7011A h:J= h1.lltfDo 0:\1\ '00-1\..,. ,+ m CO memorandum of appeal, fails to give reply or
1. tf.sP"f It,e..,~ '+l ') 1.11'~ tD,e.9" 1\",., t}"f. to appear before it on two occasions.
" 112. Appeal from Decision of Appeal Commission
OIIAil"",lt1' fL+Cl
,.
"'h~l1&fDo dJ.,') OlbI\O"" fDo"'~ ",ltIJ)A:: 1) Any party dissatisfied with the decision of the
lilIl' ,,,,.,q~ ,.q'\."} fDo"'~OOll:J'tD9"illtD7.,+Cl1,e..,q~; Appeal Commission may appeal to the competent
li.f"'''~~ ~q'\. fltmfDo fDo"'~Oth., l1~ iltJ.,.:"
court of appeal on the ground that it is erroneous
~fDo 001/1\:" fA.,.ilOl/OI/ OI/")~fDo9""'h~ta& on any matter of law within 30 days from the date
dJ.,") ,,,,..,q~ .,.qJ1,fDofDo"'~ O.,.ltm Oc!)+") of receipt of the written decision of the Appeal
;
dJ'Iil1'1-JI'") P'A"I,) I\ltm- t;: "'.:,. ,,:"C(I Commission.
lal\th~ iltJ"':" t;:C~ t\.m,e.:" ,e."f/ 2) The court of appeal shall hear and determine any
I' P'AIJ)') '.,.ltmfDo t;:C~ 0.-1- Oth"'. 1.'11: f"'~ question of lawarising.on appeal and shall, after
Itm-") bCbCl1:J= "'OIIAb.,. m-"'~ hltm 0:\1\
reaching its decision tlrereon,return the case to the
1-JI'")dJ~ .,.q'\.lD- f.,oPAltA::
[. P'An;") O.,.ltmfDo t;:/n.-1- Oth., '1'14: I\,e. Commission.
O.,.ltmfDo~..,~ :"c ,.,.It; "'h~l1& tD1') J) An appeal to the next court of appeal from the
fDo"'~fDoO"'iam Oc!)+') lD-il'l' I\",.,q~ ltD7.,fDo decision of the lower court of appeal may be made
t;:C~ 0.:" ,e...,q~ 1\01/1\-1- ,."fl\A:: ",.,q~ ltD7.,lD- by either party, within thirty (30) days of the
t;:c~ 0.:"9" 1V,e. f"t"fhlD- 'OII"f.OII&lfDo decision of the lower court of appeal.
t;:c~ 0.:" O,e...,q~ fOJ.ffm-") f th" 1-JI", -n:J= 4) A taxpayer's appeal shall not be accepted by the
~lD-1I '
court unless at the time the appeal is lodged, the
f!' , ..,l1C h.s." o..,-nc ,e..,t}~ ,.t}'\. f"'dJlt~O-1-") taxpayer has paid the tax liability determined by
60-1\- .,l1C I1Ah~1\ Oil.,.+C f,..,q~ ltD7.,fDo
t;:C~ 0.:" ",..,q~") OII+OA fItO-1-9"::
the Appeal Commission.
113. Bstablishement of Appeal Commission
if!;:' ,,e...,q~ .,.q~ 011**9"
1) The following Tax Appeal Commissions shall be
i' fD7.,h.,.l\-:" ,..,-OC ,e..,q~ ,.t}'\.9'-:;' ",)Jlil~I\1. established:
.,;r:f1D-
~*'" l\- (a) Federal Appeal Commission, at the Federal
v) nd.1.~A I.l){ f L1.~A ,.,l1C ,e..,q~.
.,.q '\.1 level;
1\) ~JI")~ 'bAA 'PC; h-f-Ol/: 'bAA (b) Regional Appeal Commission, in each
f..,-oC ",..,q~ .,.q'\.: Regional Government town;
th) O""JI")~ 'fI,) 'PC; h1-Ol/: 'fI") '..,l1C (c) Zonal Appeal Commission, in each Zonal
",..,q~ .,.q~'i: town; and ,
011) O""JI")~ ftDl.'; ,,It.,..';1.C h-f-Ol/:'tDl.'; (d) Woreda Appeal Commission, in each
,..,-nC ,e...,q~ ,.q'\.:: Woreda Administrative town.
 ,~ ii(,ifi U-t.A. ~;M+ .?1111J.1'C 0i c'1"~i .,., Iif7i ,.,.. Federal Negarit Gazeta - No. 34 4110
July, 2002-Page 1904

I' 111lHt h1.,.", (Ii) f"'1.~111D- {t'iC9"'f fh~ft- 2) Notwithstanding the provisions of Sub-Article
0II1'1P'T hl\,e. l1"'m"'{}.T tlfJ1~1D-9'"I.l)f I\,e. (1), if the Regional Government finds it unneces-
ftOt11-t ht)q{t9T f.,.ftf f,e.'1q~ .,.q~ tIfJ**9'" sry to have a separate Appeal Commission at any
hit4C.I\1.hftOllI1'~1 fl.l~ "~H.tJ f1:J-9T I1hc}>&- of the above mentioned levels, it shall make an
{tflD- 11"'**011f'1-nC ,e.'1q~ .,.q~ P' &-T(l)o1 arrangement in such a way that such areas may be
"'Uh'i"lD-~ f1.C;J~1I covered by the Appeal Commission established in
f. f~1w&-~ f'1-nC ,e.'1q~ .,.q~ "'m~~1: t\tt:Tih the neighboring locality.
-
OttitTCf fhi-tIfJ OIIit"'~~C'T ,e.'1q~ .,.q~91- 3) The Federal Appeal Commission shall be account-
"'m~~T t\fOllit.,.~~~ P'&- hit4C.KOtffh~Af able to the Minister of Justice; City administration,
}-
,
fll1 "'I fWl~ f'1-nC ,e.'1q~ .,.qh.$P1- "'m~~T appeal commissions to the executive organs of city
I1f1.l)f(l)o I\ft- P'&- hit4C.KOt ht}I\:'- ,e.,,'i"~::
administration, region, zone, woreda, as the case
ifI'~ f,r.'1q~ 1-q~ hqh-1-1 itt\OII{tf9'" may be.
i~ I1t1fJ'i"T(l)o9'"I.l)f fOt1~ f,e.'1q~ {tOt .,.q~
~ql\T l1ih1l-n ,n~ ql\TID- :J-'Pct~T'i" :J'07~~Tf 114. Appointment of Members
ql\Tm- mc}>I\I\"'I ~ ~ {)ID-"'T "'-\u-9'" h'1-nC 1) Members of Appeal Commission at every level
;JC 11"'1'i"T 'I'~T t}A4C.OtJDo {t91- OIIt}hA shall be appointed from among persons having
.
~' "'OOCm(l)o ,e.(tftIfJIr:: good reputation, acceptability, integrity, general
I- "'1. h'1q-n~1: ftt:Tih OttitTC W,e.9'" fhi-tIfJ and professional knowledge, and from among
'-it+~~C "'I fh~~ P'&- hit4C.KOt ht}I\T persons who have not committed any offense in
M-nC ,e...,q~ {tOt hql\T fOtOlllm-I1:'-1 OIIOIIH~ connection with tax and tax administration.
, , 2) The Minister of Justice or executive organs of city
',,"'I h-n'l'C f"twit1 OIIOII~f fWflIlr::
e.>
. 1.tJ11 OIIOO~f 11000h.,.A f..,-nC ,e.'1q~ .,.q~ administrations and regions, as the case may be,
hql\T fOtI1'~T "'1.h'1qiU1: I1tt:TihOttitT~ shall issue directives setting out the criteria to be
w,e.9'" h'1q-n qt\1D- fhi-tIfJ OIIit"'~~Cf fhAAf applied in the selection, appointment and com-
fll1 w,e.9'"fWl~ P'&- hit4C.KOtht}~ "'OIICm(l)o position of members of Appeal Commissions.
t '{ItIfJft-II 3) On the basis of said directive members of the
g. f,e.'1q~ (tOt .,.q~ 1~H.~1T hH.tJ 111\,e.I1h1"'2t appeal commissions and panels shall be selected
lilIE (E) h"'HlH~T OIIt}hA h..,q-n qt\1D- ht}A and appointed by the Minister of Justice or the
,e. '{I tIfJ A:: appropriate city administration, regional, zonal or
~. l1"f1~1~ f,e.'1q~ .,.q~ hh1~ fl1t\m-.,.q~91- woreda executive organ, as the case may be.
I\.'i~ ,e.1-I\ft- II I1lltJ ~,e.~1:9'" u-~:t" "f1~1~ 4) The Appeal Commission's President shall be
.,.q~ h9"'itT hql\T fOt'i~T fl.'" f&-{}.11\..,. appointed by appropriate entities listed under
0II1l1C hhqh-~ OIIt)hA ,e.OIICflI~11 Article 113(3)above.
I' ftIfJ1~1D-9'" f,e.'1q~ .,.q~ hq~ fh1~'1tt-T H0II1 5) Each Appeal Commission may have more than
t\U-t\T ~0II:t"+1.H. ,e."'i"~11 11,e.'1q~ .,.q~ w,e.9'" one (1) panel. In such cases each panel shall have
l1"f1~1~ .,.q~ 111\."'0II1I1C~+ h1-\f1t\..,A five (5) members and s~all elect one (1) members
f"'OIIlm {t(l)o fp'&- H0II1 U-ftT ~OIIT w,e.9'" to serve as Chair person.
I19"'Th~+ f"'OIIlm fl.'" f.,.t}1D- {t1D-f"'l(l)o 6) The person term of office of an Appeal Commis-
.
fp'&-1.lI. ,e.11''i''~11 sion member shaH be two (2) years. A member
~. f'1-nC ,e.'1q~ .,.q~ 1\."'0II111C "'I f"'~T9'" appointed to chair an Appeal Commission or a
A.tt-1- hqtt-1- "'1.h'1q-nH: OttitT~ w,e.9'" panel shall serve in that capacity for two (2) years
fh~ft- P'&- hit4C.KOtht}~ I1f1.lI.lD-I1Otwit~(l)o or the remaining period of Ithatother member's
OIItPlT l1.,.q~1D-I\,e."f"'11- t\1P~I1T 1.lI. hl1A term if he is a substtute.
. ,,e.h4C.I\T'P~I: 7) The Chairperson and other members of the
"I~' . f,e...,q~ .,.q~ "'I 1\."'0II111~itt\Ot'i&-TID-"''1qC'i'' Commission shall be entitled to receive such
P'~flI11 attendance fees for sitting on panels as shall be
"
lit f,e.'1q~ (tOt .,.q~: fixed from time to time by the Minister or the
v) I1t1fJitl)f f.,.l;J1m- (f:.'.. ~1C'1-1'i" ih.." Executive body of the Region, as appropriate.
OIIlPlT I1t1fJ~l'1 ,e.'1q~ f"'0IIIPl.,.I1T1 115. Powers and Duties of Appeal Commission and of its
f'1-nC ID-Uf~ ftIfJe)'i"Tf fOll.,.~it w,e.9'" Chairperson
fOlltPl1l P'AflI1'i" ft~~ fOll~l?f 1) The Appeal Commission shall have the authority:
ID-m.T t\tlfJit1TT +hh~'i" hit4C.I\1. OIIith- (a) to confirm, reduce, or annul any assessment
"'-.,
f:t"flD-1 "7'i"T(l)o19'" "'a,),tIfJ~ T{)tf1l appealed against on the basis of established
fOllitm+ P'~flI1 ,e.'il'P~11 factual grounds and the law, and make such
t\) f'1-nC hit1{t1D-1 qt\P'~flI1 w,e.9'" '1-nC further consequential order thereon as may
h~~1 "'1."1~ u-~:t" "'a,),tIfJ~ tt:~ ~1C'1- seem just and necessary for the final dis-
t}ft- "~H.tJ~ "'U"'C~ OIIOII~f ,e.{tfliAf position of the matter;
h 1-\U-9"'f (b) to instruct the Tax Authority or the taxpayer
th) "'1. u-~:t"1D- hit4C.I\1.~Tf '1-nC h~~19'" to submit new facts, if any; and
11'~ '1-nC hit1{t1D-1 qt\P'~flI1J w,e.9'" (c) to order the Tax Authority or the taxpayer or
tlfJ1~1D-19" A.I\ {tlD-f tlfJ1l1Cf 0II1'1P':t"f any other person or governmental department
0IIp'~' l1.T w,e.9" ~C~T ..,-nC h~~ or agency, as the case may be, to produce
I\"'ll1lD- hl1.-I::t" h'1q-n fl\T1D-1 1.;J~ supporting evidence relevant to the tax-
tlfJitl)f$PT ftf~d payer's allegation.
"'U"'C-n
 1,," li1tilf61J.t-1\ ~;M+ ;JtillJ rfr'l'C01 f\k 1M;+') xun ",... Federal Negarit Gazeta - No. 34 4th July. 2002-Page 1905

I' )J1JS,.IJ. f,f."'II)'Sfa."" ?-I)'\ ,,-+oo'OC: 2)

An Appeal Commission's Chairperson shall:
V) f,f."'II)~' tt:&. ~1C R'th-tt: foo1: (a) make preliminary examination of
fl""'"
00&1 ~l1f 9"Coot- I~C"'IA:1'I:\I memoranda of appeal;
A) f?-I)'\"'" "1:'JS '";J1f1:\1 (b) prepare the agenda for the panel;
th) f,f."'II)'S tJch~ O.""fa07OT lDoPT "-+00 (c) preside over and guide the proceedings;
'o~ ?-I)'\"" It,f. ,t.+001fJ1:\'"'''lV-9'' F~ (d) ensure that the arguments are properly recor-
FC,-t:, ,f.00&-1:\1
00) O:J>A?-I)'\ f1-1'" 1D,f.9"o",."'t~ ,,,.It''' ded in the minutes and that the decision
f1-00""o- f:J>1:\ 1D,f.9"ff),h.tt: tJctJC''f conforms to the prescribed form; and
V-Ir 0."" 1 I) 00 00111I):f",., 'I ih "'I (e) submit an annual report about the aCCOm-
O"tf"",. I.':C9" ',f.~T 00";J1::1':f",.' plishment (performance) of the commission
Il;J"'I1lJ 1:\I he presides over.
IP) 0"-+ oo'oc~+ f""'oo&-"" ?-I)'\ ltlth'i"lD 116. Burden of Proof
'i":f",. "''''I1)C'1' '00:1'' &:rCT "";J~'" The burden of proving that an assessment is excessive
I+CI)I:\:1 or that a decision of the Authority is wrong lies on the
liUI' f07l\lJST ~It.c.~T person objecting to the assessment or decision.
f 1-1Dfa~",. "'1-0C 01l:t 1:\ ID,f.9" f"'1{1C l\, 0."" 117. Power to Issue Regulations and Directives
'1AFAIfJ' ffaro"" ",."'t~ +tJhl:\ ",f.~ft9"" 0.",,1:\ 1) The Council of Ministers shall issue regulations
0""1.+C{I tJctJc f"7ltlJS:t?It.c. ~-I:f1-lDfI'I"'" "'I{lC for the proper implementation of this
1D"9" f'1ftFI:\IlJ~' ",."'t~ f.",,:J>moolD- fa",. Proclamation.
"If'i" 1:\11 2) The Minister of Finance and Economic DeveJop-
lifI1 ~'{I'i" 0000&1 f"'l""IlJ+ PI:\IlJ' ment shall issue directives for thecarrying out of
Ii' fDttlt+C'T rtJc 0.+ ftlf.U "".~ hL'O'- any power delegated to him under this
~'{I f07",."'+ FI:\IlJ' 1-fa"'''':1'I:\:: Proclamation.
I' f1'"{I'i" A.l'ttj."" 1:\"7+ .""tltT~ OH.U h"'~
f1-fam"'" FI:\IlJ' ft"7ltL09" ooootl "-lmllJ
,,'fltl\lI SECTION Xl
..
.. alProVISIons
htt:1:\hF &-h' 1: .I.ranSItJon
T

foo'{i;J1&11:,:n?,'f 118. TransitionalProvisions

. .
.IL j\H repealed ~a,,:s. ~ereunder, shall continue to
lifI~' foo'{i;J1&11:';J1. n . . .
,~t? all lIabilItIes ~at w:e already due an.d
Ii' "U hCP~ OPt-'It,f. O.""aij~tFf>i!T'i~l,~:if ..
Ift'1:f(J)o'j"OoohLI:\ It,f.~~'i~~.'\I'~t~.~ .~ .'~yabI9i ~pon the cormng. Into force ~f thls
m,f.9" h07e;:f",.9" ''''I1i~'i!J;f~..t.~l:~l'',}": .t~l..tlOn
"'~'~;:;::'-';;,;;;:; o~ are accrued.Inrespect.of Income
fi1h.1i, F &-e; h07'i":f",.9" Ibit=i- F &-?,'f 9'ririn
. .
fiCle, busIness,profession, vocatIonsor any
f1-,T' ,0. m,f.9"01rUT '1-00"'0' 0""'00 otheractivitytaxablethereunder.
Ah+ OH.UhCP~ f1-?\'~ ih1-'f v-Ir 1-L''''''~+ 2)
All existing Tax Appeal Commissions shall con-
hlt:f",.11 tinue to function until such time as new Tax
I' OIf.U hCP~ 1:';J1.?''f OOlPlT ',f."'I'1'S fa."" Appea)Commissionhas been established in accor-
?-'1,\jP'f "lth.",,*!tCJDo.('llt OhV-~ 1.", OF&- dance with the provisions of this Proclamation.
It" IlrT ',f."'I'1'S fa."" I't""'fl.f'tj'f rN\" 119. Repealed and Inapplicable Laws
F&-:f",., ""~.1-ftoo1."" 007t}~" ,f.+.,.ltlr" 1) The Income Tax Proclamation No. 173 of 1961
lifIu' '1-?\'~ "e; 1-L''''''~+ f07,f.tj &-:f"" ii":"1' and all amendments thereto are hereby repealed.
Ii' h07'i":f",.9'"'o. "'I1IC ltft07l\hLI:\ flDlfJ",. 2) Payment of Tax on Gains from Capital
h"'~ ~.,.C lifttr/Ijf2r h~07?\'?\'I?'=t:. Proclamation No. 108/1994 is hereby repealed.
I' ht}1::1'A CP;J61:1T .,.:,.9" It,. "'I{lC ft07l\hLI:\ 3) Federal Tax Appeal Tribunal Establishement
flDlfJ"" hCP~ ~.,.C n~/Iufn' Proclamation No. 23312001.
r' f~1.&-1:\ f"'111C,f."'It)'S fa."" "1-'1'\' ft07!t!t9" 4) All laws which are inconsistent with this
flDlfJ"" Ijf1r hCP~ ~.,.C fleDr Iiinr' Proclamation shall not apply on matters covered
OH.Uh"'~ 1-1ilCPI:\:: under this Proclamation.
!!. hH.u "".~ ;JC f~l~ 07'i":f",.9" A.h-'f .
ih1-'f OIf.UhCP~ ",.h.,. O+'{iL~ "JoJSf''fIt~ 120. Eff.ectJveDate.
.
This ProclamatIon shall come Into force as of the 4 th
1-L'."" ~T h~tj &-:f"",-::
r f .tr. ~. +, day of July 2002, and shall apply to all incom.e.,paid,
Jl anT ".0"," f ""''10-,-
received
. or earned from Hamle 1/1994E.C. onward.
f.U hCP~hfa~n +, IUn!! ,.9'" 1:9'"C'fO'i"000'''')
'h') f..h. :"f'k f "~lfJroC hm9'"A. Ii +, Iii f1!! ,.,- Done at Addis Ababa. this 4thday ofJuty, 2002.
1.,.t: n."" 1 'S 10. It,. 1-L ,."" ~T hft",.11
""ll\hO'1 ...~ n +, Ijn!! "9" GIRMA WOLDE GIORGIS
'1CO? 1D1:\1.1.f'c11i PRESIDENT OF THE FEDERAL
fh.Tf'kl ~1.&-It' "l'PtJ&-fI.1'&T{I,,-h DEMOCRATIC REPUBLIC OF ETIllOPIA
T&.IlJS'T