Instructions for Personal Income Tax Declaration (For Employee)

Instructions – Individuals completing the Personal Income Tax and the expense of transport to move from home to work place and
Declaration Form must be familiar with the Income Tax Proclama- from work place to home. The transportation allowance exempted
tion Number 286/2002 & Income Tax Regulation No. 78/2002. The from tax payable for employee is only up to ¼th (one forth) of the
instructions below will aid you in completing the form. Should total salary of the employee and in any circumstance the amount of
there be any discrepancy between these instructions and the Proc- transportation allowance exempted from tax must not be more than
lamation, the language of the Proclamation shall take precedence. birr 800/ eight hundred birr. Consult the Directive to determine if
any of the other provisions will affect your tax calculation. For tax-
Who Must File? - To determine if you are required to file this form, payer files their tax declaration in region & city administration, the
consult the Proclamation starting with Chapter 1, Article 1 para- amount of transportation allowance exempted from income tax is
graph 3 (Scope of Application) on page 1871. determined based on directive of each region & city administration
Tax Authority.
Also, review Article 65 (3) and (4) which state, “In the case of an g Overtime – Enter the total Over Time payment received during
employee whose taxable income for a tax year consists exclusively the filing period.
of Schedule “A” income, no declaration of income is required. h Other Taxable Benefits – Enter the value of additional benefits
Notwithstanding the preceding, an employee working for more you received from each of your employers which are taxable under
than one employer or an employee of international organization the Proclamation
having diplomatic immunity or working in embassies, missions and i Taxable Income - Add columns d, f, g and h and enter total in
other consular establishments of a foreign government shall him- this column.
self declare and pay taxes on his scheduled “A” income within the j. Tax Withheld – Enter the amount of tax, if any, that each of your
time prescribed under Article 51 (3).” employers has already withheld from you pay. If self-employed,
enter “0”.
Section 1 – Taxpayer Information Continuation Sheet – If you have more entries than will fit on this
1 Name – Enter the name of individual taxpayer including given form, use a blank sheet of paper, which includes all of the same
name, father’s name and grandfather’s name. columns. Place 4 entries on the face of the form and then use the 5
2 Address – Enter all information necessary to identify the location line to carry over the totals from the continuation page. Be sure to
of your residence. If your address has changed since your last include your full name, TIN and the tax period on the continuation
filing, contact your Registration Office immediately. Article 45 (1) page or pages.
of the Proclamation states, “Any taxpayer who makes a change of Section 3 – Calculation of Tax Due
address shall notify the Tax Authority of the change within thirty Carry the totals down from Section 2, including anything that might
(30) days.” be on a continuation page, to the appropriate line as stated on the
3 Taxpayer Identification Number (TIN) – Every individual is face of the form. Line 70 requires you to calculate the total tax
required to have a TIN and to enter it with each filing. See Articles due. The tax table is provided below for your use.
43, 44 and 90 of the proclamation. Tax Rates (Schedule A) - For taxpayers filing the Personal In-
4 Tax Account Number (TAN) – This number is provided by the come Tax Declaration. The table is based on monthly on Employ-
Federal Inland Revenue Authority (FIRA) and must be entered ment Income earned.
each time a Personal Income Tax Return is filed. If you have not Over Birr To Birr Tax Rate
been issued this number, contact your local central registration Exempted
office. 0 150
Threshold
5 Tax Period – This form is filed on a monthly based on a stan- 151 650 10 %
dard calendar month. If you use alternated dates for your tax pe-
651 1400 15 %
riod, see Article 64 of the Proclamation.
6 Tax Center – Enter name of Tax Center where your are regis- 1401 2350 20 %
tered.
7/8 Telephone and Fax Numbers – If more than one, enter con- 2351 3550 25 %
tact numbers for person authorized to sign this form. 3551 5000 30 %
Section 2 – Declaration Details
Over 5,000 35%
a Seq Num (Sequence Number) – Starting with “1” number each
entry. For longer entries, use 2 or more lines, with a line number
placed before each new entry. Calculation Table
b Employer Name – Enter the name of your Employer. If you are Over Birr To Birr Tax Rate Deduction
self-employed, write SELF. 0 150 Exempted threshold
c Employer TIN – Enter Employer’s TIN. If self-employed, leave 151 650 10 % 15
blank. 651 1400 15 % 47.50
d Basic Salary – Enter your total basic salary from each employer 1401 2350 20 % 117.50
for the period covered by this filing. You should receive from each 2351 3550 25 % 235
of your employers a tax-withholding certificate that will serve as 3551 5000 30 % 412.50
proof of the income you earned and the amount of tax withheld. Over 5,000 35% 622
See Article 65 of the Proclamation for more information. Example – Determine which range bracket your total taxable income
e Transportation Allowance – Enter the total amount of the on Line 60 falls within, multiply by the percentage shown in the Tax
Transport allowance you may claim. Rate column and then deduct the amount in the “Deduction” column.
For example, if your taxable Business Income on Line 60 for the month
f Taxable Transportation Allowance – Enter the portion of is 2,500 birr, you would go to the 5th row (2351-3550 birr) and multiply
any allowance you receive that exceeds the allowable amount your taxable income of 2,500 birr by the tax rate of 25% and then sub-
entered in column “e.” tract the 235 birr shown in the Deduction column. (2,500 birr x 25%
For taxpayers filing with the Federal Inland Revenue Authority, the minus 235 birr equals 390 birr).
regulations dealing with this allowance is the "Directive to Limit
Transportation Allowance Payable for Workers and Exempted from Section 4 – Taxpayer Certification
Income Tax." According to this Directive, the permitted transporta- The taxpayer must sign and date the form. The preparer, if other
tion allowance exempted from tax is only for the task which is car- than the taxpayer, must sign and print his name on the form. If
ried out by moving from place to place due to the nature of the payment is made in person, the cashier will record this information and
work and that is clearly stated in contractual agreement between the Ministry of Revenue will retain the original form. If you need a copy
the employer and employee. Transportation allowance exempted of the Declaration, you should make this before meeting with the cash-
from tax excludes those who use vehicles allotted by the employer ier.

Ministry of Revenue (as of 07/8/06) Instructions for FIRA Form 1101 (1/2006)