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8th Year No. 34 ADDIS ABABA-41h July. 2002

FEDERALNEGARIT GAZETA
OF THE FEDERAL DEMOCRATIC REPUBLIC OFETIDOPIA
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CONTENTS Proclamation' No. 286/2002 Income Tax Proclamation PRQCLAMATION NO. 286/2002 .' INCOME TAX PROCLAMATION . page 1867

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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;

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"OD'i' 0"'l1:1 ,'i f..,l1C ODU'I.i:1 WHEREAS,it is believedthatmodernizing the tax system 1\.')iL.h-rtlD")-r') "'I01.;t-;t--r LITf1 and broadening the tax base promotes economic growth by
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NOW, THEREFORE, in accordance with Article 55(1) and (11) of the Constitution, it is hereby proclaimed as follows:
CHAPTER I Substantive Provisions Section 1 General

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,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 -rC~"I Proclamation NO.286/2002" OIlU h"~ tD-h1" ('.,.Af -rC1-9'" O..,Ab tJA.,.l1ITfTlD. 2. Definitions In this Proclamation, the meanings of terms defined in Oh"''''Cf 0t\.A-'f fh.-rf'kf ;"1o'f -rC1-9'" f.,.l1ITfTlD. O.,..,.1.1000-0-r ;,..., f.,.l1ITfTlD.') -rC1-9'" ,e,,.1flr:: other laws of Ethiopia apply unless a different meaning is :J>":" expressly provided herein. For the purposes of this f\IlU h"~ hL'fl9'" fOlf.h.,.lr-r :J>"-r'i dl1.1o'f hH.U Proclamation the following terms shall have the O;t-'f f.,.l1ITfTlD.-rC~"l ,e,c;&-T'PIA; meanings given to them hereunder:
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l)"Person" shall mean any individual, body, or association of persons (including a business representative residing and doing businessin Ethiopiaon behalf of the principal). 2) "Body" shall mean any company, registered partnership, entity formed under foreign law resembling a company or registered partnership, or any public enterprise or public financial agency that cmies out business activities including body of persons cor,

porate or pnincorporated whetOeu'createQ.ar recognizedunder.,a 1~~,Jlf!?r~~~n Etbio~ja ~e1sewhere and any foreIgn b6dy~s" business agent doing business in Ethiopia C:)O ~~alfof th,~rinqipal.

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.3}. ' 'Association of persons''Shall mean~ as5ociation of individualsor,an 8S$.qciationhat includes one or t more members who are not individuals, but not including any association falling within the de~. finition of "body". ." 4) .."Related person" means: (i) a natural person and; (a) any relative of that nafurafperson';-'o'f (b) a trust in respect of which such relative is or may be a benefj9iary;or (ii) a trust and a person who is or may 1?ea beneficiary,inrespect of that trust;~r (iii) a partnership,joint venture,or unincorporated association,or body or private company; and (a) any"memberthereof; or (b) aoy otherperson wherethatperson and a
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ture, or unincorporated association ~r body, or private company as the case may he, are related persons in tenn~of 'thisdefinitiOn;or

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person;otherthan an incOrporated Cornpany, where that person or that person ~nd

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(i) the right to vote in the first mentioned company; or, . , (ii) the rights to distributions capital or proflts of the first-mcQtioned company. either directly or through ooe or more interposed companies, partnerships, or trusts; or (b) any other incorporated company in which the first mentioned person refelTed to in (a) or that person and a person related to that fU'Stmentioned person in tefms of this defmition controls 10 percent or more of: (i) the right to vote in the first .mentioned
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O., ;t- m,,'I" O,,"}.(" m,,'I" h",,}.(" 0"" Olf). '). \1-Q"}I9"f OIIt]h~ IIA "1li~ \1-11"}li f"lichli lli .,.9:'1" ""7t]~~+ I-r "7'"fOC m,,'I" IIA""t00ll.r-) hli hlt.1 0"" f IIf TC{t"}-r ("p'c L' O"lur"}oT 1.tt.1 n (c) any person where that person and the person referred tit) "7"}'1~'/" {t~. "U {t~ hli O"'t- L"~ (u) {t~ m,,'I" o"'t- L"IA (A) f"'OIIA to in (a) or the other incorporated company referred to f"'ooAh"'~ h"'~ Olh"'lf{t~~-r OIIflT f.,.{tmm.1:C~-r OflU in (b) are related persons in terms of this definition; or {t9"f If~~ -rC1-'I" OOIPl-r "'''}7-~-r f"T~ 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 {t~ ;JC "'''}7-~-r fAm. II'lf. terms of this definition; or (tit) h"'ooAh"'~ O"tlf,,} O-r 1.tt.i f"''''ml "Relative" in relation to a natural person; means: ~. "1.9-.("lj" "71\-r1 (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, .,..-r: h it-r: f h it:,- mf.9" m "} .("'/". h U-r! " " " uncle, aunt, nephew, niece, stepfather, stepf"'l-T lA~i fh"}1:t- "II-r: fh"}1:t- hli-r: mother, stepchild, or adopted child of that person fh"}1:t-IA~: mf.'I" f..,A{to- lDf.'I" f-rP.C ~"'1~ 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 "7"}'1~'I" {t~ (iii) 01o-it "''''W n f+ooAh"'~ (iii) the spouse of any person referred to in paragraph fTP.C ~"'1 hli Allt' -rC1-'I" "L'09" "71'1~9" (ii) and for the purposes of this defInition, any f1-JlL7 IA~ h?-Jl~ "ltP.1.~ ;JC fOll1:ootf h,,}P.A~f t,.JIO/..AII adopted child is treated as related to her adoptive "CA 1J9"'.("li 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 activity recognized as trade by the Commercial Code of OJf.'I" f'fIIA? 1-0 P't- h1~it?f\ lD"'I"f On.-rf"A-f 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 "..,flC hof."" "7A-r OflU "cp~ OIIIPl.-r ..,flC fOllhLIA l' ..,,.;t- IAO-r "71'1~'I" {t~ ~~I this Proclamation. :f.

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8) "Withholding Agent" shall mean any person with a tax collection obligation under this proclamation. 9) "Permanent Establishment" shall mean a fIxed place of business through which the business of a person is wholly or partly carried on. The following shall, in particular, be considered to be a permanent establishment: (a) an administrative, branch, factory, workshop, mine, quarry or any other place for the exploitation of natural resources, and a building site or place where construction and/or assembly works are carried out. (b) A person shall be considered not to have a permanent establishment if that person: (i) uses facilities solely for the purpose of storage or display of goods or merchandise belonging to that person; (ii) maintains a stock of goods or merchandise belonging to that person solely for the purpose of storage or display; (iii) maintains stock of goods or merchandise belonging to that person solely for the purpose of processing by another person; (iv) maintains a fIxed place of business solelly for the purpose of purchasing goods or merchandise or a collecting information for that penon's busiDesa;

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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 contracts in the name of that person and has, and habitually exercises, an authority to conclude contracts 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 OTIS controlled 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.

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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 contractor, engaged (whether on a penn anent or temporary 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.

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"Minister" shall mean the Minister of Finance and Economic Development and "Ministry" shall mean the Ministry of Finance and Economic Development. 15) "Fiscal Year" shall mean the budgetary year of the Ethiopian Government. 16) "Category A taxpayer", "Category B taxpayer", and "Category C taxpayer" shall have the respective meanings given to them in a regulation to be issued hereunder. ,3. . Scope of Application 1) This Proclamation shall apply to residents of Ethiopia with respect to their worldwide income. 2) The Proclamation shall apply to non-residents of Ethiopia with respect to their Ethiopian source Income. Obligation to pay Income Tax Every person having income as defmed herein shall pay income tax in accordance with this Proclamation Residence 1) An individual shall beresident in Ethiopia, if he: (a) has a domicile within Ethiopia; (b) has an habitual abode in Ethiopia; and/or (c) is a citizen 'of Ethiopia and a consular, diplomatic or similar official of Ethiopia posted abroad. 2) An individual, who stays in Ethiopia for more than 183 days in a period of twelve (12) calendar months, either continuously or intermittently, shall be resident for the entire tax period. 3) A body shall be resident in Ethiopia, if it: (a) has its principal office in Ethiopia; (b) has its place of effective mangement in Ethiopia; and/or (c) is registered in the trade register of the Ministry of Trade and Industry or Trade bureaux of the Regional Governments as appropriate. "Resident person" includes a permanent establishment of a non-resident person in Ethiopia.

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6. Source of Income Income taxable under this proclamation ahall include, but not limited to: (a) income from employment; (b) income from business activities; (c) income derived by an entertainer, musician, or sports person from his personal activities; (d) income from enterpreneurial activities carried on by a non-resident through a permanent establishment in Ethiopia; (e) income from movable property attributable to a permanent establishment in Ethiopia; (t) income from immovable property and appurtenances thereto, income from livestock and inventory in agriculture and forestrj, and income from usufruct and other rights deriving from immovable property is uch property is' situated in Ethiopia; (g) mcome from the alienation of property referred to in (e);

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Federal Negarit Gazeta

July, 2002-Page

1872

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~'P&H: Oh.-rr-kf fl1'~ h-ll'tf f"7.fh~lt:l\rofhhft.M X"cif. . ~'P&~-I: Oh.-rr-kf fl1'~ f"'ODH'lO f7ich'i" "710e f"7.!h~lt:l\ro- f-rClt: X"eif. 04 l'..t.A ~'i" OhAA OD'}"'lP':J'+ lD~r Oh1-"7 ODlI1'~Y:C:'f lD~cr Oh.-rr-A"f ~'P& fl1'~ (}rolD~cr Oh.-rr-kf ro-lI1' ~",& 11.e11',}9" h.-rr-kf O ro-lI1' I1l\ro- *"7. f'}"'lY: P't,. Y:el-:" f1'ht.1\ lDl\Y:' ft.lI 011'~ ~'le tt'" (}ro- ~'}-tm4>crO+ f"'(}m U Y: hlt:f (01\.11 OD1J+ ODm4>cr')Q;1,crc:) ~'i" 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.. 7.

(h) dividends distributed by a resident company; (i) profit shares paid by a resident registered partnership; (j) interest paid by the national, a regional or local Government or a resident of Ethiopia, or paid by a non-resident through a permanent establishment that he maintains in Ethiopia; (k) license fees (including lease payments, and royalties paid by a resident or paid by a nonresident through a permanent establishment that he maintains in Ethiopia.

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Oro-'T' h1e f+ht.I\'} "'l1JClll\"7l1l1l1 (;. Oh.-rr-kf ro-lI1' ~'P&fl1'~ (}ro-Oh'}Y:f"'l1JC Hoo') ro-ll1' cr'}t;Q: hh.-rr-kf ro-Q.). fl1'~ 1n. 111 ~,}f.l1'~' OILtJ 1n. I\.e Oro-~ h'lC ooht.A 0"7.111ro- "'l1Je oom'} ~'P&ro- Oh.+r-kl ro-ll1" ooht.A h"7. 1l1ro- "'l1Je I\.e .e4>~lll\:J'A:: Oro-~ h1C f+ht.l\ro- "'l1JC~,}f."'l1JC ro-Uft."7l1:J'tb-tI' h+h~.e '"1J "'l1JC +4>'i"7i00f.l..,.'} O"7.f l..7"'l1' fcrllhc lDl.4>-r lD.ecr O"'l1Je I1I\P'AIlJ)' H'}Y: ++I1~~-r I1l\ro-hol\+1n. "7l1l.~ ool..711' hI\O+:: I1'lfcr hILtJ Ol\.e O'}o-ll h,}4>'" (;)oolPl.+ I' ~(}ro- "'l1Je Oh.+r-kf ro-lI1' ooht.A I1I\O-r f"7.'" "'l1Je I\.OA1' h.e'fAcr:: OIP'}ml.Y "m" r' 1n. I\~ f"'l.ht.l\ro-') "'l1Je 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 "'l1JC' .etJ :"'i"7i 11.ec;e c;c: Oh.-rr-kl ro-ll1' I\.ht.A f"7. 111o- "'l1JC 00 m '} f"7.lD(} 11' IIt\.i: r '} C;. f"7.hlj"(D~ro- OILtJ h'Pl- h,}4>'" ~~ f+OOl\h+ro(11...,t. ') "7if.71c) h~I'}~,}'&;' h 1e f"'11ro-'} +e~ ~'i" h.Uf? O+'i"mA~,}f."'l.ool\h:" +f.C1- ~ro-:: 2' OH.tJ h'}+:t f+t.4>f.ro- ++'i"7j "'l1Je' 1n. lD.e9"
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Foreign Tax Credit 1) If during the tax period a resident derives foreign source income, the Income Tax payable by that resident in respect of that income shall be reduced by the amount of foreign tax payable on such income. The amount of foreign tax payable shall be substantiated by appropriate evidence such as a tax assessment, a withholding certificate or any other similar document accepted by the Tax Authority. 2) However, the reduction of the Income Tax provided by Sub-Article (1) shall not ex ceed the tax payable in Ethiopia that would otherwise be payable on the foreign source income. 3) In the case of a taxpayer subject to Income Tax on Schedule C income, any reduction of tax prescribed by Sub-Article (1) shall be limited to the tax that would otherwise be payable in Ethiopia computed as if Article 28 (loss carry forward) of this Proclamation applied separately to each foreign country in respect of profit and losses derived from sources therein. 4) The reduction of tax prescribed by this Article shall be calculated separately in respect of each foreign country from which income or profit is derived. Schedules ofIncome

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This Proclamation provides for the taxation of income in accordance with four schedules, as follows: 1) Schedule 'A,' income from employment; 2) Schedule 'B,' income from rental of buildings; 3) Schedule 'C,' income from business as defined in Article 2(6), but not including activities covered by the Rural Land Use Fee and Agricultural Activities Income Tax Proclamations issued by regional states; 4) Schedule 'D', other income including income from: (a) royalties; (b) income paid for services rendered outside of Ethiopia; (c) income from games of chance; (d) dividends; (e) income from casual rental of property; (f) interest income; (g) specified non-business capital gains. 9. Foreign Exchange Transactions All net gains and losses arising from any transactions in foreign exchanges shall be brought to account for tax purposes as additions to taxable income or deductible losses in the year in which they are realized.

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Federal Negarit Gazeta-

No. 344111uly, 2002-Page J

1873

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SECTION n Schedule' A' Income /Employment Income 10. Taxable Income 1) Every person deriving income from employment is
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liable to pay tax on that income at the rate specified in Schedule A, set out in Article 11. The first Birr 150 (one hundred fifty Birr) of employment income is excluded from taxable income. 2) Employers have an obligation to withold the tax from each payment to an employee, and to pay to the Tax Authority the amount withheld during each calendar month. In applying the preceding, income attributable to the months ofNehassie and Pagumen shall be aggregated and treated as the income of one month. 11. Tax Rate Schedule A

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(i) diplomatic and consular representatives, and (ii) other persons employed in any Embassy, Legation, Consulate or Mission of a foreign state performing state affairs, who are national of that state and bearers of diplomatic passports or who are in accordance with international usage or custom normally and usually exempted from the payment of income tax. income specifically exempted from income tax by: (i) any law in Ethiopia, unless specifically amended or deleted by this Proclamation; (ii) international treaty; or (iii) an agreement made or approved by the (e) Minister. the Council of Ministers may by regulations exempt any income recognized as such by this Proclamation for economic, administrative or social reasons. payments made to a person as compensation or a gratitude in relation to: (i) personal injuries suffered by that person; (ii) the death of another person. Section III Schedule 'B' IncomelIncome From Rental of Buildings 14. Taxable Income

(d)

IP)

t.)

1Df.9'" t\ttll+~1.C 9'"111.f-fo1"-OllU ttCP~ 10. +1It\/)CO-:"'i" f1'I'Imco-') "'I'iTCO-19'" 10. 01.')11 ~, t\..f1.C'? f.'fl\A:: hH.U O.+'f h+nt.ncrT ,;JC 01'.f.fn lttt,)f: I'IcoftPf.~09'" lJ"1IDf.9'" lIfI1'+:Ii. o+.,.q~ I'Ico-I\f. 01.t.fI fttlJA "'~o}-I j. 0lt.I\ fico- I\f. Of.t.fI f'JOT tt1.,;J::

(f)

I1~A
hn.o}- h.~f.

flP')mt.1r "t\" 10.

ftPf.1~ 10.

Ii'

'?1IC ftPf.h~AOo}- 10. OD7'i"TCO-9'"u.~.+ h1'h~f f.h~I\A:: n.T 0tPf.1~ 10. I\~ '?1IC

IncoI]le tax shall be imposed on the income from rental of buildings. 15. Tax l<.ite The tax payable on rented houses shall be charged, levied and collected at the following rates: (a) on income of bodies thirty percent (30%) of (b) taxable income, on income of persons according to the Schedule B (hereunder)
Schedule 'B'

I~'

f'?1IC D?l1hkY All 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. 01' uPt\h+co- All ~co-:u) Oih'? ffllD-~T OOi1T h1'fltlJTtD. f:C~-fo'f 10. ,I\f. It.11"1'?i1C htPf.h~AOT 10. I\~ c!iTCfl1T
IIPI\... OOO-f i

t\)

O'?t\flf1'f 10. I\f. 1'1.11"1 H.u O.+"f O+oolt h h+lD- 1P1mt.1r ''It'' OOIPt.T i

lP')mt.1r ''It''
'?1IC fD'/.h~AOo}- f'JOOo}fh.~f.10. h1lC '0 1,801 7,801 16,801 28,201 42,601 h60,000 'hllh 1IC 1,800 7,800 16,800 28,200 42,600 60,000 Ol\f. ftPf.h~ltco-. f10. '?i1C Ooo-fo~

h'?1IC a
10 15 20 25 30 35

Taxable Income from Rental (per year) Over Birr to Birr 0 1800 1,801 7,801 7,801 16,800 16,801 28,200 28,201 42,600 42,601 60,000 Over 60,000

Income Tax payable exempt threshold 10 15 20 25 30 35

II'

"HIC fD'/.h~AOo}-1 10. lIt\OOID{}') 00.0}- h.~f. 10. I\f. fD'/.h~t\co- '?1IC ftPf..+flOcoii' hH.U O;r'f O+oot\h+co- OOIPt.T f.1f'i"AI u) 0.-1: mf.9" '?0.lD- h~/):J>co- f+h~f 'h11.(f~, flJ:J>lD- mf.9'" fuP"1~.fco- h.~.e. hm:"I\I\co10. ,;JC f.1.OD~AI

16. Detennination of Income 1) Income from rental of building shall be computed as follows: (a) if the tax payer leased furnished quarters the amounts received attributable to the lease of furniture and equipment shall be included in income.

":"-~,~!L);1,~t?,(~1Ir_C,j}8_~.k.~~~IR{n'.?::,c,
.,.' .,,;

Federa1~eg~t~2azeia:~No.

3141bjul~~2002-Pag~)875

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',"'enfOt,h~~ "H1C h~T ..,-n~1 .

I.

e.

(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 --fD}.b~it-:,.O~,.~-r f10. A~~:-r",l', ~en-~from the sub-lessor is greater than the an10unt .. th) . ..,-flCfClll.tt~~0-r10. OOtIP"O""1.tJ. fOth.,.ft-"" payable to the lessor. bm""" 10. ",l', "'+'i1i ,l',"I.;Jft-; - (c) the following amounts shall be deducted from {if " h1n. ..,-nc Oh.,.+C b.,.h&.fen- 0."'" ;JC income in computing taxable income: ,.,.bLA fOD~"" ;C'J'OC-h'ift1t1' (i) taxes p~d with respect !o the land and buil0""'" :1'hlu dings being leased; except income taxes; and (iif 00111-0 It':''t,l',rF ..,-nC h~f"T Ao."'~1 (ii) for taxpayers not maintaining books of ac"o.-r bJtC; "ODUftl oy,,7)f OIfm1'1'i count, one fifth (1/5) of "the gross income lf~c~C; liD.,.\1.1 (.IlTtf'Lf1i1) fOtt1'1 received as rent for buildings furniture and bo.-r' ho.-r bJt'i hODUttl hOt 1"fenequipment as an allowance for repairs, mainfh.~,l', 10. h11; h9"il.,.'1en-1 m""" tenance and depreciation of such buildings, (iii) ~1I1-n AOt,l',tt-1-nC h~f"T' ..,-oc h~~ furniture and equipment; 1D1J.1.~:r:1 'ODJlll.~ "71.;J1'1' ~llh~I\ (iii) for taxpayers maintaining books of account, 1:l.ll Ou.tJ hCP~ f.J.OD'\hi:-r 1"PT ~,}1."'mO-k t1'~1Dfh.~~'} 10. A"7"'1""1 the expenses incurred in earning, securing, ,..,1;' F~ CPll-r'i f\dDhm"'" Ah.~~ and maintaining rental income, to the extent ~1:t>llJtc'Len-1 ""7ll+m!:\' f"'''I..1that the expenses can be proven by the ,l',1.I.;Jft-IIi-+'i1i 'lOt" ID"'-~T "'+'i1i taxpayer and subject to the limitations I.,.-r ID"'-~T n~~fttJ l\,l',ID{)'"AOD~-r specified by this Proclamation; deductible 1\.11(h.~") Ao.+TI Ao.-r bJt'i AODUttl expenses include (but are not limited to) the "7.(ttf"m1~'i A'hc1:'i OD"'h.l (.IlTt cost of lease (rent) of land, repairs, mainllf1i'})f OHotJ h"~ h1"'~'f)r ODIPI.:" tenance, and depreciation of buildings, furfl1'}tJ 1DI\1;f fh.1~~1ll ~'}.Il"''' niture and equipment in accordance with hl.ra'}'f"tt1'~en- OJ"'- OOt,l',tt--r OD1f1-n Article 23 of this Proclamation as well as ODIPI.-r"'+'i1r ,l',1.I.;Jfr' . interest on bank loans, insurance premiums. "'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 is liable for the payment of the tax for which the sub"'.f1~1 fODhLA ;)"4o"-r ,l','iCO:1'AI' lessor is liable, in the event the sub-lessor fails to pay. Ah.~" f"tlP~ o.+T "'lPc.,.en- ~1~A-k 1D,l'," 0.-1: 3) At the earlier of the time construction of a rental building ~ '}l."'h~fi I1".Ai: O"t "'1;ODen- 1.11.fo.-I: 111\o.-r'i is completed or when the building is rented, the owner ft1t'nen- F~ .,.*~~ fo.-I: ..,,11:1' f"'m'i++ IDW/" and the builder are required to notify the administration o.i: f"'h~f OD"'''''1 bo.i: h.~" OOt11en- 10. ",l', f"tLA1cD-1 ..,-OC ODhLA lAO:"'} {)en-({)~:y.) ll"l, of the kebele in which the building is situated about such hl:~'lf'i f..,-oC b~t. ODI\1rk'1'C 0.-1:I\DtrSo-r +01\. completion and the name, address, and tax identification ODll"'~I:C "7ll:1'OJ" hAI1:fen-1If+O"-en- ODll"'~I:C" number of the person (or persons) subject to tax on O~(t. h-1--1-A OJ,,"hHoU 0"" 0"'11\Oen-ODIPI."" income from rental of the building. The kebele adminisf"t11iCJ)o'} pIIl.)f AOtODAb.,.cD-f..,-oC hll10. 111\P' tration has the obligation to communicate this infor..,1.:1' hAO-1-11 AIIJ1 Mll"'''''~ mation or information obtained by the administrations h~A own initiative to the appropriate tax authority. flP1ml.~r "th" 10. Section IV f'}..,1; F~ -1-c~ ..,-oc Schedule 'c' IncomelBusiness Income Tax
fOtllJl\en- ..,-nC 1D{)1 01P1ml.Y "th" 10. "" b'}..,1; F~ ~'}:t>llJtc'L0"'11 ..,-oC f"thLAO-r 10. f10. ..,-OC~f"'IIJA .e.{)O{)I1A,' "" ..,-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.-10"71;1.'" 0~1'}JS,}~ f..,-oC "OD1 ,l',1D{)'iAI'
M-flC ODtlJ).

Ii.

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 compliance with the Generally Accepted Accounting Standards, subject to the provisions of this Proclamation and the directives issued by the Tax

I~.

Ii.

Ii.

Authority . f{)en-.,-1-OD-o-1-f.,.{)tlJ=fen- 1;C"f:+T ..,-nc 0""'" 19. Tax Rate h-thU\O-1- 1OJ:fen- ",l', (~1"C{)1-r) 1P"l\ OOD'" 1) Taxable buisness income of bodies is taxable at the ..,-nC "h~"ft-II

I.

f"'lP"7~ "-troT ..,-oc h~f"T O'}..,1: F~ "" f-thLAO-r "..,1; P'~ 10. ",l',f O"'f.11~-1-..,-oe
"th" ODIPI.-r

hlLU O:l"T O"'ODAb.,.en- &p'}mI.Y

..,-fle "h~"ft-..

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"~:..""-"''''?'"-~~ '

lqly, 700Z~P F~;~fal Negaqt Gaze~:::;-~(), 34 41b

~... " ' "".."_.-A~. ," ~ ", -~

e 1876
~ '..

, '~''' """'

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,

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,"""""",,, ,", '"'-

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I Schedule

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"m~!'

;~,

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1of1C"f"th,IC.AO+ f4f0D+ f'~~~~ 'ffl. ,-..J " h-o,C u~lih ~;r. 0 1,800 1.801 ,. 7.SOQ . 7,801 16,800
16,80 I 28.201
"

"

if"t~I\fD<
'- "

f'Ul"'/-ac
'.'

,OBD""~ ';,

, j: . Taxable( Business Income r, ear) Over Birr

>

'

'tQ Birr

h"NIC 10
.

~,

15 20 25 jo 35

42,601.

h60,000

"

2&,~00 42.600 60,000 () l\g,

0 1,801 7,801 16,801 28,201 42,601

Ov~r60,OOO

'I

. <16,800

,1,800' :1,800

28,200\ 42,600 60,000

~. ~

++'111 CD"'-1P"f"
Oh.+f"A-I'~i1'1'

.
20.
"'/11C.

f"7.h-'-AO-1-'

t1'}"'~

Fir

f"t1~ 10 O"tooM-r OH.Uh'P~ f+oot\h-l:-r 11.(1"f ~'1."'mO. rr'1m-f "HIC h'i-" mtX'l.~"f' 1171.;11'1' ~i1h:Ft\~t.n l\''''~ F(,.m- 1n. "D7"'7-ri ",.."." pi&.tD- fJ'h:r-' t\ooi1m+' ~'~n.4'I1.m-' ''IT'/i1'''mA f.,.1.t.'1-mn1.9'T ++'111 ,,1.I.:J{ru ~b. "'''''Ji
b.

M~1.t.'1- w~""f

" Ded~ctibJeExpcnses In the determination, of business incQme ,subject to tax in Ethiopia, deductions shall be allowed for ,expenses incurred for the purpose of earning, securing, and maintaining that business income to the exteI1t that the expenses can be, proven by the taxpayer and subjeCt to the limitations specified by . . ~) .-;. this Proclamation.

V) OH.tJh'P~ h,"';t
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fOJ.,h"'{r-r CDQ;ljP"f.,..,.C;7i h"1.I.","":

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21. Non-Deductible Expenses 1) The follow1n{ expenses shall not be deductible: (a)1he cost of the acquisition, improvement, , renewal, 'JIld. reconstructipn of business assets that are depreciated pursuant to . ArticJe 23.of this Prqclamation;

fme 1.oow1fI~ TCI'I'}-r(hF (,.

f"7.1.t.'" fml.:1" I18cp(;Ao

(b) an increase of the, share of capital of a companyor the basic capital of a registered

J\,.,,+

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tWttll.6- o-i"U1

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,

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out]hA outfJ~ 1I1:C h"'1.:1"l'111 'CDt\!:

I TCll+ (v-f\-r 0-"') 0"" fl1'~f~t\f: CD~ 1 . I.) foo~ "hT'l' 1Iof.'} ,,,m- ~-rf
1'1) ~:'" rtJ".}'-f-hLt\ f-,..JI-r t].., 1\'1 ~I i) Rff.IIJ\":E- h.,.L+1.. m-Q;t.~.Ili1 ouml)O-t,

,,/toft.,~ 1lI~" h"'L+~tIJo118m' "" r--mClOoJ:f.'} -m' "'Ita1..., m"". ".,.", ,,,,,, f"ttlJoA "'"-0 D7i1"'OU'l'i +) O""mL.Y" tit" 1n."~ f.,.hL" "I11C,1 w"".. 0) "..,1:
"'''''''11 fOJ.,1.t..., f.,.Q;1.D7&~11.-r :1"hi1i

(c) voluntary pension or providenJ.,Jundcqn. Ui,butiOnsover and above 1~% of the monthly salary of the employee. (d) declared dividends and paid-out profit 'shares; (e) interest in excess of the rate used between the National Bank of Ethiopia and the cOmmerciAlbanks increased by two (2) percentage points. (f) damages covered by insurance policy; (g) punitive damages and penalties; (h) the creation or increase of reserves. provisions and other special.purpose funds unless otherwise allowed by this Proclamation; (i) IncomeTax paid on Schedule C income and
" '

partnership;

1:C~,}

I.

1) lttn:J- mg,,. AC~#i 01l1l J\'}+1r 'Oolt, ",.,.;t (li)(1) f.,."."h.,.mn.'iCf"'I M~lt""'C'~ "..tJC f1.-r t\i'h1f11 ~ f"","A iJC~:1' III"" lltn:1' T+'i1I )\'}.IlI1" t\.L:p.~ ~~AII r. qMbt\f"r~ All-I)'}!. fl'lm-r -o..('C ~' f:p.~ bti:f 0"",,(" f;rblt "tID'}m-n1' Oh.,t]'S hll-q"),. "ht\M t]"C;rA ":1 J\&.-r"1'ti: 0"" hfi:,. MhL"'" htn A"'~ "'i' A:p.~ 8M: ~ J\u.~ M'" 0'4-' f"'~1l'"

"oP1"fT f~'" hlP(""'~m-1.OP"'1f j hi TCI'I1-1- '''to,A'1' bl1''1 .,.) MA tt:~;r mlA9'"ff :r:) OH.U h'f'~ CD"" "U" ~'P~ OUfPl.-r n-J1:t.., R"tCDIII ~'11 h.,.1.1.1 1~11 0"" f"'~/.1 ~I '1) fllP1f'i"~ lJ)Q;tjP":f-1

whit(J)/J.\f 0"''''''

f1:1"9'"f

recoverable

V a1ue~Added Tax;

representation expenses over and above 10% of the salary of the employee; (k) personal consumption expenses; (I) expenditures exceeding the limitS set forth by this Proclamation pr Rejulations issued hereunder. (m) entertainment expenses; (n) donation or gift. 2) Notwithstanding the provisions of Sub-Article (1) (n) of this Artiete, the Council of Ministers may by Regulations allow donations or gifts Pl'Ovic1ed for public use to be deducted. 3) Interest paid to shareholders on loaDS and advances shall not be deductible to the"extent that the loan or advances in respect of which the interest paid exceeds on average dUrin. 'the tax
periOd four times the IIDOIIDtorthe sb8N c:apital.

(j)

OlJ1hA'i" o.-~

tJ.q')""f 1\1."'L"~'"

1bis sub-Article does not apply 10 batab and 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."fhflU Oltf, fhtlltf"1 il1::h~\ f"7..l\lD- tltt..., 0 00IPt.:J'ce 111::J'.:\ 0 "7.. f.,..,. il 0"7..11'1 -r 1.tL A f1lHt h1~f\ (r) ~1_"J'l- .,.L'''7.. f,l1'c;A::

4)

In the case of bodies other than companies, SubArticle (3) above shall apply as if for the reference to share capital there were substituted a reference to basic capital.

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Trading Stock 1) For the purposes of ascertaining the income of a person for a tax period from a business, there shall be deducted the cost of trading stock of the business disposed of by that person during that period. 2) The cost of trading stcok disposed of during a tax period is determined on the basis of the averagecost method, i.e. the generally accepted accounting principle under which trading stock valuation is based on an average cost of units on hand. 3) The term "trading stock' means any business asset that is either used in the production process and becomes part of the product, or that is hold for sale. Depreciation 1) In the determination of taxable business income, the owner of the business assets may deduct depreciation for business assets. 2) Fine art, antiques, jewelry, trading stock and other business assets not subject to wear and tear and obsolescence shall not be depreciated. 3) The acquistion or construction cost, and the cost of improvement, renewal and reconstruction, of buildings and constructions shall be depreciated individually on a straight-line basis at five per cent (5%). 4) The acquisition or construction cost, and the cost of improvement, renewal and reconstruction, of intangible assets shall be depreciated individually on a straight-line basis at ten percent (10%). 5) The following two categories of business assets shall be depreciated according to a pooling system at the following rates: (a) Computers, information systems, software products and data storage equipment: twentyfive (25%). (b) All other business assets: twenty percent (20% ). 6) In each category as referred to in Sub-Article (5), the rate of depreciation specified in that Sub-Article shall be applied to the depreciation base of the category . 7) The depreciation base shall be the book value ofthe category as recorded in the opening balance sheet of the tax period: (a) increased by the cost of assets acquired or created and_the cost of improvement, renewal and reconstruction of assets in the category during the -tax period. (b) decreased by the sales price of assets disposed of and the compensation received for the loss of assets due to natural calamities or other involuntary conversion during the tax period. 8) If the depreciation base is a negative amount, that amount shall be added to taxable profit and the depreciation base shall become zero. 9) Ifthe depreciation base does not exceed Birr 1,000 the entire depreciation base shall be a deductible business expense. 10) If a revaluation of business assets takes place, no depreciation shall be allowed for the amount of the revaluation. 11) In determination of taxable business income a deduction is permitted in respect of each category of business assets for the maintenance and improvement expenses of business assets belonging to that category for the acutal amount of the expenses, but not in excess of twenty percent (20%) of the deprciation base of the category at the end of the year. Any actual expenses exceeding this twenty percent (20%) shall increase the depreciation base of that category.

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34 4th July, 2002-Page

1878 .

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1'ransfers of Business Assets I) When assets used in a business are sold, exchanged, or otherwise transferred, gain or loss is recognized on the transfer.

2)

Transfers of business assets among companies

which are parties to a reorganization are not treated as a disposal of the property. The value of business assets held by a company or companies which are parties to a reorganization is the same as the value of such assets immediately before the reorganization. Similarly, the balance value of any depreciation categories shall be carried
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business asset to related person within the meaning of Article 2(4). Bad Debts In the determination of taxable business income, a ~?;. f"'i f.fl 0 fl-o iJ~ deduction shall be allowed for a bad debt if the hlL U O:r f.,.oo t\ h1: + u-}.:r sPr fl. u:l.ft- "111C fOlJ.ht.. following conditions are met: IAO+ f1..,.(' P'~ 10. OOlJ.OJfl')O-r l.ft ftryf.flOl'1o(a) an amount cOITesponding to this debt was iJ~sPr "''''Cf'7i y,1.~;Jft-:: 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; and 0J0') t\ "'i it 00 t\ it m) iJ-': 0,0J0 f dt "1 h C9" jf .,. OJ Jl. il "'" (c) any legal action to collect the debt has been taken '10. Il"'l'(-~'" ft\oo:rft- f"'~;J1m hlf''':: but the debt is not recoverable. t}. IIf.JY,11J ~C~.,.:r- f1-tf.4>J!. At! oomf/fl4:f 26. Special Reserves for Finance Institutions ..,-OC fD?h~IAO+ f'i-f.Cf'')it.('C~'''"f f')"1f: P'tr 1Q In the determination of taxable business income of OD?OJfl10+ 1..H. Oh.+r-k.f' -od1.tr'f ll,)h OOJll} oooo~f f"'~"'~ finance institutions a deduction shall be allowed for IA~ (f-I;h~h) oomllOct.f'sP"f .,..,.e;7i 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)<') profit it earned to raise the capital of another -rCt;: ft\.lt1 boll')f my,9" f7ichCf' "'i'"lOC tt-c:rA company or partnership subject to the conditions in t\"'i~'" f1't\OJo hlf~ t\flU qlttry fCPt\OJo +C~ ..,-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.

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resident company solely in exchange for voting participations with no preferential rights as to dividends of a party to the
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5)

a division of a resident company into or more resident companies; or (e) a spin-off The Tax Authority shall ensure that the merger, acquisition, takeover, division, or spin-off is not having tax avoidance as a principal objective. The rules of Sub-Article (1) - (4) shall not apply to the transfer of assets described under Article 23(5).

(d)

6) Loss shall not be recognized on the transfer of a

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Federal Negarit Gazeta-No.

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The deduction mentioned in letter (a) of SubArticle (1) shall apply to shares of resident companies that are subject to taxation under Scdedule C and in which the investing body has a shareholding of at least twenty-five percent (25%), by value or by number, in the share capital or the voting rights. 3) The deduction mentioned in letter (b) of SubArticle (1) shall apply to basic capital of resident registered partnerships that are subject to taxation under Schedule C and in which the investing body holds at least twenty-five percent (25%) by value of basic capital. 4) The Council of Ministers shall by reg;ulations determine the manner in which the; incentive granted in this Article shall be applied. Loss Carry forward 1) If the determination of taxable business income results in a loss in a tax period, that loss may be set off against taxable income in the next five (5) tax periods, earlier losses being set off before later losses. 2) If during a tax period the direct or indirect ownership of the share capital or the voting rights of a body changes more than twenty-five percent (25%), by value or by number, Sub-Article (1) shall cease to apply to losses incurred by that body in that tax period and previous tax periods. 3) A net operating loss may be carried forward and deducted only for two periods of three years. Transfer Pricing 1) Where conditions are made or imposed between persons carrying on business in their commercial or financial relations which differ from those which would be made between independent persons, the Tax Authority may direct that the income of one or more of those related persons is to include profits which he or they would have made but for those conditions. The Tax Authority shall do so in accordance with the directives to be issued by the Minister. 2) In order to ensure the just and efficient application of this Article the Tax Authority may make agreements in advance with persons carrying on entrepreneurial activities, subject to conditions if necessary, that specified conditions between related persons do not differ from those which would be made between independent persons. Exemptions 1) The following categories of income shall be exempt from payment of business income tax hereunder: (a) awards for adopted or suggested innovations and cost saving measures, and (b) public awards for outstanding performance tax any field. (c) income specifically exempted from income tax by the law in force in Ethiopia, by international treaty or by an agreement made or approved by the Minister. 2) The revenue obtained by:

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Federal Negarit Gazeta-No.

34 4th July, 2002-Page

1880

the Federal, Regional and Local Governments of Ethiopia; t\) (b) the National Bank of Ethiopia 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 Scheduled Income/Other Income ,e.hLAO;rAII ~. <?-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'" 1) Royalties shall be liable to tax at a flat rate of five (tlD-1 <?lIC ""(1 000Y1l t\<?lIC hil1n.lD- oo/fl.T percent (5%). fDl/il;rw:"lJ foohLA <?Y-o;rht\OT II [. 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 Proclamation. .ehtt:ltA :: 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, resident, the recipient shall pay tax on the royalty il..cJ>1'I.f-t-'Il'lD-1 'In. Oowz.,oot\hT foo(J;l,G7i f!.rrlJ A II income within the time limit set out in this Proclamation. l;' OILtJ 11CP~ lD-il'l' c'fLmt- 001l."f.'} OO?ht-fT fowz.,'1~1n." O?t\T -t-'}.,.ta..cJ>7i 4) This tax is a final tax in lieu of a net income tax. &.A9" h'i t\~"tf" 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~ right to use, any copyright of literary, artistic or 9'"AtJT : 1~tt: w.e9'" IfDY-oA: Tlt1 : Oowz.,lI'I'C scientific work, including cinematography films, f-t- Y" C:COO-It w.e9'" fhoolrlT 'l.~T : wf!.9" and films or tapes for radio or television broadcasft7?lJ:flD-19'" fh. '}.&;..ilT6 : f1"1~ wf!.9" fUff!.'}lI ting, any patent, tradework, design or model, plan, 00"'6Y m.e9" 0h.1.&;..ilT6 : 01"1~ wf!.cr: 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" industrial, commerciaLar..scientific experience. room"'9'" 001lT1 t\'I':"9'" Ot7?ht-fT 9'"h'} J'T 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. technical services rendered outside Ethiopia to t\-t-(tm f-ttJ~h h'lA<?/r'T f-t-LfJOO htt:J' I TC(t resident persons in any form shall be liable to tax at 1T (hFC 000"') -flC .ehLAO;rA :: .eU'}'}9 a flat rate of ten percent (10%) which shall be <?lIC h'lA~i\oTf'f'LfJoot\T h4-.e hf"'~(t OO?lI withheld and paid to the Tax Authority by the payer. <l'lT t\"1l1C hil1n.lD- oo/fl.T 'In. O?~l"1 hl\OT:: 2) The term "technical service" means any kind of ~. Hf-ttJ~h h'lA <?It-T'' t7?l\T t7?'i:flD-9" flll\ooJ' 9'"tJc w.e9'" f.f:tJe;'lt-j{ h'lA<?lt-T ~lD- :: expert advise or technological service rendered.
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33. Income from Games ofChance 1) Every person derving income from winning at games of chance (for example, lotteries, tombolas, and other similar activities) shall be subject to tax at orr~lD- 'In. Itf!. I~ TC(tiT (hP't- h9"lIT . ooo.y.) <?-fI f!.htt:ltA II C the rate of fifteen percent (15%), except for winfl' 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,} 2) The payer shall withhold or collect the tax and 'Ill. DI/(-l"1 1\t\OT II . account to the Tax Authority in the manner r' OILtJ ~.e~T f-t-hLt\lD- "1-f1C hlltJ h 1:"il.4>tI. provided in Article 67. f-t-'Il'lD-1 1n. O-t-oot\h-tfooQ;},l7i .:!:hll 3) This tax is a final tax in lieu of income tax. .errlJAII iJJQ' f1\tJfL.M TCtt: .(-ci'f 34. Dividends
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1) Every person deriving income from dividends from a share company or withdrawals of profits from a private limited company shall be subject to tax at the rate of ten percent (10%). 2) The withholding Agent shall withhold or collect the tax and account to the Tax Authority. 3) This tax is a final tax in lieu of income tax. Income From Rental of Property Every person derving income from the casual rental of property (including any land, building, or moveable asset) not related to a business activity taxable under Article 17 shall pay tax on the annual gross income at the rate offifteen percent (15%). This tax is a final tax in lieu of a net income tax.

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Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1881 Interest Income on Deposits 1) Every person deriving income from interest on deposits shall pay tax at the rate of five percent (5%). 2) The payer shall withhold the tax and account to the Tax Authority in the manner provided in Article 67. 3) This tax is a final tax in lieu of income tax. Gain on Transfer of Certain Investment Property

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1) .Income Tax shall be payable on gains obtained

from the transfer (sale or gift) of property described in this Article at the following rates: (a) building held for business, factory, office 15% (fifteen percent) (b) shares of companies 30% (thirty percent) Gains obtained from the transfer of building held for residence shall be exempt. The basis for computation of gains obtained from the transfer of properties described in this Article shall be determined by Regulations to be issued by the Council of Ministers. Any exchange of shares in a resident company which is a party to a reorganization - as defined in Article 24(4) - in exchange for share in another resident company which is also a party is not a disposal of the shares. The value of the shares given in exchange under Sub-Article (4) shall be equal to the value of the original shares. Loss on the transfer of such property shall be recognized and be available to offset gain subject to the following limitations: (a) Loss on transfers under this Article may be used to offset gain on transfers under this Article, but may not be used to offset any other income or gain. Unused losses may be carried forward indefinitely. (b) No loss shall be recognized on transfer to associates within the meaning of Article 2(4). Any person authorized by law to accept, register or in any way approve the transfer of capital assets shall not accept, register or approve the transfer before ascertainig that the payment of the tax has b~en duly effected in accordance with this Article.

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Federal Negarit Gazeta-No.

34 4thJuly, 2002-Page

1882

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..,l1C h4.~1 1Df.9" f~"'l1 OO1I1{l:f1 he; (b) requiring the taxpayer or any employee thereof who :,. ar1 ~:f1 w f-.9" 00 ~;r1 t\D<J..,1' fD<J.::;-t\ 11''' has access to or custody of any information, records Wf-.9" h"H.U'" foomOcp ;'Jl\fu":" f.t(}mar1 or books of account to produce the same and to D<J1~ar19" f..,l1C h4.~1 1''''ilJt Ohoo:t f"1{lC attend during normal office hours at any reasonably ()q.y.:r he; ~/n.:r hil10. OOP'tY 0.:" fP'(" convenient tax office and answer any questions 1'1~.y. t\D?,"'Cfl-t\.} t\?--.';f- h"1fll1 Yl\rar relating thereof; 'PY<f:9':f OOAil h 1.!t()'Pe; f-f-fl ~."f-19" 1P.,~:f h 1.!t.f'" C11 t\ D<J l..., : f: (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&\&\ Federal or Regional Government to disclose par()ar il t\ {I C 00 P' t Y Cl. r : (J;},9" D<Je; rar9" C' "1 ticulars of any information or transactions, inh4.f-. fD?,.far.,.ar1 OOl.;r Wf-.9" fF'1r h1:r 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. OOl.;r!p":j-1 OO'/.il'PC ilt\oomOcp 39. Confidentiality ofTax Information I) The Tax Authority and all persons who are or have f..,l1C hil10.ar flt\P'&\ilJ1 : fflt\P'AflJ'" wh.A fl' If., ar fD?,lPc;. OJ f-.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 as are required by the Commercial Code of OOl.;r Oil1'<f>C OP' (,.rar h;JilJD?, yw~tprrlD-1 Ethiopia to be published by trade gazette, on h1f:1 ..,l1C h4.f-. fD?,oot\h-i: I\.t\,,":j-OOl.;r9''f particular taxpayers received by them in an official t\D<J19" hl}&\&.ar I}f-.(}m OD?,il'PC oomO.p 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} of carrying out their official duties; t9':f: (b) law enforcement agencies, for the purpose of t\) f..,l1C ,n?--1 Ooo1'I\t\~ W1~&\ f &.oooar"} (}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."" : criminal case; (0) h.-rf'k'Y &.(,.D?, OIf.,:fOT qt\9" q<f>lJ: (d) tax authorities of a foreign country, in accoril9"9""-r OOIPl.-r (}.mf.p t\ar"1!' h1C f"1{lC dance with an international treaty to which flt\P' &\ilJe;-r:: ~. 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 OOm1 t"J&\lf'1 D<Jil&.f19" OD?,Yil:fA h"il1'~ (1) must maintain the secrecy of that informaion, Oil1'<f>C h1J;.U Yt\ar1 UDl.;r OD?,il'PC foomO.p except to the minimum extent necessary to achieve ;'JI\~"-r ht\flrar:: OH.U h~&\ D?,il'PC";rrar the object for which disclosure is permitted. Other h ').!tm O.p f l' Y.l.?-- 00 l.;r 9':f f Y.l.!L reD- I\.t\"1-

persons who receive information the disclosure of which is regulated by this section may not further disclose the informaion and must return documents reflecting the informaion to the Tax Authqril\'. [. 3) Information concerning a taxpayermay be disclosed to another person with the taxpayer's written consent. 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'~:(a) be honest and fair, treating each taxpayer with u) :1'C1IJ~ -rhh/\~ : ..,l1C h4.~1 O."f'UTe;e; he; courtesy and respect; OM111C'-r fD?,.,.OA : (b) apply the law, regulations and rulings to each t\) ,n1o:f'): y',){l:f1 he; ooootY9':f1 f?--.';~ ~t. : case on the basis the objective facts in that case, "1C OD?,OO(,.lD" OOIPl.-r P' Ir I\f-. D<Jtp&\ 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 : or to friends; m) f (,.(t.') he; fflt\fI.-i:,) f"'111C 6.'; ODlf.oot\h:r (c) refrain from participating in any determination arm.-r fl.filh-rA OD?,:f&\ ar.,,); I\.e Yt\no that will affect his or his spouse's tax liability; 1}1'~: (0) f"t7 (d) where either a known family relationship or a OJ.p f 0. 1'(}11 119" f:e; w f-.9" f1"1 f: P' (,. 'P.p9" 01'''' ilJ t ., -I: 0 D?,() m ar 0>-"');I\.e business interest might influence any deter1'''''':' 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 (in the manner provided by regulations) such (h..,llll11t\ar ,n'" 01'W(}'1ar OOIPl.-r) : relationship or interest; 11') Oh')"'~ rliit f1'OOt\h1'ar h,)y'1'mO<f> lftf: (e) Subject to Article 39 protect the confidentiality OI/e;TCD-')9" f..,lIC : f;rhil wf-.9" f<f>l.'P OOl.1fODl/.il-rc oomO.p i of any tax or duty information, and l.) OOJe;TCD-')IJDoY.llf ht\uomf.p : Yt\oo<f>Ol\ u (f) not solicit or accept any bribe or perfonn any OJf.IJD OOJ'iTCD-')IJD ..,1IC1 hoow(}') CDf-.'l" other improper act relating to the duty to hoP (\11(\11 .,..., 11 :J c fDI/.;J Q;), lbt\":f 1'1 0. ~ determine or collect any tax. f ArT.,. .,..., llC':f') f t\ 00 J.:J.IJO1
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Federal Negarit Gazeta-No. 344th July, 2002 Page 1883 No employee of the Tax Authority shall act as a tax accountant or consultant or accept employment from any person preparing tax declarations or givino tax e advice. 41. Co-operation of other Entities 1) All Federal and Regional government authorities and their agencies, Bodies, Kebele Administrations a~d Associations shall have the duty to co-operate WIth the Tax Authority in the enforcement of this Proclamation. 2)

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2) (a) No Ministry, Municipality, Department or Office of Federal or Regional Government shall ..,{lC OCD.p-l:fhL" it"ODIf). f"7.L""'OT'} issue or renew any license to any taxpayer CD~9" hJtit ..,{lC h4.~'} O"7.OD"h'''' f-t-OD unless the applicant produces a certificate from WtO it"ODIf). h"'{lC hil1fl.W- I}"P'/,\Il)'} the Tax Authority to the effect that tax due in f-t-(}mw-'} f9"ilhC CDt."':" t}it.,.t.O respect of the preceding year or years, have Oil-t-.,.C "7'}~W-9" L:P f: (}"lI' "7.til1:C i ", 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 pending, 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 statement of its reasons therefore. m) f9"ilhC CDt."'T h/.\(}'I'9" 0"7"-1: CD~9" (c) Any applicant who is aggrieved by the reasons f'}..,f: P'I,. Uf:O OD IP t.rr f..,{1C h M fl.Wstated by the Tax Authority for refusing to issue 1l"P'/,\Il)'} O(}Il):fw- 9"h,} ,.,."f .pC f-t-(l1 Il) ~ \'1 .p~:J-w-'} "7.1: a certificate or by the revocation of his or its ",'} ~ w-9" ..,-0 C h4.~ "h license may appeal in writing to the Review t\.,"'C{I ~1-it/.\ :: Commmittee. f "'l.~ilT~ P' /.\ Il)'} ~I' OttU h'P~ 0/bl\-1' h,}"'?'1' h-t-(lmwP'/,\Il)'} 42. Powers of the Minister P'/,\Il)'} ~lj t.'P/.\; 01't;Q,"'~ "7.tilT~ fDth1'''wIn 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: f"7.,il"f/.\ ""7 f:t..., ""OC h '}~~hL/.\ I}:fw(a) enter into agreement with other Government for the 'P'P il9"9" ~T h /b l\-1' OD '}.., P':J-T ;J C OD /.\ i avoidance of double taxation on activities or tran,,) ",'}~w-9" ..,{lC h4.~ h~-t-~ f-t-L'I'C' "f..,c CD~9" sactions liable to tax in the territories of both parties; /bit hllf: h1.;J w~9" 'l'4.T ll.1.CilO-r CD~9" (b) in his discretion, waive tax upto an amount of birr 0:f/.\1'~~i: 9"h'}'T "'~If,} hh.ptJDo Oit~ Olf). ..,{lC 100,000 in cases of grave hardship due to natural or 9"h'},"'"f OtlU h'P~ ODIPt.T ,"O-r'} supervening calamity or disa~ter, or in cases of fauhL/.\ ..,f..,:J-"ODLR9" f"7.fit"f"w- hh.p9" Oit~ exceptional personal hardship not attributable to flf~ "f..,c f1.t.(}OTlflj ll.'11W- i hilh {lC lif7f.u 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. flf). ODOD~'9'1' "7W-Il)-r hL '09" hilLit1. (d) issue Directives for the better implementation of ~"fit/.\ II this Proclamation and Regulations issued there f..,o(IC h4.~ OD'" ck'l'C hilLit1. il"ODIf)' ~r' (lw- f..,{lC under. U) "7'}Cj'W-9" ..,{lC fODtiL/.\ ..,f..,:J- '''0+ :1~V-') h '}:{ 43. TIN Requirement h4.~ au", ck'l'C fOD'7I ..,f..,:J- h"OT (a) Every person having a tax obligation is required to 0"''i'':fw-9'' v-~:J- h'}f: ..,-oc h4.~ hh'}f: fO"m II f..,{lC h4.~ au", ck'l'C h'}Jt~7I h~L"'f:"''''9'' 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 TIN. fDt1.t.1Wm) f..,l1C h4.~ OD'" ck'l'C ""''''1:'' (b) No taxpayer is to be charged a fee for obtaining a Il)'} 0 "7. CD f1. Ii. (l') 9"71111 0.., {I C h it1 11. - 11 /.\ W "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- (lwthe timetable to be prescribed by directives to be f..,-flC h4-~ OD'" ck'l'C ODilm+ fDt1.t...,OT issued by the Tax Authority. tM-h~~ "l.'111 it~ ..,1tC+"''i''"li cJ:'I'~') i 44. Supplying TIN to the Tax Withholding Agent ,,"~(Do9'" ..,-oc h4.~ I f..,-flC h4.~ OD'" A person subject to tax withholding is required to ""HIe'} "',}I" 111. f"7 f:t..., ..,f..,:J- it"OT law- ",ilOD supply the TIN to the withholding agent. When paying 11111 h" 0 T :1..,-0 e'} .,.'} I" 1 11.f"7 f: t..., ..,f..,:J- ,,, 0 T (}fDo 1'\ (} (Do'}..,-0 C h'" I)-0 it" (Dof.., -fIC I)"P' /.\ Il)'} f 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'} withheld with respect to that taxpayer. IS 1.1i. t}/.\-t-(}m Oil-t-.,.C i "l{1C h4.~
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Gazeta-No.

34 4th July, 2002-Page

1884

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 insIi. f,),?X' F (,. U f: m1,9" foo-Y U f: f"'L(a'r mJ!.9" titutians issuing a business ar accupatianallicense fowz.yf.,'iI ?'Tm-9" foo')'?FT D oo/a.T mJ!.9" 1-*9" shall nat issue or renew such license unless the taxpayer has supplied the TIN. f'?lIC h<S.1, ool\Y ~'rC Itlt.,.l.O (am- mJ!.9" X'C~:'- I 2) Natwithstanding Sub-Article (1) the licensing 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.mautharity may nat require the taxpayer to.supply a l}I\FAtIJ') hH.u Olt1, Oh')"'~ ~r ooLPl.T h').&;.f. TIN if accarding to. the registratian schedule C(am- 01-f.l.1m- f9"'1I1l} f1.l1. LP/b~ m.r<tmdistributed as per Article 43 shaws that the date far 00001'"11 .rI\OT .,.') .rA$.l.{J ooW.,.') f"'LYoo his registratian is nat yet due. I\tJT ooW.,.') h1-l.~ '?l1C h~~') f'?l1C h~J!. 46. Directives ool\Y ~'rC h ').&;..r.,.ClI h1,mJ!."'m-9":: The Minister af Revenue is hereby empawered to.issue ~~. oooo~YY''f directives to.provide procedures far TIN registratian af f1llY'i- "'Ltil:'-c f'?l1C h~J!. ool\Y ~'rC I\DIJ'?"f:'taxpayers. In accardance with thase directives, the Tax '?l1C h<S.r-:r- f"'LooH.,o-OT') FC'i:'f"'Lm{)') Autharity shall prepare a schedule af registratian far a oooo~Y fDIJm-tlJ:'- FAtIJ') 1-(a'r.y.;1-A:: f'?l1C TIN, which shall inter alia cantain specific dates far hil1n.m- l}t\FAtIJ') f1llY''f "'Lt{)TC f"'LymtIJm-') registratian af a given class af taxpayers, and shall oooo~Y OOLPl.T ODIJX'l.'? Of9"X'o- f"'L1---;' '?-oC distribute capies af the timetable to. all licensing h~r-'f f"'LooH1o-0:'-') .,.') t\J&f f"'LYc'1J!.f9"'l'"l} autharities. LP/b~ YH;JjfA:: J!.U')')9" f1.l1. LP,,"~ h,?l}l1 ItltTm47 . Change of Address and Cessation of Business Uf: {JlJ.1"l}t\FAtlJC;>'f YLP(,.Qi].A:: 1) Any taxpayer who.makes a change af address shall ~%. hf:(,.i'f ilt\ool\m'r'l f')..,X' F (,. ') ilt\DIJ* l.'r f,),? (,.7jm-') f"'Lt\ m-'r DIJ')<;'m-9" "111C natify the Tax Autharity af the change within thirty Ii. X' hX' (30) days. 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:: 2) Any taxpayer who. ceases a trade ar business r. f,),?X' F(,.m-') fD?Y*C'r D?')~m-9" '?lIC h~J!. activity shall natify the Tax Autharity within thirty f')'?f: F(,.m-') tJ*l.mOT .,.') 'f.9"C: O!i (30) days that the activity has ceased. In the case af "''1:'m-il'r t\'?l1C hil1llml11\FAtIJ,) DlJiI;1-m:" a cessatian af activity, any declaratian af incame hI\OT:: f,),?X' F(" h'):"iI:f>I'L O"'L*l.'rOT 1.11. required by this Proclamaatian to.be filed at the end OH.Uh'P~ OOLPl.T ..,l1C h<S.~ O'ioo-f: oobl;bl.i'f af a tax year, shall be filed no. later than sixty (60) DIJ i 1'Lm:"l.11 Yt\ 0:'-') f., II DIJI;1-m<tY h,):" iI:J> days after the activity haS ceased. Any tax due far h1-*l.mOT .,.') h')iI.y. Ox "''T m-il'r DIJ:"l.-o the periad in which the cessatian accuITed shall be ht\OT:: f,)'?f: F(,.m-') h~:"iI:J>I'L hiltJ*l.mO.}. paid on ar befare the declaratian due date deter1.11. f:l.iI ILht..A fD? 1l1m- '?l1C OH.U h ').,.~ mined under this provisian. l. T ., II m-') 1\DIJiI;1-m:" 0 +m (a., m- 1. II. m-{) 'r 3) Where: mJ!.9" hH.Y OkT ooht..A hI\OT:: (a) any incame is derived by a persan in a tax year r. u) h'?l1C Hoo", OkT m1,9"' O'?l1C Hoo", m-{)'r from any business, activity, investment ar ather h+*l.mm- f')..,X' F(" h'):"iI:J>I'Lt h. ')n.{):'oo')T hlll/'TlD-9"' f1ll9"',)~ '?lIC h~~ 10. saurce that has ceased either befare the camY.,"f. h'l mencement af the year or during the year, and t\) f')..,X' F(,.m- h'):"iI:f>I'Lt fh. ')n.ilTOO,)-f: (b) if the incame had been derived before the m1,9" hlll/'l rm-9"' /bit f., II 9"') Q;}:h 00* l.mbusiness, activity, investment ar ather saurce OkT f1-1"fm- "llt ceased it wauld have been chargeable to. tax OH.Uh'P~ ooLPl.T ..,1IC f"'Lht..AOT hW., under this Proclamatian, 1llm- 01-.,-r 1.11. f,).., X' F (,.m- h,):" iI:J> I'Ll this Praclamatian shall apply to.the incame an h. ')n.ilTOO,)1: m1,9" lII/'Tm-9" ""It f10. the basis that the business, activity, investment 9"',)~ h,)~A1-*l.m 1-.,.'rC: 1,U htp~ ar ather saurce had nat ceased at the time the 1- t.. , D? 1,f.l..., 0;1- A :: incame was derived. ~t. 0011111foo YlI ..,1..;148. Record Keeping Requirement Ii. hf.l.jf utltH '?lIC h<S.r-'f Oil1-.,.C Oh,)"'~ ~(~) 1) All persans who.are engaged in a business or trade 0 .,.1-l..,..00 m- 00LP TO').., X' F (,. It1, f 1-LPOI}-;' l. as defined in Article 2(5), ar wtlO awn buildings m1,9" 000- t\- lD1,9"' 0 h&,A f"'L h (,.~ ;" '), Y''f held all ar in part far rental, except far Categary C l1l\o.T flf.,.' f~.c'1l10011.,11 h'l (a"f.'f') foo Y1' ..,1..;1-hl\l1Tm-:: taxpayers shall keep boaks and recards. 2) A persan who.is required to.keep baaks and recards 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 in accardance with Sub-Article (1) shall keep the f1-Hl.H~T') ool.jf1P:r- hDJ.A.y. OOYlI hI\OT; fallawing infarmatian: u) *D? ,)1Il..y.'f f1-1rrOT') .,.'). f","rro:'-') (a) a recard of the business assets and liabilities, CP;J h'l hu-') Yltrm-') fOO1l111 CP;J including a register af fixed assets shawing the fD?Y 1t1, f*D? ') 1Il. T 0011111 bl;b9" c: date af acquisitian the cast af acquisitian, and f')..,X' F(,.m-') Ull-r'l ()~ fD?Yc'11,(a"f:t the CUITent oak value af each asset; b 1\) h')..,X' F(,.m- h'):"il:f>I'L;JC 01-.rYH Of.,..,. (b) a recardaf all daily incame and expenses f",,,,lD-') "0. hCj f.,.1.l..,m-') mtJ;t. 0.,.t\J!. related to.the business activity and the matter to. , h., II CjlDtJ;t.lD-..tJ') IT ;JC 0"7YYlI' which they relate; tit) h')"'~ Ft,-m. ;JC O"'YYH f",.,rr hCj (c) a recard af all purchases and sales af goods and f.,. ifffio ":f>1PT'tCj h., A.., tt-.y."f') 0"'00 services related to. the business activitiy Ah.,. f"th.,.lt-T') f"tJ'Itf,'
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Federal Negarit Gazeta-No.

34 4th July, 2002-Page

1885 . -

(i) the particular goods and services sold; (ii) the name of the buyers and sellers or providers (ii) in such a manner that they can be identified by the Tax Authorities; (iii) and using pre-numbered invoices containing :1':fro- 0'7'1..f {t1- &\ h 1,1,:\} t ' (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;U1d) a record of trading stock on hand at the end of the OoPm+9"f accounting period, including the type, quantity and oP) OoP;JtI'} f1'hOlJ:t: f,..,f: iJ:1'9':r'1 'if."""f Cj 1\iJ:1'sP:t: f l' 1.t: 1 ro-, 11If-r h 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;}, C' 9" 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 of the tax liability. IP) fDfJ..LI\1ro-'} ..,11C l\oPm{t, fDfJ...f{t:r.~ 1 .f" :fro-, OIJC; 3) If a taxpayer has certain books or records in a :fro-9" Ibfto1h ..,C) 1.,-r 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 languages of Ethiopia at the taxpayer's expense. f ro- {tT 0 DfJ..1P t. P1-Cj {\'1"1- 0 6-(\- m {J;\, OJ\. -rr- k 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 they relate. oP1I1P1-Cj {t.,"1-f f In--r ~"-11 h ..,C)11"-r ltl\rof..,11C fIoP'} h'} {t.y. I\h,P'C 'ioP ;J--r OIJf.f-r 49. Submission of Memorandum of Association c 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: their memorandum of association and statutes and shall f1'**OU- 0IJ...0t.-r V-~ f1'oPlPt:i:O-r'} foP1'~1.tf 6 notify the Tax Authority of any subsequent change thot;: -r tJ tJ &\ .., &\C) J.1' 1\.., 11C 1.111 Cj foP oP (tt::r '" I h ft1 0. ro- C)\,P' &\1lJ'}. oP {tm -rCj 0 1'h;J- ;J-f.9" 0 H,Vtherein. "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'11) Any auditor, when requested by the Tax Authority in 1>.Il1'C f1.l0~ro-l 'ioP;J-ce 6' "7'}~ro-9" - oPC9"C'ffimro-l tTC-r O..,11Ch{t10.ro- ~""11 writing shall submit the audit report of his clients. c)1\,P' &\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 Authority shall notify the Licensing Authority to h{t10.ro- C)1\,P'&\IlJ'} f1>.Il1'~ L:1'Y: h'}.Il{tt:lI withdraw the license of the auditor. I\L:1' Y: (t{J;\,ro- C) \,P' &\1lJ'} f {t;J-ro-:1'&\ :: I SECTION IT tJ t;:&\ o-I\-r I\f. ..,-oc'} +'}t\ 10. Withholding Procedures h1'h4.f. ~"-11 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:.., to an employee, unless the payement is expressly f1'1.t:1 li~ OH.U htp~ O..,&\~ h..,-oC ." h'}.IlIT'} It&\lf., 0 {t1'+C OIJCj:fro-9" +llJt 1\1'+llJtrohDfJ..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. other amounts from payments to an employee. 0"7f:t:.., t:1f: fl\O-r ..,1.;J- : 1\1P6-1'~rohDfJ..LOOUht;:fsP1- I\f, 1'+Cj7i oP1.t:.., ltl\ C):fro3) 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 +llJtro- +'}t\ f{t+t:ro-'} ..,-oC hhf'}~'}.J;. roc E' calendar month, and each payment shall be accomoPQ;},t:f h'} (t.y. C) -r en +Cj-r ro-{tT 1\..,11C i ~ panied by a statement with respect to each employee h{t10.ro- C)1\,P'&\IlJ'} 0. -177f:t:.., hl\O-r :: OH,U 1 who derives taxable income for the month. 'if."-r 1'+'}t\ f+t:ro- ..,-oC 10. ODfJ..1.t:..,O-r .tL 1 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-IClIC fDfJ..f"-f. oPt:;T 1'lf,tf oP:rt:11 l in the form and furnished in the manner prescribed hl\O-r :: by the Tax Authority, and shall contain the following g, hllU Ol\f, O'}o-{t h'}+~ (E) oPlPt:-r fDfJ..{tmroI {t., information: oP'" 1\~ f..,-o C h (t., o.ro- C) \,P' &\1lJ'} ODfJ..m ro: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 employee from the employment; h"-f, ODl\f <k'1'C f (c) the amount of the tax withheld from that income, 1\) hJ"}'-;,}.J;. 1'+lflt hOD+mC f11ro-'} ..,11C f"thL&\O-r 111. ODtn'}f and
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(d) the amount of any tax-exempt income derived by the employee.

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Federal Negarit Gazeta-No.

34 4th July, 2002-Page

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Collection of Tax On Imports 1) A current payment of income tax shall be collected on Schedule C income at the time of import of goods for commercial use, and the collected amount treated as tax withheld that is cr~ditable against the taxpayer's income tax liability for the ye<1r. 2) The amount collected on import of goods shall be three percent (3%) of the sum of cost, insurance, and freight ("CIF value"). 3) If the amount of income tax collected on the import of goods results in underpayment ofbusiness income tax due for the year, as determined at the time of declaration of income tax, the taxpayer is required to pay the difference with the declaration. If the amount represents an overpayment of income tax due for the year, the Tax Authority shall after ensuring the accuracy of the books and records refund the taxpayer the amount overpaid within 3 months period. 4) The tax collected under this Article shall be recorded and accounted - for using the taxpayer's name, address, and TIN; provided, however that if a taxpayer is not required to obtain a TIN the records shall be kept using only the taxpayer's name and address until such time as the taxpayer supplies a TIN to the collecting agency. 5) For purposes of implementing the provisions of this Article the Minister shall by directive define the term "for commercial use." 53. Withholding of Income Tax on Payments 1) Origanization, having legal personality, " government agencies, private nonprofit institUtions, and non-governmental organizations ("NGOs") shall withhold income tax on payments which by Regulations to be issued by the Council of Ministers are subject to withholding Tax. 2) The amount withheld shall be two per cent (2%) Of the gross amount of the payment. 3) Within ten days from the last day of each month, the withholding agent shall transfer to the government the amount required to be withheld on payments made during the month. The withholding agent's aggregate monthly transfer shall be accompanied by a statement lising separately each specified person to whom payments were made; the person's TIN; the monthly total of payments made to that person; and the amount of income tax withheld results in government with respect to that person. 4) Ifthe amount ofincome tax withheld on payment to specified person results in underpayment of income tax actually due for the yeary as determined at the time of declaration of income tax, the taxpayer is required to pay the difference with the declaration. If the amount. of income tax withheld results in overpayment of income tax actually due for the year, the Tax Authority shall refund thetaxpayer within the time and in the manner prescribed under Article 76.

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Federal Negarit Gazeta-No.

34 4th July, 2002-Page

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If a withholding agent fails to withhold or under withholds he shall be made to pay the full amount of the tax to the Tax Authority. 54. Withholding of Schedule' 'D" Income Tax on Payments 1) The payer of any payment subject to tax under Schedule "D" shall withhold from the payment
the amount of tax required by Schedule' 'D"

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The obligation of the payer to withhold tax has priority over all other obligations to withhold amounts from payments to a payee (the taxpayer). 3) A payer shall pay the witheld tax to the Tax Authority within fifteen (15)days of the end of each calendar month, and each payment shall be accompanied by a statement with respect to each taxpayer who received payments during the month. 4) The statement referred to in Sub-Article (3) shall be in the form and furnished in the manner prscribed by the Tax Authority, and shall contain the 6liJ. f.., 11 C h 111 n. m- 11f\,v' All)") (l 01/. lD 11~ m00'" f\ :"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 (b) the amount of payments subject to tax under f..,-nC hcf.,f. 00f\! ~'1'Ct Schedule D; f\) (llP")ml1f "00" OOlPl"" ..,1IC fOl/.h&.oA (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\"!") 5) At the time of making a payment to a taxpayer, the ~").I;. ..,1IC h cf.,f. f..,-nC h 111n. m- 11 f\,v' A Il)") ft01/.DM m- h ';1.:\") ..,11C 1-"'") (t .,. t 00 1.l.,.") l payer shall furnish each taxpayer a tax withholding ,r, 1\Il) A :: ,e.tJl}" f OI/.!l.7"''1' f 9" 11 helD l"''''' certificate (in the form prescribed by the Tax fl}"l1hc lDl"''''' (l")o.l1 h").,.?\ (~) f1-"lHlm-") Authority) showing the date of the payment and OOljff ..,1IC hcf.~ 1-.,.")(t .,.t fH-1.l1m- f..,1IC 00 m") I\,f. :,. &.;1'm-") f\ try :"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"":: withheld; and the manner of doing so. }. ..,1IC 1-4'")(t"'t oo1.l.,.") fOl/.!l.7"'mm- f9"l1hC 6) The tax-witholding certificiate is proof of the "00" ODlPl"" ..,1IC (lOl/.h&.o lDl4''''' {llP")mt.1f A{l"" 1n. I\,f. 1-4'")(t f\4'lm. ..,1IC tryl1ljf ,e.IfCjA:: amount of tax withheld on payments subject to tax f\ OD 11 m"" f 00 ;1' lDet! OJl"''''' 11 under Schedule D. 11f\,v'AIl)') n1-hcf.,f. ~ta1l I\,f. ..,1IC "f"'1IC h{}1(lm. 55. Issuance of Identification Card 4'") (\ ftry l1"'l"" ;}I\L ~..,. f\ 1-1'11l):fm- 1'1?':f f OD;1' lDet! The Tax Authority shall issue identification cards to ,f.I'1Il)A:: lDl4''''' .., -nC 1-"'") (t 1 (l 7D 1.l.,. ") Withholding Agents. f 1-&.0000 m.") h Ci:! 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 available for inspection by the Tax Authority, U) 'f1'UllD- hCi:!5P:f"): "Cj 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. (b) tax withheld from those payments. ftry :"l1l ..,~;1' h f\ {l"":: 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: ~ after the end of the fiscal year to which the records M-nC qoo~ trycf>f""hf\{l"":: 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 (6) f1-IIlH~""") 1'1~p.:f \'11: "COh")"'~ to furnish a copy of the records to be maintained it (lOl/.l'1mm-1>6 "Cj lJo);.;1' ")It lJo9" (lOI/.lD ~m- flol1. " under Sub-Article (1) in the manner, form' and at A ~ ~..,. ,,") Jt!4'C-n ll.m,e.:" ,e.:fl\A:: the intrvals prescibed by the Tax Authority. (l;1'ho- lloo~ m-it'1' fOl/.&.of\1m-")..,-nC itf\tryit1-ilhA ftryY:l.., ..,~;t' 1f\(l1' ()m-lll\f\II1' he.. 57. Adjustment To Tax Due For Year "''''IC ""W1(l f 00'1 {}.., ~;t' And Withholding Agent's Indemnity h"FJ' O' 1-"")(1.,.t f1-f-l1m- ..,1ICfODt;Q.liff..,-nC ..,I(IC 1) Except for tax withheld with respect to final taxes, 1-.,.")(t .,.~ f1-f-l1 hln{l"" lJo);.;1'{lit1-"'Cf lD,f.9" {lh")"'~ :I~ ODlPl"" hCi:! ({lh")"'~ :Ii: withheld tax (or tax paid currently under Artide 53 {lflol1.tDf1-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 52 is included in ascertaining a taxpayer's tax due hcf.~ (ltl.!m- f;1'hit HOD")m-it1' ll.htt:t\ fD?,,111(Do for the tax year. .., -nC {l"7.1'1 1\(l"" 1.11 fOl/.I11-"" ,f.lflj t\::

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Federal Negarit Gazeta-No.34

4111 July,2002-Page

1888

A withholding agent who has withheld under this Proclamation and remitted the amount withheld to the Tax Authority is treated as having paid the withheld amount to the payee for the purposes of a claim by the taxpayer for payment of the amount h~A Y'll'-" withheld. f"111C ~...'n h.(I,(l1' ooelfsP";f SECTION ill Y~' f~l'\11 hff1' HY.. Tax Accounting Principles ji. OH.tJ hCP~ O""1.~11lJ)c OOLP~'-" Oh'}~' f"111C flOO'} lJ)cll'J' "111e h~~ f1~ A .,..111\- f :1'flOlJ)c'} 58. Method of Accounting 1) Subject to this Proclamation, for the purposes of lD.e9" f17'lJ)c'} 1(1. 1\D?~;J1'J' hHOO~ 0:\1\ rD?(}(l () 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~'-" during a tax period, the timing inclusions and OD?~. ~ "1 0 fIOD h'} 1..,..fl 0 fl 0 lDf.9" h '}1. .,.. ~ h L 1\ deductions shall be made according to generally "'~'J'C' h,}1.h"1Il11~~ 01(1.H. h'}Jlf1' lD.e9" OlD{J;}. accepted accounting principles,. h'}Jl"'~ll .ef.~;JA:: '}(}oll h,}"'1t(ji) hiJ (C)r""J.'.~11lJ)c I' OH.tJ h'}"'~ 2) Without prejudice to Sub-Articles (1) and (3), and h,}J.'.""mO.,. (J'tjt r"111C h1l1(1.bJ.-71l1\, AIlJ') unless the Tax Office prescribes otherwise in parf.,..l\f r~l'\11 hff1' , 1,. I\.e h'}JllJ)cA I1AL.,.J.'. ticular case, a taxpayer shall account for tax purposes Oll.,...,.C D?,}~lJ)c9" "1'Oe h~.e ~ltn-'} 0'J'6. 1'}H11 on a cash or accural basis. h'} .p 1l.4'11. I\.e 0.,.. OD of' lD.e 9" 0.,.. ()11It (1.iJ LP~ 3) A company shall account for tax purposes on an ""h~.e ~1'\11 I\.e O""ODLP~"" f~lt11 hff1l flY.. 00 f1' hI\O"":: accrual basis. C. 1\"111C hh~LA fl.llA h-1l"),(1 ~ltn-') O.,..fl11lt(1.iJ 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.. person's method of accounting and the Tax offIce OOLP~'-"00 f1l hI\O'-":: D?,}~lJ)c9" (}lJ)c r~l'\11 hf f1l HY..lJ)c') I\OOl\lD'J' Q' 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\,.... clearly reflect that person's income. AilJ'} .,..I\CPlJJ: flY.. f"111e h~~'} ~1'\11 O'-"hhA 5) If the person's method of accounting is changed, rD?fl'\.e ~lJ)c 111\- fl..f9",}O'-" l\lJ)cm'} OD"'Of\o'} 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 more than once. .,...,. iJ7i lD.e9" f :1'h II D?1111 ~ 1'\ 1-:;' I\.e 1\lJ)c if ( m h.,.. J.'.~ 1 0'-" f"111 e fI OD') 59. Cash-Basis AccountinJ? +'1' I\- 111\lJ)c f}00.-,. lJ)cliT "'1(1.lJ)c D?ll.,..l1hf iLJ.'.~"111TlJ)c.e111A:: 1) A person who is accounting for tax purposes on a OTto 1'}fl11 h '}.pll.4'11. I\.e rTOOLP~"" f~l'\11 hf.f1l cash basis shall acoount for amounts to be included YU' 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-'} is accounting, for tax purposes, on a cash basis when lD.e9" Olloo- f""ffll\'-"'} r1'}fl11 OOm'} 0~1'\nlJ)c liT D?11.,..'-" h 1\ 0 .-,.:: it is paid by that person. 1\..,11C hh~LA fl.IlA ~ltn-'} 0'J'6. 1'}H11 h,}.p I' 60. Accrual-Basis Accounting 1l.4'11.I\.e O""OOLP~"" r'Llt11 h,f!1I fl1. rD?.e.1I 1) A person who is accounting for tax purposes on an "111C h~f. lD{J;}. J.'.~1 rD?lll\lJ)c "111e h~~ Ol,.(}. h accrual basis shall account for amounts to be rD?LOOOlJ)c h~f fl.1f'} ~lJ)c:: included in ascertaining that person's income when :s. 0.,.. ()111'\ 1.iJ .,..h ~f. 'LIt11 I\.e 0""00 LP~ .,.. ( they are receivable by that person. f~"'11 hY Y1I flJ!.. 2) An outgoing or expense is incurred by a person who is ji. 1\..,11C hh~LA fl.llA 'Lltn-') OTfl11lt(1.iJ
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~ccounting for tax purposes on an accrual basis when it ISpayable by the person. 3) Subject to this-Proclamation, an amount is receivable by a person when that person becomes entitled to receive it, even if the time for discharge of the entitlement is postponed or the entitlement is payable by installments. 4) Subject to this Proclamation, an amount is treated as payable by a person when all the events that determine liability have occurred and the amount of the liability can be determined with reasonable accuracy, but not before economic performance with respect to that amount occurs. 5) For the purposes of Sub-Article (4), economic performance occurs:

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Federal Negarit Gazeta-No.34

4th July, 2002-Page

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with respect to the acquisition of services or property, at the time the services or properties are provided; (b) witn respect to the use of property, at the time the property is used; or (c) in any other case, arthe time that person makes payment in full satisfaction of the liability. 61. Prepayments . hil.,. f:tlD ilt\.,.f.l.,. h~fsP"f 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" other benefit which :xtends beyond twelve months including h., fA"" 1\-+ aJ"9" hhP' /ro 11-t\ tD/ro+ ",e. t\ "7."''' cost of lease of land, shall be allowed proportionately over the "7c;:flD-9" tD{;L\. .,.+fi1i "''' 1'~9" '.,.f.l1 1'~OO- P' /ro .,.L'''7. "7.1Dtax periods to which the service or other benefit relates. h1fA..,tt-r-"f1 'hfi 1-fil+"f1 o.,.oot\h.,. h1A ..,it-of: O.,.{lm m,,9" 1-filof: "'"1 'l.JI. "ID-:: t\) 01-fil+ oom"'9"1 O.,.oot\h.,.,-filof: Off9" OCPt\O+'l.JI. ~ID-i 11-).;J-sP"f ..,Yu;J-ID-1 th) "" 0"7'i:f1D-9" "'t\-"f t\OOtDtIJ+ '''7.!il"fI\(lJ-1 oo-tr h~f ..,-oc h4-~ OLOooO+ 'l.JI. "l1D-::

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Claim of Right 1) A taxpayer who is accounting for tax purposes on a cash basis shall treat an amount as received and an outgoing or expense as paid, even though that person is not legally entitled to receive the amount or liable to make the payment, if that' person claims to be legally entitled to receive, or legally obliged to pay the amount. 2) Where Sub-Article (1) applies and that person later refunds the amount received or recovers the outgoing or expense paid, an appropriate adjustment shall be made to that person's income c+the tax period during which the refund or recovery occurs. 3) A person who is accounting for tax purposes on an accrual basis shall treat an amount as receivable and an outgoing or expense as payable even though that person is not legally entitled to receive the amount or liable to make the payment, if that person claims to be legally entitled to receive, or to be legally obliged to pay the amount. 4) Where Sub-Article (3) applies and that person later ceaSeSto claim the right to receive the amount or to claim an obligation to pay the outgoing or expense, an appropriateadjustrnent shall be made to that person's income of the tax period during which that person ceases to make the claim. 63. Long Term Contracts 1) 1n the case of a person accounting for tax purposes on an accrual basis, the timing of inclusions in and deductions from income relating to a long-term contract of a business of that person shall be accounted for on the basis of the percentage of the contract completed during any tax period. 2) The percentage of completion is determined by comparing the total costs allocated to the contract and incurred before the end of the tax period with the estimated total contract costs including any variations or fluctuation. 3) Whereduring the tax period m which a longt~rm contract of a business is comp1eted the person carrying on the business: (a) incurs a loss; or (b) has an unrelieved loss available for carrying forward under Article 28(1); ~ which is attributable to the long-term contract, the Tax Authority may allowthe loss to be: (c) carried back to preceding tax periods, and (d) applied against an amount of income of a tax period not exceeding the amount, by which inclusions in the income of the business relating to the long-:term contract forthat period exceed deductions therefrom.
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Federal Negarit Gazeta-No.34

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A loss .incurred by a person in carrying on a business during a tax period is attributable to a long-term contract of the business to the extent that deductions allowed in ascertaining the income from the business relating to the long-term contract for that period exceed inclusions in ascertaining that income. 5) In this Article, "long-term contract" of a business of a person means a contract for manufacture, installation, or construction, or, in relation to each, the performance of related services, which is not completed within the tax period in which work under the contract commenced, other than a contract estimated to be completed within twelve (12) months of the date on which the work under the contract commenced. SECTION IV Declaration and Assessment 64. Tax Year 1) Unless otherwise provided, the period for tax assessment ("tax year") shall be the fiscal year, that is, the one-year period from 151 RamIe to 30thSene. 2) The tax year of a person is: (a) in the case of an individual or an association of individuals, the fiscal year; (b) .in the case of a body, the accounting year of the bodv. . 3) A body shall not change its accountmg year un 1 1t ess ' obtains prior approval, inwriting, from the Tax Authority and complies with any condition that may be attached to the approval. 4) The Tax Authority may, by notice in writing, revoke an approval granted to a company under Sub-Article (3) if the body fails to comply with any of the conditions attached to the approval. 5) Where the tax year of a person changes as a result of Sub-Article (3) or (4), the period between the last full tax year prior to the change and the date on which the new tax year commences shall be treated as a separate tax year, to be known as the "transitional year. " 65. Certificate and Assessment of Schedule A Income 1) The tax-withholding certificate issued by an employer to an employee shall be proof that tax in the amount stated was withheld on the employee's Schedule "A" income of the amount stated. 2) The amount of tax withheld on an employee's Schedule A income, paid to the Tax Authority and accompanied by the employer's statement (as required by Article 51) shall be the amount assessed by the Tax Authority effective on the date the tax is paid, and subject to later amendment if the Tax Authority determines that an error or omission has been made. 3) In the case of an employee whose taxable income for a tax year consists exclusively of Schedule "A" income, no declaration of income is required. 4) Notwithstanding the preceding, an employee working for more than one employer or an employee of international organization having diplomatic immunity or working in embassies, missions ana otfier consular establishments of a foreign government shall himself declare and pay taxes on his schedule "A" income with the time prescribed under Article 51(3). 5) If'an employer finds out that his employee has more than one employment income and if he ascertains that the other employer(s) have not aggregated said income, he shall aggregate and withhold the tax thereon.

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Federal Negarit Gazeta - No.34 4thJuly, 2002-Page 1891 C Income 1) Every taxpayer who has Schedule B or Schedule C income shall prepare a declaration of his income in a form prescribed by the Tax Authority. Taxpayers shall submit the tax declaration to the,Tax Authority at the time of submitting the balance sheet, and the profit and loss account for that tax year within the time prescribed below: (a) Category A taxpayers within 4 months from the end of the taxpayers tax year. (b) Category B taxpayers within 2 months from the taxpayers tax year. 2) The type of records to be submitted to the Tax Authority in accordance with Sub-Article (1) above shall be determined by Regulatons to be issued by the Council of Ministers. 3) The tax calculated accordancewith the tax declaration. in reduced by the tax with heldin accordance with Articles 52 and 53 of this Proclamation and the amounts provided by Article 7 (foreign tax credit) of this Proclamation during the tax year, shall be transferred by the taxpayer to the Tax Authority simultaneously with the tax declaration. 4) Any excess payments over the tax calculated according to Sub-Article (3) of this Article shall be refunded by the Tax Authority to the taxpayer within ninety (90) days of becoming satisfied on the tax declaration. 5) The amount of tax due for the year, as stated in the declaration, shall be the amount assessed by the Tax Authority although the Tax Authority may determine that an error or omission has been made and therefore may issue an amended assessment. 67. Declaration and Assessment of Schedule D Income 1) Every taxpayer who has Schedule D income, not subject to withholding at source constituting a final tax, shall prepare a declaration of that income in a form prescribed by the Tax Authority. Taxpayers shall submit this declaration to the Tax Authority within two (2) months from the end of the Ethiopian Fiscal Year. 2) The tax calculated in accordance with the declaration, after the amounts provided by Article 7 (foreign tax credit) paid during the year with respect to the Schedule D income subject to declaration having been reduced, shall be transferred by the taxpayer to the Tax Authority simultaneously with the declaration. 3) The amount of tax due for the year, as stated in the declaration, shall be the amount assessed by the tax Authority unless the Tax Authority determines that an error or omission has been made. 68. ~)'tandard Assessment for Category C Taxpayers 1) A standard assessment method shall be used to determine the income tax liability of Category C taxpayers. 2) The standard assessment shall be a fixed amount of tax determined in accordance with a Council of Ministers Regulations establishing a schedule 9f standard assessment amounts that reflect variations in the type of business, business size, and business location. The taxpayer shall pay the tax determined 7th in accordance with standard assessment on the 6thday of August every year, unless, day of July to the the taxpayer requested and is allowed to make installment payments in accordance with Council of Ministers Regulations.

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Assessment by Estimation 1) If no records and books of accounti are maintained by the taxpayer, or if, for any reason, the records and ou1l1{1o"} hCj lP"~"} f'?lIC hi11o.ar C1l\P'AIIJ"} books of accounts are unacceptable to the Tax fAi-+Ol\ar h"},\'.If., -: mf.9'" '?lIC h4.~ OH.U Ch'? 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 determined by directives to be issued by the Minister 10. "} OIJIIJuoC of Revenue. <>J.OC h4,~ Oh"}f.' lP"}ml.1f P'C <>J.OC fOlJ.h..tAOT 10. Aggregation h,,'l\ff f1o. 9""}"Ih fO'J..r1~ fl.1f"} <>JlIorfO'J.m().,ar 70 . A taxpayer who derives income from different sources 10.ar"} OOlJm:Pl\A f.IfCjA I: subject to the same schedule shall be assessed on the f.C;J 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 hi1i1) If a taxpayer has submitted a declaration of income \1htr> <>JlIor"}om()"} fO'J."1'l\ar m: quo.} 1."- ro-i1'r u within the time limit and manner as prescribed in this .,m. II f.U9" f?; quo-r Proclamation, the Tax Authority has five (5) years to 1."- uoc>mCfO'J."f.9"l.ro- f10. 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. 2) If a taxpayer has submitted a declaration in the ~. <>J1ICh4.~ OtLU h'P~ O.,.uol\h,,'ar hi),:\"} f10. 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 has five (5) years to amend the assessment. The five f4'l.Om."} OIJll;rmcf hll.,.\1htr> '?lIor"} oum()"} qou.} 1.,t uoc>mC fO'J."f.9"l.ar years assessment period runs from the date the f.rllA :: f.U9" f?; 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 <>J f.,. ,\'.., 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 72. Contents of Assessment Notification OIJll;Jomcf f.HT f<>J1ICar""~ Every assessment notification shall contain the h.r'M"}~ fetHIC ar.,.,~ OIJll;Jomcf fO'J.hi-/r.}"} following elements: hn:LA-f uofll hl\OT; 1) gross income and deductions applicable under OUlPl..} i-4'Cj7i fOlJ.If j!. m1>"" 10."}Cj OILU h'P~ this Proclamation; .,..-,."}mlJ;l9'r : 2) taxable income; ~. '?1IC fOl/..h..tAO.}'} 10. : 3) rates applicable or percentage; [. .,...t'O'J.".} fO'J.e;'l.ar"} fOlJi1h..tf Ah mf.9" ou1'-~-: 4) taxes paid and due; f.,.h..tt\ar"}Cj 4'tar"} <>JlIC-: Q' Tar"} 9" ou4'6I>J. f.9" m l\f: -: m 5) any penalty or interest; ?;. OIJCj }. 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) Income tax assessment notices or other notices f<>JlIC ar.,.,~ OIJll;Jomcf9'"1' llt\O'J.f.C()'O-r v--~;Jo issued by the Tax Authority to any taxpayer shall be j!. f<>JlIC hi11o.ar C1l\P'AIIJ"} l\<>JlIC h4.~ fO'J.() communicated in writing as follows: IIJTar f<>JlIC ar""~ OIJi1;rmcf9'r mf.9" l\.tr>r (a) In the case of a resident individual, by registered OIJll;Jomcf9'r OO'J.hi-l\ar lH;Jo l\<>JlICh4.~ nX'ch-~ letter or by delivery to the taxpayer in person, or f..e.clt/r:: if he is absent, to any adult member ofhis family (u) "'4'OIJ~"oJ: On.-rfokf ari1'r l\1f., ()ar Oh,\'.(,. or any person employed by him at his residence, Tll;Jo -:mf.9" n4''r;r l\'?lIC h4.~ Oh~ Ooui1m.} or place of business or, professional practice, h(). fl\.il h"},\'.If., -: hfl.i-()n=t: ro-ll'r ilOlJ"} mf.9'" provided that, if, no person can be found to ~ar9" h\1l\ uom"} il,\'.l.() mf.9'" ooue;' tfro- mf.9" f f: accept such service, then, the same may be 6oO.} P'lf.6o 4''1' r: f (IDe m f.9'" f"}<>J P' (,. n O'J.lP ilO'J.f()(,.ar OIJ"}~ro-9" ()ro- Ooullm.} -: Iftj9'" effected by affixing the notice to the door or OIJl;rmcf ro-"} fOlJ.4' 0 A () ro- \1A i-1} f.11 ro- OIJI l I 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: '?lIC h4.~ 9""}9" qf.""" f~It.O ou1'1111j lP.,f.' .rAfH h"},\'.If., mf.9" OOlJCjrar9"9'"h"}fT f~ltll

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Federal Negarit Gazeta - No. 34 4thJuly, 2002-Page 1893 in the case of non-resident persons, to their agent or agents in Ethiopia, or by affixing to the door or other available part of the residence or place of business of such agent if he could not be served in person; Provided that, if in any case none of these measures are effective, service may be discharged by the publication in any newspaper in which Court notice may be advertised. The cost of such publication shall be charged to the taxpayer. 2) Any assessment of income tax duly served on the taxpayer shall become final when: (a) the taxpayer tails to pay the tax due or to lodge his or its appeal with the Tax Appeal Commission within thirty (30) days from the date of receipt of an assessment notice orfrom)the date of decision of the review committee, (b) the time for appealing the decision of the Tax Appeal Commission has expired; or (c) the Court of Appeal renders its final decision. 3) A taxpayer who does not pay the final assessment as provided under Sub-Article (2) of this Article is in default. SECTION VI Payment 74. Tax Payable when Due Any tax (including whithheld or collected tax) that is to be paid to the Tax Authority by a stated date shall be payable on that dat~. Failure to make a timely payment shall result in the imposition of interest and the late payment penalty. 75. Interest 1) If any amount of tax is not paid by the due date, the taxpayer is obliged to pay interest on such amount for the period from the date the tax is due to the date it is paid. 2) The interest rate under Sub-article (1) of this Article is set at 25% (twenty five percent) over and above the highest commerciallending interest rate that prevailed during the preceding quarter. 3) Interest shall be collected in the same manner as the tax to which it relates. Credit and Refund 1) Where the Tax Authority is satisfied that tax has been paid by a person, whether by withholding,
installments, or otherwise, in excess of the person's tax.

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libality to which the payment or payments relate, the Tax Authority shall: (a) credit the overpaid tax. against any liability of that person in respect of: (i) other taxes under this Proclamation; (ii) withholding of tax under this Proclamation; (iii) any other amount due to the Tax Authority under this Proclamation; or any other tax law; and (b) refund the remainder to that person within 90 days of becoming satisfied. 2) The Tax payer shall be entitled to an interest set at the highest commercial lending interest rate increased by 25% (twenty five percent) that prevailed during the precedjng quarter if befIt has not received the refund within the time prescribed under Sub-Article (1) (b) of this Article.

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(b) the date on which the tax or interest was paid.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. A person dissatisfied with a decision referred to in Sub-Article 4 may challenge the decision only through. the appeal procedure as though the decision were that of an assessment. L SECTION VII Collection Enforcement

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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

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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, collection 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.

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If the Tax Authority makes a finding that the collection of the tax is in jeop~dy! a demand for immediate payment of such tax may be made by the Tax Authority and, on failure or refusal to pay the tax, collection thereof by seizure shall be lawful without regard to the 3D-days period p~ovided in Sub-Article (1) and the days provided in sub-Article (4). 6) The effect of a seizure on employee remuneration payable to a taxpayer shall be continuous from the date such seizure is first made until the liability out of which such seizure arose is satisfied or becomes unenforceable by reason of lapse of time. 7) The following shall be exempt from seizure: (a) such amount of employee remineration or other periodic income payable to an individual as does not exceed the exempt amount according to Schedule A; and (b) all other income and property that are not liable to attachment or lien under Ethiopian law. 78. Enforcement of Seizure 1. Any person in possession of (or obligated with respect to) property subject to seizure on which a seizure has been made shall, unless such property is, at the time of such demand, subject to an attachment or execution under any judicial process or is encumbered by law with the preferred right of other creditors as stipulated under Article 30, on the demand of the Tax authority surrender such property (or discharge such obligation) 2. Any person who fails or refuses to surrender any property subject to seizure, on demand of the Tax Authority, shall be personally liable to the government in a sum equal to the value of the property not so surrendered, but not exceeding the amount of taxes for the collection of which seizure has been made (together with costs and interest on such sum). 3. In addition to the personal liability imposed by SubArticle (2), if the failure or refusal to surrender is without reasonable cause, such person shall be liable for an additional charge equal to fifty percent (50%) of the amount recoverable under Sub-Article (2). 4. Any person in possession of property who surrenders or makes payment in accordance with this Article shall be discharged from any obligation or liability to the delinquent taxpayer or to any other person arising from such surrender or payment. 79. Production of Books If a seizure has been made or is about to be made on any property, any person having custody or control of any books or records containing evidence or statements relating to the property subject to seizure shall, on demand of the Tax Authority, exhibit such books or records to the Tax Authority. 80. Preferential claim to Assets 1. From the date on which tax becomes due and payable under this Proclamation, subject to the prior secured claims of creditors, the Authority has a preferential claim over all other claims upon the assets of the person liable to pay the tax until the tax is paid.

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41huly,2002-Page 1896 J

Where a person is in default of paying tax, the Authority may, by notice in writing, inform that .}. person of the Authority's intention to apply to the 'l t\ P' All)'} 0 'I'ct.:" 9"h '} .f' '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.'; any asset situated in Ethiopia which is owned by that fD?Lt\ "lO:" I'lro- u'O:" O'Pll.}.e; i' f,Jf "'}Jt~ f, ,)fll.~'} t\oo1l10ro- ht]A fX'th-tt: :"61111 fD?(}'I' person, to cover any unpaid tax in default, together 00 If). '} 0 OO"l\ ~ t\ "lfI C h ct.f.. "'I {}m ,}"'<I:.f' t with any expense incurred in recovery proceedings. f,(}ll)A:: 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.(lrounder Sub-Article (2) fails to pay the amount "l fI C h ct.f, "'Ill m ') "'<I:.f' ro- 0J.". () ro- 0 c!j.,.'} ro-ll'I' I. specified in the notice within 30 days after the date "lflot-'} .f'AhLt\ ",}J.".If~ f"lflC hit1Qro- 'It\P' of service of the notice, the Authority may, by All)'} t\OOll;JQro- flt\P'All)'} f"l'OC hct.f.. UfI:" notice in writing, direct the Registering Authority flAi'hLt\rof"l'OC 6.'; oom'} O'Pll:,.e; i'f", f, f,(lll)A:: "'}Jt~ 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. oo1l;JQro- flt\p' "'}Jt~f, :"6111' f(}m Itlf,): 4) Where the Authority has served a notice on the All),}"'Ie;~ro-,}9"htt:.f'~f,mf,.p,}fll.~O'P{}:"e; Registering Authority under Sub-Article (3), the "'}Jt.f'1I f J.".I.(}ro-'}:"61111 ,,'} f."'Ie;~ro-9" OU.O~ Registering Authority shall, without fee, register Itf, ",}.';t\ foo.f''tf ()~~ f,ooll"lflA: .,.1.9" itA the notice of security as if the notice were an fi'(}m foo.f'''r oofl:" ",}J.".i'mO.,. Iflf: f'Pll :,.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 '}J.". () m 00 .f''tf lDf,9" i' ~ro-9" 00 A h- 0 to "l 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>~ reasonable grounds to believe that the collection of tax 001.:4' "'}JtI'lmro- fhlli'.';f.C :"6"11 t\.(}'I' "e; "lflot- '} is in jeopardy, and where a state of urgency exists, the lDJt.f'ro-). 00 lD()'} f,'flt A:: f,v-'} '}j( f"lfl C Tax Authority may issue an administrative order to the " hit1Qro- flt\P'All)'} htLU Oltf, fi'oot\hi'ro-'} hlli'.'; 11 J.". 'e :,. 611 illl.,..1tt\ L 0:" .,.'} 1.9" c: fl t\-:" hp' C t. 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 however; that the Tax Authority shall obtain court ~ro-:: authorization within ten (10) days from the date of hi'hct.f, ~...,fI Itf, i'''',}I' 0.,.1. "lflC Itf, llt\"'I.lfC itl' issuance of its administrative order and further that such ff,1fl"fA .p~.f powers may only be used to elucidate information ji. OtLU h'P~ ooWI.T hi'hct.f, ~""flltf, "lflC "',}I' relevant to the assessme~t. () ro- i'''',} I' f i' .f'II "lfI C: oo.f'1I flt\ 0:" 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":: Tax Authoritv: th) "l-f1ot- "',}I' f .f'lIro- I'l(Dofh(}l. lDf,9" ~...,n'} (b) is not subject to attachment in respect of a debt or 000 ll) t.:" Itf, 0 D?1f'} 0 T 1. H. i'''',} f.,. I. (Do I I' liability of the withholding agent; and "l-f1C 000 ll) t.:" Itf, .f't\ (Do: 06.'; 9" h ') .f':" (c) in the event of liquidation or bankruptcyuf the f"'l. i'1tt\L(Do lDf,9" fh(} I.ro- ~C~:,. UfI:" 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' and the Tax Authority has a first claim before oo-f1:" f.lf 1.'Pt\:: 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' f"'l..f'll .,. I. (Do "lfl C: 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') other agency of the government may require the property '}fI I. :,. "'Ie;T(Do'}9" t\.1t 9"h'}.f':" 00 wI.:" 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 ,}-fll.:to fi'7rm ",}J.".If~ OtLO ht;:t\ ODIPI.:to fi"" 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.:" excess of the taxpayer's liabilities under this section 'l CD-\.f'(I)o).f,oPt\~t\1S shall be returned promptly to the owner of the property.
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means, the infonner shall be granted upto twenty percent (20) of the amount of tax evaded at the time of collection of the said tax. 2) The infonner shall notbe entitled to such a reward where: (a) he/she has participated in the tax evasion; or (b) where such reporting is part of hislher employment duty. 3) Details shall be provided by the directives of the Tax Authority Reward for Outstanding Perl'onnance 1) The Tax Authority shall reward tax payers and tax officers for outstanding perfonnance and discharge of duties. 2) , Details shall be provided by the directives of the Minister of Revenue. Penalty for Late Filing or Non-Filing A taxpayer who fails to file a timely tax declaration is liable for a penalty equal to: (a) 1,000 Birr for the first thirty (30) days (or part thereof) the declaration remains unfiled); (b) 2,000 Birr for the next thirty (30) days (or part therepf) the declaration remains unfiled); (c) 1,500 Birr for each thirty (30) days (or part thereof)thereafter that the declaration remains unfiled. Penalty for Undcrstlltement of Tax 1) If the amount of tax shown on a declaration understates the amount of tax required to be shown, the taxpayer is liable for a penalty in the amount of 10% (ten per cent) of the understatement or 50% (fifty per cent) if the understatement is considered substaintial in accordance with Sub-Article (2) of this Article). 2) The understatement is considered substantial if it exceeds the smaller of the fonowing two amounts: (a) twenty-five percent (25%) of tbe tax required to ~ shown on the return; or (b) 20,000 Bin". 3) The penalty shall continue to apply until, the Appeal Commission or a Court, as the case may be, shall have rendered its final decision. Penalty for Late Payment A taxpayer who fails to pay tax liability on the due date is subject to: (a) a penalty of 5% (five percent) of the amount of unpaid taxon the first day after the due date has passed: and (b) an additional 2 % (two percent) of the amount 0 f the tax that remains unpaid on the first day of each month thereafter. Penalty for Failure to Keep Proper Records 1) The taxpayer shaH be liable for a penalty of 20% of the tax assessed if he failed to keep proper books of account, records, and other doc1.unmts ~gmdm.g a certain tax year. 2) If the Tax Authority finds that a tnpayer has failed for two consecutive tax years, to keep proper books of account, records, and other documents:

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" (a) the licensing,authQfity,shan fOJ1hw~thuspend the s taxpayer's license.;Ob notificatJqR py the Tax Authority; .
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(b),'~.{f in asubsequ~!1t year"the Tax Authority again

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authontyfor purposesof suspensioQ ortevocationof the 'taxpayer's license shan for all purposes of this PfuclaIJ1.ationbe treated as an ssessment and notification may not be sent to the f OD""l?j' 11'/,?1651 hll'/"'1'f -I: Ok."f 1I'f11:J-CD<tJ'0J0"} l licensingauthority until the TaxAuthQrity'sfmding ODI\h ft\O.'}-9":: is finat' h.,.h4..f. ~P/1l I\.f. "'1llC .,."}(\ 10. llt\"'1~l"'1 fOl/.II)A 90: f}'enaltyfor Failure to Withhold Tax (/11"'651 ., '1), A withl10ldingagent who fails tQwithhold tax in Ii' OH.Uhtp~ ODlPlT h.,.h4..f. ~P/1l I\.f. "'1llC .,.")(\ '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 which has not been withheld, b':ltthe withholding q.f.~T fhd.t\OJo"} ~P/1l h"'1llC h4.f. ODA(\ agent is entitled to recover this amount from the fll'/"'1'fT ODllT .f.crltpA:: 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" purposes of any Article providing taxpayers with CD.f.9" +1.9" itA fhd.t\(Do :J-hl1 'h"}JtODt\l1t\T fODmf.p ODllT ht\OJo:; the right to contest the amount of tax 'due or to
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failed to .keep proper books,' records, and documents, the licensing 'authbrity shall revoke the taxpayer's license on , , ' notification by the Tax Authority; (c) A fmding by ~e Tax Authority'that the taxpayer's
,

.finds.that t.be,~ayerhas

failure.justifies notifica~onof ~e licensing

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recover tax paid.

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4) A penalty of Birr 1,000 is imposed on the following individuals: (a) a manager who knew or should have known of the failure described in Sub-Article (1); (b) a chief accountant or another senior officer who is responsible for supervisionor controlof withholding procedures and who knew or should have known of the failure described in (Do OU"}1 ~ 11t\ 11'/h CJCD). "'111~ .,..,."} (\ 0"'" n. Sub-Article (1), or whose improper 1n. I\t\OD"l19"h"}J'."f flf~ f~"'ll ~I\k supervision failed to prevent it. CD.f.9" II'/") ~ 0J09" "'1\ ~I\k 11C Ii if. OD"'1i5I, .f. hii:I\ 1\-:: 91. Penalty for Failure to Meet TIN Requirements 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 1) a withholding agent who makes a payment to a .,."}(\ fOlJ.! 11.,. . (Do 1'1 h .,.h4. f. I (Do 'h"}1. If ~ "'1llC withhold thirty percent (30%) of the amount of the payment. 2) a taxpayer who has not supplied the TIN to the withholding agent, in addition to what is stipulated 11(Do 0.,.""11'/& lIC ~ if. (h9"l1."f if. lIC) mf,9" 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:: whichever is less. OD"'6AiJ."} l1t\ODl'IlIl'1lI 'hCJ OOD+1i5I, I\f, l1t\OI/."'ClI Collection of and Appeal Against Penalties 92. .e."'111:OS Administrativepenalitiesshallbe paidon noticeand hO., "'&.ce OD4-i h"'1l1C h1111l(Do lli\P'AII)"} OOl/.lIT 1I'/11:J-m-tJ' 'htj fhii:J' TJ'4: mJtJ'(Do). ODhLA demand by the Tax Authority and shall be assessed and collected in the same manner as taxes. Any "1\0:":: hl\lf~r fOD+~ hm"l'I"} 'hCJ hl'llll'lll ..,lIC 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.
e. ~P/1l I\.f. r!j TCI'I"}."f (11'1\" OOD"') .,."}(\ 1n. J'1.C,?A:: h.,.h4..f. ~P/1l I\f, "'11l~"} .,."}(\ 1n. lI'/~l"'1 t\0I/.111(Do1'I(Do f"'1llC h4.f, ODt\J' ckT~"} J'I\.,.I.O "'1llC h4.f, mf.U ,,"}.,.'" "}o-l1 h"}"'''' (Ii) h"'''~

.f.h ii:I\A:: Q' hH.U Ol\.f. h+"~11OJ- OD.,.651 O"'Q;},II'/& fOl/.h .,.I\-."f "'1M'ln"f httU O:J-"f f"'CDI'I~(Do"}OD"'1i5I, 'h"}Jthii:1\- f,"l,?l\; Ottu 1\"}"'~ "}o-l1 h"}+~ (Ii) ,'h"}1."'ODt\ u) , h+(Do h.,.h4..f. ~"'1ll\f, "'1llC .,."}(\ 10. J't\OD1.I.1-"} J'CD'" CD.f.9"II'/CD.pJ't\0."f P't,. hl1hJ~: t\) Ottu h"}"'~ "}O-l1 h"}"'''' (Ii) 'h"}""'ODt\ ,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 h.,..h4..f. ~P/1l I\.f."'1llC +"}(\ 1n. fll'f~I.1-"} FCq."f fODh:J-.,.A CD.f.9" fOD.y.lI)mC ~I\k~T J't\0."f trcr h."f."ft\-"} CD.f.9" ck'l"r~"}
,

3) In addition to any ~ount for which a withholding agent is liable under'Sub-Article (1), an age~t who fails to withhold tax in accOrdance with this Proclamation shall be liable for a penalty of.1,000 Birr for each instance of failure to withhold the
proper amo\lDt.

person who has not supplied a TIN is required to

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Federal Negarit Gazeta - No. 34 4111 2002-Page July,

93.

1899

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Exoneration

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In the event that errors that led to incorrect determination and execution of tax obligations are corrected independently before commencemC(nt of a tax examination, the taxpayer shall be released from liability, with the exception of paying the tax and interest. SECTION IX Criminal Offences Procedure in Tax Offence Cases A tax offence is a violation of the criminal law of Ethiopia and shall be charged, prosecuted, and appealed in accordance with the Ethiopian criminal procedure law. TIN Violations If a person subject to tax is convicted of obtaining more than one TIN, that person shall be liable to pay a fine of not less than 20,000 Birr and not more than 50,000 Birr and to imprisonment of five (5) years per additional TIN ohtained. Tax Evasion A taxpayer who evades the declaration or payment of tax commits an offense and, in addition to the penalty for the understatement of income referred to in Article 86, may be prosecuted and, on conviction, be subject to imprisonment for a term of not less than five (5) years. Making False or Misleading Statements 1) A tax payer who: (a) makes a statement, to an officer of the Tax Authority, that is false or misleading in a material particular; or (b) omits from a statement made to an officer of the Tax Authority any matter or thing without which the statement is misleading in a material particular; commits an offence and is liable on conviction. 2) Where the statement or omission is made without reasonable excuse, (a) and if the inaccuracy of the statement undetected may result in the underpayment of tax by an amount not exceeding 1,000 Birr, the tax payer shall be liable to a fine of not less than 10,000 Birr and not more than 20,000 Birr, and imprisonment for a term of not less than one (1) year and not more than three (3) years, and (b) if the underpayment of tax is in an amount exceeding Birr 1,000, he shall be liable to a fine of not less than twenty thousand Birr and not more than 100,000 Birr and imprisonment for a term of not less than three (3) years and not more than five (5) years. 3) Where the statement or omission is made knowinIllv or recklessly, (a) and if the inaccuracy of the statement undetected may result in an underpayment of tax by an amount not exceeding 1,000 Birr, to a fineo f not less than 50,000 Birr and not more than 100,000 Birr, or imprisonment for a term of not less than five (5) years and not more than ten (10) years; and (b) if the underpayment ot tax is in an amount exceeding Birr 1,000, to a fine of not less than 75,000 Birr and not more than 200,000 Birr, or imprisonment for a term of not less than ten (10) years and notmore than fifteen (15) years.
.

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Federal Negarit Gazeta -

No. 34 4th July. 2oo2-Page

1900

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Obstruction of Tax Administration 1) A person who, (a) obstructs or attempts to obstruct an officer of the Tax Authority in the performance of duties under this Proclamation, or (b) otherwise impedes or attempts to impede the administration of the Proclamation, commits an offence and is liable on conviction to a fine of not less than 10,000 Birr and not more than 100,000 Birr, and imprisonment for a term of two (2) years. 2) The following and similar other actions are considered to constitute obstruction: (a) refusal to satisfy a request of the Tax Authority for inspection of documents, reports, or other information related to a taxpayer's income-producing activities; (b) non-compliance with a Tax Authority request to report for an interview; (c) interference with a tax officer's right to enter the taxpayer's business premises. 99. Offences by Tax Authority Employee Any person employed for carrying out the provisions of this Proclamaton who: (a) directly or indirectly, asks for or receives in connection with any of the officer's duties, a payment or reward, whether pecuniary or otherwise, or promise or security for that payment or reward, not being a payment or reward to ~ch the officer is lawfully entitled to receive, or (b) enters into or acquiesces in an agreement to do or to abstain from doing permit, conceal, or connive at any act or thing whereby the tax revenue is or may be defrauded, or which is contrary to the provisions of this Proclamation or to the proper execution of the officer's duty; (c) exeeds the authority conferred upon the Tax Authority or misuses such authority; commits an offence and is liable, on conviction, to a fine of not more than 50,000 Birr and to imprisonment for a term of not less than ten (10) years and not more than twenty (20) years. 100. Unauthorized Tax Collection Any person who is not authorized to collect tax under this Proclamation collects or attempts to collect tax (or an amount the person describes as tax) commits an offence and is liable, on conviction, to a fine of not less than 50,000 Birr and to imprisonment for a term of not less than five (5) years and not more than ten (10) years. 101. Aiding or Abetting A person who aids, abets, incites,or conspires with another personto commit a violation againstthis Proclamation also commits an offence under this proclamation and shall be subject to prosecution, and shall on conviction be liable to a fme and imprisonment not in excess of the amount of fme or period of imprisonment provided for the offence aided or a betted. 102. Offences by Entities 1) Subject to the provisions of Sub-Article (3) of this Article, where an entity commits an offence, the manager of that entity at the time of the Commission of the offence is treated as havingcommitted the same offence and is liable to a fme and imprisonment under this Proclamation.

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Subject to the provisions of Sub-Article (3) of this Article, where an entity commits an offence by Ii" failing to pay an amount of tax, including an amount treated by this Proclamation as though it were tax, every person who is the manager of that entity at that time, or was a manager within six (6) months prior to the date of commission shall jointly and severally, be liable with that entity and that other person to the Tax Authority for the amount. 3) Sub-Articles (1) and (2) do not apply where: (a) the offence is committed without such perE" 01o-it ~1"'K" (Ii) hCj..,(ID f"'1.'111-1:-;son's knowledge or consent; and OwIt! ID-.p CD f.1jO It f. itDfl u) 1'4- -I: f.,. ~8 00 lD- f\ 1'1 (b) such person has exercised the degree of care, "'lOT hlf'1 -: diligence and skill that a reasonably prudent f\) ~1Y: '1.,c:":j-1 01'1.4'<1: fDt.ff.l'1ID- O.,.ooltltf. person would have exercised in comparable oo~OIjO f\oohl\hA f.CDit~ v-).;r lD-it1' f1'4--I:1 circumstances to prevent the commission of Tif' A .,.11ft- fDt., 00-1: 1'1.4'<1: '"f1 -:.,.., 0.ID-1 9 the offence. hCj f~lPlrC 1'011 f"''l''I\O:'' hCIjO~ T;1:" 4) Any person who refuses to supply goods or render ..,f\l'1o- CDitf. f"'''l h11.1f'1 -: .,.~,Dt ~f.1f'1-0:"1jO:: services to a withholding agent, by reason of him withholding an amount of tax from the payment to h.,.h4-f. 'Llt11l\f. ..,11C .,.,(\.,0. fDflY:I..., ;}l\k'1-12" that person, shall personally be liable to a fine of not f\ "'1'1 m ID- 1'1lD- "l11 -t-1 .,., (\ ODflit.,. I. -I: IjOtJ 1 !:,. IjO less than Birr 5,000 and not exceeding Birr 10,000 iJ.4' f\ "'I:P 1.11 CD f.1jO ~., A"l ft- -1- t\ 00 it m -1- h 0. .,. and to imprisonment for a term of not less than one ~'1T !ltf DflCjTlD-1jO 1'1ID-h11C ~7f.u ODfl!1it 'hCj 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) (a) in the case of a partnership, a partner or f.'" A II f\1o-it ~1"'K" (Ii) hCj (ID ~~'OIjO "P'lr manager of the partnership or a person pur" ~" Dflf\:"; ~it h.!~" porting to act in either of those capacities; U) f"liCtJCj "'I10C1 ODtoot\h-1f"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~ to act in any of those capacities; and Iffj fDt;rf. -: (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 capacity. CDf.1jOhh'1H.U ;}l\k'1.y."f 0~1~ h11.DtIP~ 103. Publication ofNames -: I1'fj fDt;r f. 1) The Authority shall from time to time publish by th) fl'19'"f1 111I.T ODl/.oof\h-1- f1111.-I: P' ~ notice in daily Gazettes a list of persons who have CDf.1jO0H.v- ;}l\k'1-1- 'h11.DtIP~ ~P'h.!~ fj fDt;r f. -: 'lID- II been convicted of offences under Articles 93 to If 101. ID-il}:" itljO O;J H.ffJ ~:,.qu itt\ DfI Iif E" f'f'4-.,.~"f1 2) Every list published in terms of Sub-Article (1) Ii" f"l11C ~it.,o.lD- 11f\P'AffJ1 OH.U ~'P~ h~1"'K" shall specify: 1E - fli f.,.1.'1n'T1 fCD1~A 1'4-.y."f 000~81jO (a) the name and address, of the enterprise or of f"'~I.1.I1TlD- 1'19'"f itljO1fC1fC Of'LH.lD- OiJf\;r4f ;1H.tn"f ;rT'l" h1-\CDffJ !1.C;JA II the person; (b) such particulars of the offence as the OH.U ~1"'K" 1o-it ~1"'K" (Ii) OOIPI.:" ;rT'l" I" fDtCDffJlD- 1fC1IC -: Authority may think fit: CDf.1jO f"lt\l'1o-1 itljO'hCj ~Y:lr"li-: u) f~C~-I:1 (c) the tax period or tax periods in which the f\) 11 f\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 "l11C 11 -1t\ SECTION X f.U1'1-:: Appeal Procedure tJC;:A ~P'C 104. Review Committee f.f."'I1~ ~"'lrl.11 p'c~-1Members of the Review Committee shall be appointed (, \1"7.-1: 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"0.9'1DI/.~it:"C CDf.1jO recommendation of the head of the Tax Authority. ~"'fI-oI1f\lDftJAA 11f\P'AffJ1 f.l'1fDflft- II fj 105. Powers And Duties ofReview Committee lif~" \1"'1.. -f:lD- itf\"'I...,. 1.lD- P' AffJ1Cj "'''lflC 1) The Review Committee shall be accountable to the \1Dt i;lDm (, '1-1: f\..,-o C ~ il1 0.ID- 11 f\P' A ffJ1 Ii" head of the Tax Authority and shall have the Iffjf following duties: U) O..,-oC h4-r-"f oo.,.~ h 1-\ 'lit f CDf\Y: .,.(, (a) to examine and decide on all applications h1-\1.I..., CDf.1jOf"l-oC "l~;r h1-\"li"liA submitted by tax payers for compromise of fDt.,.Co"'IooAh;J=9'"f1 f\oooocoocCj penalty, interest, and waiver of tax liability; lD-"'t). f\ ooltm T f (b) to gather any written evidence or information f\) h"'l.o-T ~o.-f:;r9'"f ;1C ..,,1-'1:" !I\TID-1 ,h.C;: DfItl.~9'"f "'ICj:flD-1jO f K" l CD f.1jO relevant to the matter submitted;
Iffj -: 011J.{, ~1"'K" (E) f.,.1.'1.,.,ID- h11."'mO.,. "'ICj:flD-1jO ~C~:,. OH.U ~'P~ OOIPI.:" fl.h~A fDt111lD-1 CDf.1jO~'P~ h11...,-oC fDt~1'1.ID-1 "'ICjTlD-11jO t\.l\ tJ C;:! ., 0. It! 1.C.., f'" I. h 11.If '1 1'4--1: 0"'~8000:''LH. CDf.1}"1'4--1: h"'~oooO:" 'L H.. Ml'" ~'l" 0'1 0 -t-:" itY: it 1:- CD ~:,. ID-it l' fY:C~-I: P'lr ~ith.!~ f'10-t- 1'19'"f hY:C~-I: hCj h/\.l\lD- 1'1lD- ;1C 0~1Y:'1:"Cj (H-CjmA f..,-oC . ~il10.ID- 11f\P'Ail}1 f\Dt~A"ID- ..,-OC hCj /\.f\":jtJC;:!9'"f "'m!et f.lfCj ft-:: ool.)f,,"f 00 0 0 a:

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No. 34 4tl' July, 2002-Page

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(}9"cout- ~f.. f0lf.17'ro-'} 1-P,f.. (}OIf.out\h,} (c) to summon any person, who directly or roo'} t.1 y.: <I' (1 fOlf.m f <f> C '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'/,."" : (d) to review determination made by the Tax ou) f"1'OC hft1QW' t1t\F'Afl)'} fomro. f"1'OC Authority for accuracy, completeness, and rooOf). .). tI tI t\~: : f -t. ~ h lJ f..u'n ~\P~~ "compliance with this Proclamation. m'O~ f.,. Om oulf'1-,} fe11Jt.,'J1'I' F'Afl)'} 2) The !=ommittee shall only review applications f..Cjt.PA :: submitted to it within 10 days of receipt of tax fh(}.1::t' hfl)6ro- h"1'OC h \,.:f. fUIJA'cn(D''} assessment notification. hO,.f:;1' t\.!f.. f0lf.1.t\CD- "1.nc h4,(-'. f"HIC ro."/>, 3) The Head of the Tax Authority may approve the e11Jft:rmcf.r (}f.t.Oro- Or <I'lJ.). (D'ft'I' ~\o.'I::J'w,'} t"t<l't.(} ~ro- :: recommendations or remand the case, with his f"1'OC hft1Qrot1t\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'" ftUIJUIJ 9"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
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the Minister of Revenue. Right of Appeal against Assessment of Income 1) Any taxpayer who objects to an assessement may appeal to the Tax Appeal Commission (hereinafter referred to as the "Appeal Commission") upon the fulfillment of the requirements hereunder. 2) No appeal shall be accepted by the Appeal Commission, unless: (a) a deposit of th~y-five percent (50%) of the desputed amount is made t6 the Tax Authority; and (b) the appeal is lodged with the Appeal Commission within thirty (30) days following the day of receipt of the Assessment Notice or from the date of decision of the Review Committee. 108. Date of Lodging Appeal The date on which an appeal is submitted shall be the date of: (a) its registration by the archives of the Appeal Commission if it is delivered other than by registered mail; or (b) registration by the post office if sent by registered mail. 109. Contents of Memorandum of Appeal 1) The memorandum of appeal shall be sumbitted in diplicate and shall include: (a) a statement of the specific subject matter of the appeal and the reason for the appeal: (b) the taxpayer's name, address, and TIN, and (c) as attachements, any relevant supporting documents and a photocopy of the receipt for the appeal deposit. 2) Where anyone of the first three conditions under Sub-Article (1) is missing, the Appeal Committee shall require the aDDellant to correct the deficiency within five (5) days, failing of: w~ich the appeal shall be rejected. 110. Service of Documents 1) Prior to the first hearing of any appeal: (a) a copy of the memorandum of appeal shall be served on the Tax Authority by the Appeal Commission; and (b) the Tax Authority shall submit its reply to the Appeal COmmission while at the same time giving a copy thereof to the appeallant. 2) The appellant shall have the burden of proof with a view of establishing his or its claim.
107.

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July, 2002-Page No. 34 4111

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111. Decision of Appeal Commission 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}'\.fDo ill1ltt} the appellant and the date of decision, the names ''''1 ~:,.") 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.., 6 ~ "H fDo011.,1\ 5J. I' 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 justified and accepted partly or wholly, ~ ~t;: Il\fDo 01111'") 11\01111''1-") : .,..,.q,e.H' whether the claim is remanded with instruc.f1;fDo Oou-I\- tD,e.r Oh".A OII(I''I-"}: .,,+q,.~..,. .,e..,q"f. hOllOlltl .?C tD1. tions to the Tax Authority; and the amount the "'OC f.fOlll\lt OII(I''I-"} : "~(1.1& ql\P'A"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..,.: 3) The decision shall be signed by the panel memfDo"'~fDo") OD7.,OIIlth..,.l1~ ,.,.ltm fYltl1 bers present, and the Seal of the Appeal CommisA'~:" 11M sion shall be affixed thereon. th) f,e..,q~q,,") ,e..,t}~ fOl/:"ll1 0II11.,."f:: [. 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: ,,e..,q~ .,.q'\.I 0' (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 (b) the Tax Authority, after receiving the '1\) ,.,l1C hil1{1.m- q I\P' A"I') ,,e..,t}"f. memorandum of appeal, fails to give reply or tI7011 h:J= h1.lltfDo 0:\1\ '00-1\..,. ,+ m CO A to appear before it on two occasions. ') 1.11'~ tD,e.9" 1\",., t}"f. 1. tf.sP"f It,e..,~ '+l " 112. Appeal from Decision of Appeal Commission OIIAil"",lt1' fL+Cl 1) Any party dissatisfied with the decision of the "'h~l1&fDo dJ.,') OlbI\O"" fDo"'~ ",ltIJ)A:: ,,,,.,q~ ,.q'\."} fDo"'~OOll:J'tD9"illtD7.,+Cl1,e..,q~; Appeal Commission may appeal to the competent court of appeal on the ground that it is erroneous li.f"'''~~ ~q'\. fltmfDo fDo"'~Oth., l1~ iltJ.,.:" on any matter of law within 30 days from the date ~fDo 001/1\:" fA.,.ilOl/OI/ OI/")~fDo9""'h~ta& 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 P'AIJ)') '.,.ltmfDo t;:C~ 0.-1- Oth"'. 1.'11: f"'~ I' 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:: Commission. [. P'An;") O.,.ltmfDo t;:/n.-1- Oth., '1'14: I\,e. J) An appeal to the next court of appeal from the O.,.ltmfDo~..,~ :"c ,.,.It; "'h~l1& tD1') decision of the lower court of appeal may be made fDo"'~fDoO"'iam Oc!)+') lD-il'l' I\",.,q~ ltD7.,fDo ,e...,q~ 1\01/1\-1,."fl\A:: ",.,q~ ltD7.,lDby either party, within thirty (30) days of the t;:C~ 0.:" 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 , ..,l1C h.s." o..,-nc ,e..,t}~ ,.t}'\. f"'dJlt~O-1-") f!' taxpayer has paid the tax liability determined by 60-1\- .,l1C I1Ah~1\ Oil.,.+C f,..,q~ ltD7.,fDo the Appeal Commission. t;:C~ 0.:" ",..,q~") OII+OA fItO-1-9":: 113. Bstablishement of Appeal Commission ,,e...,q~ .,.q~ 011**9" 1) The following Tax Appeal Commissions shall be fD7.,h.,.l\-:" ,..,-OC ,e..,q~ ,.t}'\.9'-:;' ",)Jlil~I\1. i' established: .,;r:f1D~*'" l\(a) Federal Appeal Commission, at the Federal v) nd.1.~A I.l){ f L1.~A ,.,l1C ,e..,q~. level; .,.q '\.1 (b) Regional Appeal Commission, in each 'PC; h-f-Ol/: 'bAA 1\) ~JI")~ 'bAA Regional Government town; f..,-oC ",..,q~ .,.q'\.: (c) Zonal Appeal Commission, in each Zonal 'fI,) 'PC; h1-Ol/: 'fI") '..,l1C th) O""JI")~ ",..,q~ .,.q~'i: town; and , 011) O""JI")~ (d) Woreda Appeal Commission, in each ftDl.'; ,,It.,..';1.C h-f-Ol/:'tDl.'; ,..,-nC ,e...,q~ ,.q'\.:: Woreda Administrative town. ,,e..,q~ .,.q", ID-"'~
. . ,.

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July, Federal Negarit Gazeta - No. 34 4110 2002-Page 1904 2) Notwithstanding the provisions of Sub-Article (1), if the Regional Government finds it unnecessry to have a separate Appeal Commission at any of the above mentioned levels, it shall make an arrangement in such a way that such areas may be covered by the Appeal Commission established in the neighboring locality. The Federal Appeal Commission shall be accountable to the Minister of Justice; City administration, appeal commissions to the executive organs of city administration, region, zone, woreda, as the case may be.

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Appointment of Members 1) Members of Appeal Commission at every level shall be appointed from among persons having good reputation, acceptability, integrity, general and professional knowledge, and from among persons who have not committed any offense in connection with tax and tax administration. 2) The Minister of Justice or executive organs of city administrations and regions, as the case may be, shall issue directives setting out the criteria to be applied in the selection, appointment and composition of members of Appeal Commissions. 3) On the basis of said directive members of the appeal commissions and panels shall be selected and appointed by the Minister of Justice or the appropriate city administration, regional, zonal or woreda executive organ, as the case may be. 4) The Appeal Commission's President shall be appointed by appropriate entities listed under Article 113(3)above. 5) Each Appeal Commission may have more than one (1) panel. In such cases each panel shall have five (5) members and s~all elect one (1) members to serve as Chair person.

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6) The person term of office of an Appeal Commission member shaH be two (2) years. A member appointed to chair an Appeal Commission or a
panel shall serve in that capacity for two (2) years or the remaining period of Ithatother member's term if he is a substtute. 7) The Chairperson and other members of the Commission shall be entitled to receive such attendance fees for sitting on panels as shall be fixed from time to time by the Minister or the Executive body of the Region, as appropriate. Powers and Duties of Appeal Commission and of its
Chairperson

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1) The Appeal Commission shall have the authority: (a) to confirm, reduce, or annul any assessment appealed against on the basis of established factual grounds and the law, and make such further consequential order thereon as may seem just and necessary for the final disposition of the matter; (b) to instruct the Tax Authority or the taxpayer to submit new facts, if any; and (c) to order the Tax Authority or the taxpayer or any other person or governmental department or agency, as the case may be, to produce supporting evidence relevant to the taxpayer's allegation.

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Federal Negarit Gazeta 2)

No. 34 4th July. 2002-Page

1905

liUI'

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An Appeal Commission's Chairperson shall: (a) make preliminary examination of memoranda of appeal; (b) prepare the agenda for the panel; (c) preside over and guide the proceedings; (d) ensure that the arguments are properly recorded in the minutes and that the decision conforms to the prescribed form; and (e) submit an annual report about the aCCOmI) 00 00111I):f",., 'I ih "'I V-Ir 0."" 1 plishment (performance) of the commission O"tf"",. I.':C9" ',f.~T 00";J1::1':f",.' Il;J"'I1lJ 1:\I he presides over. IP) 0"-+ oo'oc~+ 116. Burden of Proof f""'oo&-"" ?-I)'\ ltlth'i"lD '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 f07l\lJST ~It.c.~T person objecting to the assessment or decision. 117. Power to Issue Regulations and Directives l\, 0."" f 1-1D fa~",. "'1-0 01l:t 1:\ ID,f.9" f"'1{1C C 1) The Council of Ministers shall issue regulations '1AFAIfJ' ffaro"" ",."'t~ +tJhl:\ ",f.~ft9"" 0.",,1:\ 0""1.+C{I tJctJc f"7ltlJS:t?It.c. ~-I:f1-lDfI'I"'" "'I{lC for the proper implementation of this Proclamation. 1D"9" f'1ftFI:\IlJ~' ",."'t~ f.",,:J>moolD- fa",. "If'i" 1:\11 2) The Minister of Finance and Economic DeveJop~'{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 SECTION Xl ,,'fltl\lI I'

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.~ .'~yabI9i ~pon the cormng. Into force ~f thls .t~l..tlOn o~ are accrued.Inrespect.of Income "'~'~;:;::'-';;,;;;:; 9'ririn fiCle, busIness,profession, vocatIonsor any F &-e; h07'i":f",.9" Ibit=i- F &-?,'f
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All existing Tax Appeal Commissions shall conAh+ OH.UhCP~ f1-?\'~ ih1-'f v-Ir 1-L''''''~+ hlt:f",.11 tinue to function until such time as new Tax Appea)Commissionas been established in accorh I' OIf.U hCP~ 1:';J1.?''f OOlPlT ',f."'I'1'S fa."" ?-'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 and all amendments thereto are hereby repealed. '1-?\'~ "e; 1-L''''''~+ f07,f.tj &-:f"" ii":"1' Ii' I' r' !!. h07'i":f",.9'"'o. "'I1IC ltft07l\hLI:\ flDlfJ",. h~07?\'?\'I?'=t: . h"'~ ~.,.C lifttr/Ijf2r ht}1::1'A CP;J61:1T .,.:,.9" It,. "'I{lC ft07l\hLI:\ flDlfJ"" hCP~ ~.,.C n~/Iufn' f~1.&-1:\ f"'111C,f."'It)'S fa."" "1-'1'\' ft07!t!t9" flDlfJ"" Ijf1r hCP~ ~.,.C fleDr Iiinr' OH.Uh"'~ 1-1ilCPI:\:: 07'i":f",.9" A.h-'f hH.u "".~ ;JC f~l~ Payment of Tax on Gains from Capital Proclamation No. 108/1994 is hereby repealed. 3) Federal Tax Appeal Tribunal Establishement Proclamation No. 23312001. 4) All laws which are inconsistent with this Proclamation shall not apply on matters covered 2)

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under this Proclamation. .

This ProclamatIon shall come Into force as of the 4 th

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day of July 2002, and shall apply to all incom.e.,paid, received or earned from Hamle 1/1994E.C. onward. .
Done at Addis Ababa. this 4thday ofJuty, 2002. GIRMA WOLDE GIORGIS PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETIllOPIA

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