VAT 15% in Ethiopia: registration, invoices and monthly returns
Ethiopia charges value added tax (VAT) at 15%. This guide covers who must register, how to calculate VAT, what to do when an invoice changes, and when the monthly return is due, based on the VAT Proclamation No. 1341/2024.
Who must register for VAT
- Compulsory: a business must register when its taxable sales are more than 2,000,000 birr in 12 calendar months (Article 12). The application is due within 7 days of becoming liable.
- Voluntary: a business may apply to register when its taxable sales are more than 1,000,000 birr a year (Article 13).
- The tax authority can count the sales of related persons when it checks the threshold.
How to calculate 15% VAT
On a price without VAT, multiply by 15%:
| Potato chips 50 g × 480 | 12,000.00 |
| Corn puffs 150 g × 240 | 15,600.00 |
| Net total | 27,600.00 |
| VAT 15% (27,600 × 15%) | 4,140.00 |
| Total in birr | 31,740.00 |
To find the VAT inside a price that already includes VAT, multiply by 15/115. Example: 11,500 birr × 15 ÷ 115 = 1,500 birr VAT and 10,000 birr before VAT.
Some supplies are zero-rated (0%) or exempt; they are listed in the schedules of the Proclamation (Articles 9–11).
Invoices, credit notes and debit notes
- Issue the tax invoice at the time of the supply (Article 52). The details it must show are set in the VAT Regulations, so make sure your invoicing system follows them.
- If the VAT on an invoice was too high (for example after a return or a discount), issue a credit note; if it was too low, a debit note. Issue it by the end of the month in which the change happened (Article 53).
- Mistakes are expensive: issuing a tax invoice, credit note or debit note that does not follow the Proclamation can cost 50,000 birr each time (Article 66).
- For official tax invoices under the Ministry of Revenues' e-invoicing rules, follow the Ministry's current instructions (approved invoicing machine or system).
The monthly VAT return
- The VAT period is one calendar month. Nehase and Pagume are counted together as one month (Article 2).
- File the return by the last day of the following month, even if no VAT is due (Article 58).
- Pay the net VAT (VAT on sales minus VAT on purchases you may claim) by the same date (Article 59).
- Keep the originals of invoices you receive and copies of invoices you issue, in date order (Article 55).
Sources
General information, not legal or tax advice. Laws and rates change; check with the Ministry of Revenues or your accountant before you file.