Ethiopia: New VAT proclamation targets cross-border digital services
Ethiopia’s Ministry of Finance issued VAT Proclamation No. 1341/2024, introducing new rules for taxing digital services supplied by nonresident businesses. The measures focus on cross-border transactions and are set to take effect upon approval by the House of Peoples’ Representatives.
Key provisions of the proclamation:
15% VAT on cross-border digital services: A standard VAT rate of 15% will apply to remote services supplied by nonresident businesses to Ethiopian residents.
Liability for nonresident providers without a PE: VAT will also apply to services physically performed in Ethiopia or other specified categories, even if the provider lacks a permanent establishment in the country.
Residence and platform rules clarified: The proclamation outlines criteria for identifying whether recipients of remote services qualify as Ethiopian residents and specifies how VAT liability applies when services are supplied via electronic distribution platforms.
Registration threshold set: Nonresident providers must register for VAT if their taxable annual sales exceed 2 million Ethiopian birr (approximately USD 14,936).
Penalties introduced: A penalty of 100,000 birr (approximately USD 746) will be imposed for each failure to comply with the new requirements.
Repeal of previous law: The new proclamation repeals VAT Proclamation No. 285/2002.
These measures are part of Ethiopia’s efforts to modernize its VAT system in line with global trends in digital taxation.
Source: gov.et
VAT/GST rates 2024 in Africa
| Country | Standard VAT/GST Rate | Reduced Rates |
| Algeria | The standard sales tax (VAT) rate is 19%. | A reduced rate of 9% applies to certain industries |
| Egypt | The VAT rate is 14% | 5%, 10% |
| Equatorial Guinea | The standard VAT rate is 15% | 6% |
| Ethiopia | The standard VAT rate is 15% | |
| Mauritania | The standard VAT rate is 16% | |
| Mauritius | The standard VAT rate is 15% | |
| Morocco | The standard VAT rate is 20% | 10% |
| Nigeria | The standard VAT rate is 7.5% | |
| South Africa | The standard VAT rate is 15% | |
| Tanzania | The standard VAT rate is 18% | |
| Tunisia | The standard VAT rate is 19% | 7%, 13% |
| Uganda | The standard VAT rate is 18% |
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