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Ethiopia - Apply for Withholding Tax

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Contents

Introduction

Withholding Tax is an advance payment of income tax. In principle, Withholding Tax is a payment on account of the ultimate income tax liability of the taxpayer or company.

Withholding tax is not a separate tax on its own and does not confer an exemption from the filing of annual tax returns by the company which had suffered WHT. The tax is normally to be deducted at source when a payment is to be made to the beneficiary.

Eligibility

It is applied to Ethiopian in receipt of the certain incomes mentioned above.

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Instructions

Employers are required by law to register and deduct tax from payments made to employees in respect of employment income.

Required Information

1. Proof of employment

2. Proof of identification

Procedure

1.You will start by registering as a taxpayers at a nearby tax office in your area of operation:-

In this case, you go to a nearby tax office and obtain an application for registration form and fill it in completely;
Accompanied with proof of identity, submit the filled form to the tax office;
Upon submission of documents, your passport photo and finger prints shall be captured by the tax officers;
Upon verification of submitted details, a taxpayer’s identification number (TIN) is issued to you;

2.Thereafter you can proceed with filing the withholding tax returns under the self Assessment Regime

You can either file Withholding tax returns in person or you can contact an authorized tax agent to file returns on your behalf.
You / your agent should start the filing process by computing the tax liabilities; in this case, you shall be required to make sure that an assessment of taxes payable is done, and then you make payment for the With holding tax(es) due in any designated bank;
Thereafter obtain the With holding tax return form for the return you wish to file, fill it completely and submit it with an assess ment notice and evidence of payment to the tax authority;
  • WHT is an advance payment of your income tax, therefore if at the end of a financial year your tax payable is Birr500,000 and an aggregate of all your WHT credit note is Birr200,000, the net tax you will pay to the government will be Birr300,000. That is why it is important to keep your WHT
  • Non-resident companies are subject to Withholding Tax (WHT) deductions on the income they earn from Ethiopian. This becomes their tax upon filing returns
  • When the tax authority receives documents, they will assessed to ensure that each and every detail has been filled in the form; then you will be able to get the withholding tax return certificate.

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Required Documents

  • Tax Invoices
  • Payment Slips
Companies filing Annual Returns must also provide
  • Audited financial statements;
  • Capital allowances computation;
  • Detailed statement of profits from each transaction
  • Audited financial statements and tax computations (nonresident companies)

Fees

  • Its free to apply for withholding tax.
  • Where a person rents or hires property/services from another, WHT at the rate of 10% will applies.
  • Dividends are subject to a 10% withholding tax whether paid to a resident or non-resident unless (in the latter case) the rate is reduced under a tax treaty. Dividends paid between two Ethiopian companies are exempt.

Validity

  • This tax should be paid on or before the 20th day of the following month.

Documents to Use

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Sample Documents

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Processing Time

  • Using the online method, it is instantly done after clicking the submit button. This usually takes a few minutes.

Office Locations & Contacts

Ethiopian Revenues and Customs Authority.

Ato Kaidaki Gezahegn

Deputy/Director General- Program Designing of Operation and Development Businesses

Telphone: - 0116 62 98 57

Fax - : 0116 62 98 59

E-mail -: kaidakig@revenue.gov.et


Ato Desta Bezabih

Deputy/Director General, Branch Offices

Coordination and Support

Telphone - : 0116 62 98 81

Fax -  : 0116 62 98 66

E-mail -  : desta@revenue.gov.et

Domestic Tax System and Program Development Directorate

Ato Tesfaye Mergiya,

Director-

Domestic Tax System and Program Development Directorate

Telphone -  : 0116 62 98 15

Fax - None:

E-mail -  : tesfayem@revenue.gov.et

Ministry of Revenues

PO Box 2559, Addis Ababa, Ethiopia

Tel:00251115511066

Tel: 00251115518200/512555

Ministry of Trade and Industry

PO Box 704, Addis Ababa, Ethiopia

Tel:00251115518025/515411


Ethiopian Revenues and Customs Authority
Ministry of Economic Development & Cooperation

P. O. Box 2428, Addis Ababa

Tel: 251-1-519684, Fax: 251-1-517988

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Video

Videos explaining the procedure or to fill the applications. 
Attach videos using the following tag <&video type="website">video ID|width|height<&/video&> from external websites.
Please remove the "&" inside the tags during implementation.
Website = allocine, blip, dailymotion, facebook, gametrailers, googlevideo, html5, metacafe, myspace, revver, 
sevenload, viddler, vimeo, youku, youtube
width = 560, height = 340, Video ID = Can be obtained from the URL of webpage where the video is displayed.
e.g In the following url "http://www.youtube.com/watch?v=Y0US7oR_t3M" Video ID is "Y0US7oR_t3M". 
	

Information which might help

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Other uses of the Document/Certificate

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e.g. Birth Certificate can be used as proof of identity.

External Links

http://www.2merkato.com/articles/tax/28-tax-registration-assessment-and-payment-procedures-in-ethiopia

http://www.erca.gov.et/index.jsp?id=faq&pgNber=5

http://www.2merkato.com/articles/tax/types/29-value-added-tax-registration-rates-and-exemptions-in-ethiopia

http://chilot.me/tag/value-added-tax/

http://www.erca.gov.et/docs/1457.pdf

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