- Ethiopia modernized its tax system with changes to the VAT regime.
- Proclamation No. 1341/2024 was enacted in July 2024, replacing the former VAT law.
- VAT obligations now extend to non-resident digital service providers and platforms.
- The legal framework aims to tax the digital economy fairly and align with OECD guidance.
- Objectives include increasing VAT revenue and curbing base erosion from e-commerce.
- Non-resident providers must register and account for VAT on services to Ethiopian consumers.
- Digital platforms are deemed suppliers if they authorize payments, set terms, or facilitate delivery.
- B2C transactions are subject to 15% VAT; B2B transactions use a reverse charge mechanism.
- A registration threshold of ETB 2 million per annum is set for VAT registration.
- Simplified registration for non-resident businesses is expected.
- Taxpayers must issue VAT-compliant invoices, with details to be set in future regulations.
Source: vatabout.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
