Ethiopia: Value Added Tax Proclamation (Proclamation No. 1341/2024) entered into force

On 21 August 2024, VAT Proclamation No. 1341/2024 was signed and published in the Federal Negarit Gazette following its adoption in July 2024 by the Ethiopian House of Peoples' Representatives. The Proclamation repeals the previous VAT Proclamation No. 285/2002. The Proclamation introduced a 15% value-added tax (VAT) on cross-border digital services. The tax applies to "remote services" provided by non-resident suppliers to consumers within Ethiopia. Non-resident providers may also face VAT obligations for services physically performed in Ethiopia, including those related to immovable property, inbound tourism bookings, and telecommunications used solely within the country. VAT applies to business-to-consumer transactions where the recipient is considered based in Ethiopia, determined by factors such as billing address, bank account, geolocation, and delivery method. Digital platforms facilitating these services are also liable for VAT if they authorise charges, manage delivery, or set supply terms. Non-resident providers must register for VAT if their taxable sales exceed 2 million ETB (approx. USD 17,500) in any 12-month period.