Ethiopia Tightens VAT Rules to Widen Tax Base
Ethiopia has introduced sweeping changes to its VAT system, requiring a broader range of businesses and professionals to register..
✨ Key Highlights
Ethiopia has significantly broadened its Value Added Tax (VAT) system, mandating more businesses and professionals to register under new regulations. This move, outlined in Directive No. 1104/2025, aims to boost compliance and expand the nation's tax base.
- All Category “A” taxpayers and businesses with annual taxable and exempt transactions exceeding 2 million birr are now required to register for VAT.
- The Ministry of Finance, led by Finance Minister Ahmed Shide, is the key organization behind these changes.
- The new directive also extends VAT obligations to professional service providers regardless of turnover, effective after publication on the Ministry of Finance’s website and registration with the Ministry of Justice.
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India and Ethiopia Adjust National Tax Policies Amid Trade and Economic Pressures - September 2025
India has significantly cut taxes on hundreds of goods by simplifying its Goods and Services Tax (GST) structure into two main slabs of 5% and 18%, effective September 22. This policy change is aimed at boosting domestic consumption and mitigating the potential economic impact of steep 50% US tariffs imposed by President Donald Trump, which became effective on August 27. The US tariffs have put Delhi in a difficult position, leading to geopolitical signaling rather than direct retaliation. In a separate move to increase government revenue, Ethiopia has broadened its Value Added Tax (VAT) system through Directive No. 1104/2025. The new regulations mandate more businesses and professionals to register for VAT, a move designed to boost compliance and expand the nation's tax base.
