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FEDERAL NEGARIT GAZETA

OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

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Council of Ministers Value Added Tax

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REGULATIONS ISSUED PURSUANT TO THE VALUE

ADDED TAX PROCLAMATION
These Regulations are issued by the Council of Ministers

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pursuant to Article 5 of the Definition of Powers and Duties of
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the Executive Organs of the Federal Democratic Republic of

:f!! Ethiopia Proclamation No. 4/95 (as amended) and Article 64
of the Value Added Tax Proclamation No. 285/2002.

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CHAPTER 1
General

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91hYear No. 19
ADDIS ABABA-31't December, 2002

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1. Short Title
These Regulations may be cited as the' 'Council of
Ministers Value Added Tax'Regulations No. 7912002.

2. Definitions
In these Regulations, unless the context requires
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Authority;
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3) "Minister" and "Ministry" shall mean the Minister
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Proclamation No. 285/2002; and
5) "Tax" or "V AT" means the Value Added Tax
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Imposed by the V(\lueAdded Tax Proclamation.
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No. 1931stDecember, 2002-Page

1980

Supply of Goods or Rendition of Services

1) For purposes of Article 4, Sub-Article (3) of the
Proclamation treats the supply of goods or the
rendition of services to employees as supplies in the
course or furtherance of a taxable activity; and
therefore taxable unless the transaction is exempt
under Article 8 of the Proclamation.
2) . A supply of goods or services to employees are
treated as supplies for consideration and therefore
may be taxed, even if the employee did not pay (or
paid less than market value) for the goods or
services.
3) If an employer:
(a) provides an employee a cash advance,
(b) pays a supplier on behalf of the employee; or
(c) reimburses an employee
for the cost of goods or services provided as a fringe
benefit, the employer is not entitled to claim any
portion of the cost as a tax credit because the goods or
services provided to the emplyee are not used in
connection with the employer's taxable activity.
4) If an employer was denied a tax credit on the
purchase of goods or services (such as a passenger
vehicle), the supply of those items to an employee is
not a supply in connection with a taxable activity and
therefore is not subject to tax.
5) If a registered person supplies an exempt service
(such as a medical service at a company-run clinic) to
an employee, the service is not subject to tax and the
employer is not entitled to tax credits under Article
21 of the Proclamation for tax on purchases allocable
to the exempt services.
6) Where goods supplied under an installment sale or
finance lease (collectively referred to as a credit
agreement) are repossessed, the repossession is a
supply of the goods by the debtor under the credit
agreement to the person exercising the right of
repossession, and where such debtor is a registered
person, the supply is made in the course or furtherance of the debtor's taxable activity unless such
goods did not form part of the assets held or used by
the debtor in connection with that taxable activity.
7) The sale of a lottery ticket by the National Lottery
Administration is a supply of services.
8) Where a supply consists both of a supply that is
charged with tax at apositive rate and a supply that is
charged with tax at a zero rate, each part of the supply
is treated as a separate supply, unless one part is
incidental to a main supply within Article 5, Sub.Article (1) of the Proclamation.

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Taxable Activity
1) For purposes of the definition of a taxable activity
under Article 6 of the Proclamation, anything done
in connection with the commencement or termination of a taxable activity is treated as carried out
in the course or furtherance of that taxable activity.
2) Taxable activity does not include:
(a) an activity carried on by a natural person.
essentially as a private recreational pursuit or
hobby or an activity carried on by a person other
than a natural person which would, if carried on
by a natural person, be carried on essentially as a
private recreati9nal pursuit or hobby; or
(b) an activity to the extent that the activity
involves the making of exempt supplies.'

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1981

9. The'rendition of services by an employee to an

employer by reason of employment is not a supply.
10. The provision of goods on consignment and the
transfer of goods to a person in a representative
capacity is not a supply.
11. The removal of goods from a bonded manufacturing
warehouse or any supply of goods subject to an
export trade duty incentive scheme under
Proclamation No. 249/2001 is treated as a supply of
those goods in the course or furtherance of a taxable
activity in Ethiopia. If the goods are sold into the
domestic market, the supply is taxable at the st~ndard
rate, and if the goods are sold for export 'within
Article 7, sub-Article (2)(a) of the Proclamation, the
supply is taxable at the zero rate.
12. a supply of goods or the rendition of services to a
person as agent for a principal is treated as a supply
to the principal.

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Ili'

1931'IDecember,2002-Page

5.

Tax on Imports of Goods

1) Except where the Proclamation provides to the
contrary, the provisions of the Customs
Proclamation, relating to the import, transit, coastwise carriage, clearance of goods, and payment and
recovery of duty, with such exceptions,
modificatins, and adaptations as the Ministermay by
directive prescribe, shall apply, so far as relevant, to
the tax charged under the Proclamation on the import
of goods.
2) Where tax is payable on an import of goods, the
importer shall, upon such entry, furnish the Customs
Authority with an import declaration and pay the tax
..
due on the import.
3) The import declaration sh'tll(a) be in the form prescribed by the Customs
Authority ,
(b) state the information necessary to calculate the
tax payable in respect of the import, and
(c) be furnished in the manner specified by the
Customs Authority.

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Time of Supply
1) Article 3, Sub-Article (6) of these Regulations, treats
the repossession of goods under a credit agreement
as a supply of the goods. The supply occurs:

V)

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(a) on the day that the goods are repossessed, or

(b) when the debtor may, under any law, be
reinstated in his rights and obligations under the
credit agreement, on the day after the last day of
any period during which the debtor may under
such law be so reinstated.
2) Article 4, su1r-Article (9) of the Proclamation treats,
as a supply of goods, the transfer of a taxable activity
(or a portion of a taxable activity) as going concern.
The supply occurs when the transfer under that subArticle (9) occurs.
3) Article 3, sub-Article (8) of the Regulations, treats
the removal of goods subject to an export trade duty
incentive scheme under Proclamation No. 249/2001
(incluqing a sale into the domestic market) as a
supply of those goods in the course or furtherance of
a taxable activity in Ethiopia. The supply of those
goods occurs when the goods are supplied in the
domestic market, or when the goods are exported, if
they are supplied for export.

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I'

Postal Services to perform functions on behalf

of th Customs Authority in respect of tax on
imports that arrive through the Postal Services.
Goods covered by an export trade duty incentive
scheme under Proclamation No. 249/2001 are not
subject to tax at the time of import, except that tax is
payable upon import if the importer is covered by the
duty draw-back scheme.

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I'

The Customs Authority(a) shall collect at the time of import and on behalf
of the Authority, any tax due under the
Proclamation on an import of goods and, at the
time, obtain the name and the taxpayer identification number, if any, of the importer, and
the invoice values in respect of the import; and
(b) shall make arrangements with the Ethiopia

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Value of a Supply
1) The value of a supply may be reduced by any price
discounts or rebates allowed and accounted for at the
time of the supply of goods or the rendition of
services. Post-supply price adjustments must be
accounted for in accordance with Article 13 of the
Proclamation.
2) Where a portion of the price of a supply represents
tax imposed by the Proclamation that is not accounted for separately, the value of the supply is the price
reduced by an amount equal to the product of the tax.

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(ii)
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1\:,. to n.dJ4 It +h" = It..,"} I};J- 'h'i It 001

1983

3) It' a registered person converts a portion of, or an

entire good or service from use in a taxable activity
to a different use and the person was allowed a tax
credit in respect of the acquisition of those goods or
services, Article 4, Sub-Article (2) of the
Proclamation treats the change in use as a supply of
the goods or services in the course or furtherance of
a taxable activity. The Minister of Revenue may
issue directives on the value of a supply resulting
from a change in use under this Sub-Article,
4) The value of a supply of goods under an installment
sale or finance lease (a credit agreement) is the cash
value of the supply. The "cash value" , in relation to

supplyof goodsunder a credit agreement,means -

(a) where the seller or lessor is a bank or other

financial institution, an amount equal to the sum
of:
(i) the consideration paid by the bank or other
financial institution for the goods, or the
market value of the goods, whichever is
the greater, and
(ii) any consideration for erection, construction, assembly, or installation of the goods
borne by the bank or other financial
institution; or
.
(b) where the seller or lessor is a supplier, an
amount equal to the sum of:
(i) the consideration for which the goods are
normally sold by the supplier for cash; and
(ii) any consideration for erection, construction, assembly, or installation of the goods
borne by the supplier.
5) Where the debtor is deemed to make a supply of
lIJml}" ImllJdJ4 mt;Ll,=
goods under Article 3, Sub-Article (6) of the
~. 01t0 1."}11 ~"}+1\ I: "}o-h 1\"}+1\ (I) oolPl:" O~n.
Regulations as a result of the repossession of goods
..,:tr dJ4A f+1tf iJ:J> ltifQJ; oooooltf1- O~n. f1tfdJ4
under a credit agreement, the value of the supply is
iJ:J> 'h"}.c;+l 0 fOl/.'" m C 1\ If"} f 1\:"C Pi: 'P ;J iJ:J>dJ4
an amount equal to the balance of the cash value of
0+ooltf10:" 1.tf. +001\7i J'A+'.l1dJ4 f'l't. 1"}Hl1
the supply that has not been recovered at the time of
the supply.
+1, 8l111,,1f'iAII
6)
The
balance of the cash value of the supply under
O"}o-h
1\"}+1\
(~)
f.,.oolth+dJ4
f1\:"CPi:
+1,
8l111
I"
sub-Article
(5) is the amount remaining after deducf~n. 1:trdJ4 O~n. 7iJ'6f" dJ41\-oolPl:" fhLltdJ4
ting
from
the
cash value so much of the sum of the
fOl/.+ldJ4
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payments
made
by the debtor under the credit
m1'i"f
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agreement as, on the basis of an apportionment in
1}":fdJ4 0011+'i ..,1-..;J- oom"} f+h4-LltdJ4 8l111
accordance with the rights and obligations of the
O"t1.Cl1:fdJ4 Ah f1\:"CPi:
f'l'~ 1"}Hl1 'P;J If'i
parties to such agreement, may properly be regarded
ft.m (t.(- ,,"fi\ A II
as having been made in respect of the cash value of
1\'P'; <k1'C
1" fm"'. "}..,.(- f+l1' "70l;J-~ rc,:"
the supply.
f"tIf"}I}:ffDoi
If~i/!ifjl:+L'''t
7) The value of goods subject to an export trade duty
0) lt~10J'f+lltim,,1}"
incentive scheme under Proclamation No. 249/
It) O~.,C dJ4h'l' 1t7iJ'6f.bf'Pfr ~1C ..,"} m1. dJ46f.b
2001:
IA.,.I\h- iJ:J>?'"f'P;J f101 'P;J "1f'iAII
(a) that are removed for export, or
(b) are supplied but not exported is the market
"}o-h 1\"}+1\ (ID(oo) OOlPl:" 0tf.C'
~" 0~'P:q: 1\'"}+1\1
value of the goods
MhhLI
Ah f"t+"lttj:"}
f1oo"}+l1+h
8)
Article
4,
Sub-Article
(11) of the Proclamation provides
.(-c:E-+f"t,1f f1dJof h11fdJ4 iJ:J> dJ4h'l'.,...,I}C
hkfr"} ;1'h h
J''PltdJ4
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"
that where the recipient of a zero-rated transfer of a going
It-LhLAO+
concern under Article 7, Sub-Article (2)(d) of the
1\:"CP-f:f,
1:trdJ4
;1'hh
'h"}1.If., flUJ '''''-f~
Proclamation, acquired some.of the good~ in that transfer
O"thLAn+
f"}"',(- rto 'h"}:"h:J>~ 81.:" m,,1}"
for a pUI1loseother than to make taxable transactions, the
"tJ"}~ 'h"}:"h:J>~ m1..,.iflt 1.l~ 1t"70;J1C 'h"}.c;'P
acquistion of those goods is treated as a supply of goods
1\:fdJ4 'h"}1."t "'mC f 1\'P:( 1\"}+1\ "}o-h 1\"}+1\
by the recipient in'the course or furtherance of a taxable
(!l!) 11.""';JA II
activity.
Olt" 1."} 1\"}+1\ 1 "}o-h 1\"}+1\ (~) f.,.oolth"'dJ4 9) The value of the supply under Article 7, Sub-Article (8)
i'
~ :"Cf1+ 'P;J"dJ4 ., 1\- fOl/.m "1.dJ4 ;J-h h fOl/.hLA
of these Regulations shall be the ,consideration for the
oT"} f1,",,g- rto 7t"}:"h:J>~ Itoo..,tf:" h+LOoodJ4
acquisition of the taxable activity, reduced by an amount
htj:1
r
to
'h"}:"h:J>~dJ4
'h"}-'ldJ4A
1t;1'+
which bears to the amount of'such cOl1sideratinthe same
f1'~
Ittluratio as the intended use or application of the taxable
1.0+ ""m~1)1\ .,...,l1c h+hLltdJ4 m(JJ.
n..,.(- pi~ 7\"}:"h:J>~;J-hhfOl/.hLAO:" "'11":"
activity for making taxable tral;1sactions.bears to the total
.,
dJ4
r:
(\
inten~ed use or application ofti)e. taxable activity.
qA 'P I\dJ4 oom" ++"}
f"t +lC1J4
=

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8. Obligatory or Voluntary Registration and Procedure

1) The Authority may waive the requirement under
Article 16 of the Proclamation to register where the
Authority is satisfied that the value of a person's
taxable transactions exceeds or will exceed the
amount specified under Article 16, Sub-Article (1)
of the Proclamaton solely as a consequence of(a) a cessation, or substantial and pennanent
reduction in the size or scale, of a taxable
activity carried on by the person; or
(b) the supply of capital goods that are being
replaced with other capital goods to be used
in the taxable activity carried on by that
person.
2) Article 18, Sub-Article (4) of the Proclamation
provides for the date that registration becomes
effective. While the registering person may select
the date that the registration is to become effective,
the Authority, in its sole discretion, may change
that date to the beginning of an ~~so~n~i9gpe,riQd.,
9. Divisional Registration
1) A registered person and its separately-registered
division, and separately-registered divisions of a
head office registered person, are "related persons" for purposes of the Proclamation.
2) A separately-registered division must file a VAT
return for each accounting period (Article 26 of the
Proclamation). Each separately registered part of
the entity is subject to all of the obligations imposed
on a registered person, but it remains a part of the
entity.
3) A registered person may apply for divisional
registraton if a single registration requiring a single
VAT return imposes an onerous compliance burden on the registered person. The Authority, in its
sole discretion,' shall decide if the applicant will
experience real difficulties in submitting a single
VAT return.
4) A registered person may request that some, but not
all divisions be registered separately, and those not
registered separately treated as part of the entity's

registration.
5)

..

The Authority may withhold any refund under

Article 27, Sub-Article (5)(a) of the Proclamation
to a separately-registered division in order to satisfy
the tax, levy, interest, or penalty payabl~ by the
entity or another division.
6) Supplies made by a separately-(egi$tered division
to the head office or between separately~egistered
divisions are treated assupplies between related
persclnsfor tax purposes, the supplier must issue tax
invoices for those transactions in aecotda11cewith
the Proclamation, and the" r~ipl~nt can claim tax
credits 0\\ the purchases to the extent"provided
.
under Article 21 of the Proclamation.

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ool1hA fDtLfJooOJ- ..,-0,,-1- OhfJ'~ h,}"'f\:t; O+OOA
h+OJ- OOIPI."" +10. IAIf.,

f;J-hll '1':"9" A"7"'1""

"h'}~"OJ-A Aooh"hA f;J-h{}. I1APAIIJ'}

h ..,...,.A "71:1..., h A0"" II
ii' O+tjmA

fDt1.I...,

fPt-

f:"C-o

h~A..";f 9""H111 f;J-h{}.

I1APAIIJ'} {1"L:"1:-o;F fDthtjm'} hAlf., f A+tjmA .

9""H111 -o-h

AOOIf'}

cptjOJ- 00/0.""

fDth,,'I\-""'}

"7".7.""" "'f CO;J-A ;

0) hooAI1~ OhfJ'~ h,}"'f\ !~ OOIPI.""nL:J>1.~"""
fDtOOtl1-o l1"If'} A+QJ."7t "hiL"" ;J-hll foooo
"H1-o ..,1o;J- IAO"" 001f'} hAO"" ;
A) "7ooAh;FOJ- Of\m.~ If'f f f;J-hh h4."'} ooAI
ck'l'C 'htj f+QJ."7t "hiL"";J-hh f9""H111f9"llhC

mI."''''' ck'l'C 00 1"H hAO"" I

th) hooAI1~ f'}..,1: Pt-OJ-'} 01:C';""
tj OJ-"OJ-00 If'} h A0"" ;

Mt9" fDtlh

00) hOOAI1~ Am:""" f'}..,1: Pt-OJ- h,}1: f;J-hll

"7h;J-m<t1 "7:"1.0- ht;:+2j= mt;Ll. fDtI11h""
AO"" oolf~,} "711I.~"" hAO"" II hooAI1~
f.f'tjmA 9""H111I1"L+1: fDtI ;J'I'ooOJ-'} ";f..,C
"htj Am:""" f'}..,1: Pt-OJ- 0"h1'}~'}~ f'll1-o
tloo'} f+m:J>AA f;J-hh "7h;J-m<t1 O+OJ{l"OJ1.tI. OJ-h'l' "7:"1.-0
"7 h I.~"" h A0"" I

f"7 ,,";fA O..,.'} 9"h,} '''''

1985

7) Expenses allocated by the head office to a separatelyregistered division may be treated as taxable supplies
by the head office.
8) Transactions between the head office and separatelyregistered divisions, or between separately-registered divisions may be closely scrutinized by the
Authority to prevent the use divisional registration to
obtain unintended tax benefits referred to in Article
60 of the Proclamation.
9) Separate divisional registration is discretionary with
the Authroity and, to be eligible, the head office
applicant must satisfy all of the following conditions:
.
(a) The applicant must be a registered person for
VATpurposes, but not a person who voluntarily registered under Article 17 of the
Proclamation;
(b) The application must be in writing and include
the applicant'-s taxpayer identification number
and VAT certificate number;
(c) The applicant must conduct its operation as an
incorporated company;
(d) The applicant will experience an onerous compliance burden if it must submit a single return
for its entire business operations. The applicant
must describe in detail the problems likely to be
encountered if divisional registration is not
approved, and the reasons why a consolidated
. VAT return for the entire business for each

accounting period cannot be submitted by the

IP) O+tjmA
"h'}"lOOtl1-o f+mf.,.A""
f'}..,1:
due date for each .tax period;
(e)
The
division for which separate registration is
P t-OJ- h~A f t-{}. f'll1-o hll"H PC,"" IAOJtj mt;Ll.OJ-'}
requested must maintain an independent ac00 If'} hA 0"" II
"09" f P t- h t;:1\-10.
counting system. This requires the division to
nt-{}. fDtOOtl1-o "htj hl\.",,";f f P t- ht;:A..";f
record its receipts and payments and produce
001f'}'}
f"'Af
f'll1-o 00..,A6IiJ. fDtIt1;J';
financial statements separate from its head
"m":J>A;
office and/or other divisions;
I.) hooAI1~ 'll10-'} h"7m:J>AI\- O~..,. "h1'}~'}~
(f) The applicant must already be preparing
"h,}"l'fI.OJ- /1.1.1
h~A ft-{}. f'll1-o PC'''''
divisional accounts before consolidating them.
001f'} hAO"" I
(g) The division for which separate registration is
ll) O+tjmA. 'h,}"lOOtl1-o f+mf.,.A""
fPt- ht;:A
requested must be separately identified by
0 '}..,1: P t- "h'}:"h:J>iLOJ-,,,.,..,. 'htj ODt1~ 0""
reference to the nature of its activities or its
(1;J- +AM fDt;J-m:" 001f') hAR"" ;
location;
if) f'hI'}~'}~ fPt- ht;:A f'll1.o hll"H PC''''' 'htj
(h) Each division must use the same accounting
00"H1.1OJ-.,.'} h,}1: ,,,.,..,. 001f'} hAO"" II
period and the same year-end date as the entity.
!. f;J-h{}." I1APAIIJ'} f+tjmA
9"11111OJ-'}h"7f\1.-h
10) The Authority may impose additional conditions before
O.c."" OtLO 1.'}.o h+tll.tI~"" 1\." +QJ."7t lI-~;J-,.";f
approving an'"application for divisional registration, or
'h'}"l ".7.1\- A00 m f:" "htj h"lh ADt OOtl1.o 1:C';""
may impose different conditions on a newly-registering
f+A" :"1:00 lI-~;J-,.";f "h,}"l'f~ A.11.C.., ,,";f"A II
entity.
Hi' f+OOtl10 {lOJ- A"hI'}~'}~ O+tjmA "h'}"lOOtl1.o 11) The registered person must file a separate application
ADtm":"O"" fPt- h~A f+Af "7ooAh;F "7:"1..0
for each division seeking separate registration on the
f;J-h{}. qAPAIIJ'} fDtm""'OJ-'}
"htj o:"~
form and containing the information required by the
""
ool.)f 00""""" hAO"" II h"lh f9""H111'I'1cf: fDtI
Authority, or a newly-registering person must submit
+c.o {lOJ- f9""H111 "700Ah;FOJ-'} 'htj f+tjmA
an applicaton for registration and an application for
9"11111"7ooAh;FOJ-'} Oh'}1:.,,,,, A.1+C.o ,,";f"A II
divisional registration at the same time.

'lA" Iif'"

~1..~l\

);J&"" ,?1L"14J1'C

Ii ;J-UUfP'.gli+1 Iilfj~ '"f". Federal Negarit Gazeta-No.

II" ~1'.c;,~ O+limA f"'ooW'O fJPt- h(j:A f'Plim~.C~..,.. "I1A OOIf).' ftPJ.11t~ f;J-hll h4.~ 00/\1
ck'1'C ~Ii f+aJ.",.t ~I\"'" ;J-hll frllhc
ml+"'"
ck'1'C~"'m'PA :I

Ic" ~1'.c;,~

0+1imA f+00"10 f JPt- h(j:A f t-fl-,

f+/\f f;J-hll h4.~ 00/\1 ck'1'C~Ii f+aJ.",.t ~(\..,..

;J-hll frllhc
ml"'''''' ck'1'C f1" f;J-hll 1.l"'~
oollm"'"

II

"/\0"'"

Ii" 0"'P:4: ",.,." Ii /\+00/\h+m-/\r1l1'1

oflcfl/\tPJ.11.
C1m- f1'"ofl oom' "mlt..., f~1'.c;,~
O+limA
f+00"10 fJPt- h(j:A "e}>Cf1"'"f'Plim- ~C~..,..
"e}>Cf1"'"~'1.If~

~"'mt-A

f01I1'1m- ~'-\lPl1l

"'~l'"

12) Each separately-registered division will be issued a

taxpayer identification number and VAT certificate
number that identifies it as a division of the entity.
13) Each registered division must issue tax invoices
listing its unique taxpayer identification number
and VAT certficate number.
14) For purposes of the registration threshold under
Article 16 of the Proclamation, the supplies of each
separately-registered division are included as supplies of the entity.
credits under Article 21, Sub-Article (22)(c) of the
Proclamation to be made on an entity basis, rather
than on a division-by-division basis.
16) The home office registered person may apply in

Ii" f+00"10m- 'Pli 00/(1"'" O+limA f+1.l1m- f"'~

fJPt- h(j:A r1l1'1 ~'-\lPl1l
I\.m~e}> m~r

Ot-fI-

1986

15) The Authority may require the allocation of tax

II

I~" f;J-hfl- '1/\JPAtIJ' 0"'P:4: ",.,." 3'l! ,o-ll ",.,."

1("') f+L.,.1.m- f;J-hll "''''Ii~ll 0~1'.c;,~ fJPth(j:A It~If'
0'P1im- 00/(1"'" 1.l~ ~'-\hlim'
/\", ~l'" ~"f"A :I

f ;J-hfI- '1/\JPAtIJ'

1931I1December,2002-Page

"

writing for the cancellation of the separate regis-

~It1i~..,.. f+1i mA

~"f"A IIr1l1'1 0tPJ.1P

tration of a division, or the Authority may initiate a

cancellation of a divisional registration. The

l1l0"'" 1.", ftPJ.h+I\-""'1.'f1"f +L"tPJ.~"'"~lflil\- i

U) f;J-hfl- '1/\JPAtIJ' hfLtJ 1~'" 1.", ~'-\If'
fJPt- h(j:A f+limA
I1AL"'1. Oll+.,.C f"'~

following rules shall apply:

(a) Unless the Authority approves a shorter period,

r1l1'1 /\0-/\"'" '00"'" fBIi Iflf oo.,.f"'" "/\0"'" i

/\) ",Ii:fm-r
~C~..,.. m~r O+limA f+00"10
h(j:A f+limA r1l1'1 OtPJ.L"'~'1:fm- o-~;J-~"f

remain in effect for not less than two years;

(b) If an entity or a division ceases to satisfy any of

ooJPt-1:, 1~lm ~'1.If~ 'Plim- 00/(1"'" fo-~

;J-~:r: 00".7.""'"00'" ml\- h+~ lm 0"'" .,., ", ll.,.
Or!) .,., 1."' m-ll'1' ~tJ')' /\;J-hfl- '1/\JPAtIJ'
O",h.(j: ", ll;J-m~ ,,/\ 0"'" I
"') f;J-hfl- '1/\JPAtIJ' f+limA r1l1'1 ftPJ.Le}>~
'1:fm- o-~;J-~"f 00".7.""'" oo~lm-'
1m.,.
JP ltf m- f;J-h fI-, 1 f1. /\00 m (Ie}>

~ ') 1.1f~ m ~r

the separate registration of a division must

the conditions imposed on divisional registration, the entity must notify the Authority in
writing of the change within 30 days of the date
any condition to be met;
(c) The Authority may cancel a divisional registration if the conditions are no longer satisfied
or if the Authority believes that cancellation is

"llL"1. ~m- ofll\- fL1r,

r1l1'1m-,
/\001Pl1l
~"f"A I
(0) f;J-hf1. Q/\JPAtIJ' fJPt- h(j:A f+limA f01I1'1

necessary for the protection of the revenue;

(d) The Authority shall have sole discretion to

~'-\"''1'A
m~r
~'-\~l'1'
/\"'~l'"
ofl:f2i'
JPAtIJ' "/\m- I
IP) fJPtht;:A f+limA
f01I1'1 JPltf
fBIi

allowed to continue;
(e) The cancellation of divisional registration shall

ftPJ.If~m- f;J-hfl"f.rr: ~IfIiA

ODIP~lI

1" ''''''711
i. f+00"10

'1/\JPAtIJ'

htPJ.mll~m- .,.,

"'ofl~"'" l1~l

10. Cancellation of Registration

1) A registered person must apply for cancellaiton of

1."' m-ll'1'r1l1'1m- ~,-\

registration within 30 days of the date the person

(am- ;J-hll ftPJ.hLAO"""

IPl1l ",ooAh;J= ",e}>lofl"/\0"'"

I. O')o-ll ",.,."

(Ii)

II

~ '-\lPl1l
f"t"'Cofl "7ooAh;J= O",h.(j: ooe}>~ 1/\0"'" fLlf'
oolPl"'"

ceases to make taxable transactions.

2) The application for cancellation under sub-Article

r1l1'1

;t-hll h4.f. ;J-hll ftPJ.hLAO""" "'ofl~"'" 1~lmO"""

.,., ~Ii ;J-hll h4.f. "'ofl~1:' l1~lmO"'" .,., "f.rr:
Q/\m- fIlmc
l\"7hlim,
1\/\0"'" II

1.", m-ll'1' ;J-hll ftPJ.hLAO"'" ..,ofl.e;+

''''1.

be effective from the date specified by the

Authority .

:I

mO"'" .,., "f.rr: Oe!).,.,

<;letermineif the divisional registration shall be

OOIf' 1/\001f.,.'

ftPJ.1A"

OOIf'

(1) shall be in writing, shall state the date upon

which the person ceased to make taxable transactions, and shall state whether or not that person
intends to make taxable transactions within 12
months trom that date.

'l~' Hil'it?;

t..fulrA

~;J~'''' ;JlI,111 ~'I'C

Iii

;rUUfp'

?)g<I>'}Iiif1?i'}'9".

Federal Negarit Gazeta-No.

1931'1 December, 2002

Page 1987

3) The Nlthority shall appmve anapplicaiton for the

cancellation of registration under "(2) unless the
OOYliTOJ-9"
1.
It
;t'tI
il
fD?
h
t.A
0""
..,11.f,''''
Authoirty has reasonable grounds to believe that the
1. It OJ-il'l'
fhliOJ-liA
ftoyft"" 04: 9"tI'}f""
ht\.ftOJ- Oil,"<f>C
person will male taxable transactions at any time
O'}o.il h,}<f>'" (~) oPlPl"" 9"11111 h'}JtlPl11 f<f>l
within 12 months from the date of cessation.
OOJ-J oyoPAh:F oy",f,.~ hftO"" ::
4) While the cancellation of registration generally takes
Q' 9"1'111 fD?lPlHOJ- .+tlil fD?ht.AO""
..,11.f,'''' tH'*l
effect on the date of cessation, if .the Authoity is
mO-r <f>'}"f.9"C' QtrJ9"
: f;t'tI(}. I1ftP'AITJJ ;1.tlil
satisfied that the registred person' did not' make
h4-~ 9"1I111OJ-J t]hliOJ~O-r <f>J "f.9"C' ;1.tlil fD?ht.
taxable transactions from the date the registration
AO""
..,11.f,-r foPftt.Ol1D'J
t]l:J1m
: mY.:\I\
took effect, the Authority can cancel the registration
OoPoPftil 9"1'111OJ- hOliO"" <f>'} "f.9"C' hY.lPl1l
retroactive to that effective date,
OYY.:l.., .f,1'I\A ::
5) When registration is cancelled,' to.the extent
t.. Ohq'~ h,}<f>?\ Q '}o.il h,}<f>?\ 2 0i'Y.~11OJ- oPlPl:"
provided under Article 4, Sub-Article (4) of the
9"1'111 ItlPl1'
: f'roPII10OJ(tOJ- Oh~ fD?1)'.""J
Proclamation, the registered person may he deemed
lJ:P?J1' ;t'tlil
OD?ht.AO""
..,11.f,'''' hJf,. 'fitTJTOJto have sold the goods onhanQ ill, a , taxable
.f,~m?A
::
transaction.
j. f;t'tlil
OYil;1'm4:f OY~ll1,)
m.9"C' 9"11111OJ' fOli
6) Any obligation or liability under the Proclamation,
Otf~O"" 1..1. OJ'il'l' I1hlim~OJ- OYli;'~OJ'9 "'''''lC
including the furnishing of returns, of any person in
9"tI'}f.1' ;1.tlil h4-~ Ohq'~ f.,.tTJt)0'1' ..,Yo;1' m.f,9
respect of anything done by that person while the
~I\&,~'1'
9"1"111 OoPlPlrt.
9"tlJf''''
fD?*l'l'
person was a registered person, is not affected by
h.f,tf'}9 ::
cancellation of th~ person's registration.'
Xli' P:j'hl1 Df~Ii"}11 J'.'}{l=111. Tax credit Rules
(i. hllU 0;1'1' f',.,'lll<;.''''
t]A"'",,,,
Oil,"<f>C Ohq'~
h,}<f>?\ f;(i
oPlPl.1.
f;1.tlil
OY<f>li~il ft.Y.lO]
1. No tax credit is allowable under Article 21 of the
Proclamation unless:'
h.f,1'A9"::
(a) a tax invoice, or debit or tax credit note, in
u) Ohq'~ h,}<f>'" ?;'~ : ?;'r m.f,9" Ir oPlPl:"
hh~C{l'f; ;JC O"'ffll f;t'hil Y.l(t~ m.f,9"
relation to the supply, has been provided in
f ;t' tIil YoQ:" OJ,e,9" tIt.Jt ""IP ~f: f .,.(tm h li
accordance with Articles 22, 23, or 13 of the
h,}
oy
<f>li
~
il
Jtt. <f>
y:ft"" fD?m.f,<f> OJ-f'I-oP
f ;1' tI il
Proclamation and the registered person
1110 (tOJ- f;J.tlil OYil;t'OJ4:f 0D?f<f>C110'''' 1.11.
-claiming the tax credit is holding that supporh ~1i.U,) f,.;J&' 1P~Jl.1' (Y.l(t~
hilt.I\1.
t]Atr~
ting document (unless an invoice is not
Oil"'<f>C) t]"<f>lO :
required) at the time anYJeturn in respect of the
ft) f;t'tlil OY<f>li~ilh'}Jtt.<f>y,:ft-r fD?m.f,<f>OJ- f"'oP
supply is furnished; and
1110 (tOJ- OJf,. h1C fl\111OJ-') lJ:J> OOY.oPfth..,.
(b) a Customs Declaration as prescribed under the
f;1.tlil
OYi1.;t'OJ4:f Itf<f>Cl1
hh~C{l-f;
;JC
Customs Proclarpation, or a document issued
Oi'ffH
;J.tlil
fi'ht.ft
oPtf~J
fD?fl;J"''I'
by the Customs Authority evidencing paxment
01-9"<;.tI hq'~ oPlPl-r fi'H;J"f. f1-9"<;.tI Jttll\?
of tax in relation to an import is held by the
f1.\"''} OJ.f,9" 0 1-9" <;.tI 11ft P:' A tTJ'} f i' (t m t\.1\
registered person claiming the credit ~t the time
1P~f: t]I\<f>lO :
'any
return in,respect of Jhe import is furnished.
~, ;t'tlil fD?ht.AO-r
OJ.f,9" h;t'tI(}. a ftf~OJ-'} f'}"'f.'
2) The cost Incurred to begin or terminate a taxable or
h,}~il:P(I.
ftoP"f.oPC OJ.f,9" ftOY*l'l'
fmffl<
P'?
exempt activity are taken into account in calOJlilil.?J1- Oh q'~ h,} <f>?\f; (i 011IP l"" f i' t. <f>
~ f;t' tI il
culating the allowable tax credits under Article'21
i'<f>li7'1- ilt\.-r OD?hliOJ~O-r
'lit h..,9""" OJ-il'l'
,
of the Proclamation.
fD?1 n- .f,tfli A ::
3) Article 21, Sub-Article (3)(a)'of the Proclamaiton,
Ohq'~
h,}<f>'" f;(i '}o.il h,}<f>?\ r(U) ftoP'}1f.~
f'
denying a tax' credit on the acquisition of a
OY:}:}'lf,i'7ihCt]&?J1f;t'tlil OY<f>li'1ilh'}f,.OY.f,f,.l..,
passenger
vehicle, dose not apply to'a commercial
f.,.f,. ~11OJ- Oq"~~-rlJ:P
ftOY:}:}1IflT'/.OJ-t\- f'}..,f.'
truck or other vehicle designed and usedprimarily
f6lh~"" .,.7ihCt]&?J1-'}
OJ.f,9" t\.tr-~ "'7ihCt1?J1-'}
,
r' f;t'tJl't- I1ftP'AITJ'} ;t'tlil h4-~ ;t'tlil fD?ht.AO""
..,-fl.f,'''' OYhliOJ'}t]*lmO"" <f>'}h,}il-f t]ftOJ-fI~ mc

'

for the carriage of goods.

h.f,m.9"C9"::
Q'

fth4J>~ h,}<f>'" 'fir; '}o.il h,}<f>'" r(ft} ht.'109"

f"'oPH10
(tm- ~I\&.sP1-1 lP?.,.if'1- OJ.f,'r f,.'}0if'1'
O't.M.?'}."f
f9"..,11 h1A..,li-..,.
h'}Jtf1)'.
OJ.f,9"
{l;t'rIDOJ-lJ.1,
0 D? :}
IP ?.,.if' 1- ft 011 11lili -r hp'?

rtO"" 'lit ftoP~;J. hli ft9"..,l1 0D?t.6oPOJ-.."r",e,

fD?hCj:ftOJ- ;t'tJil h'}Jt<f>Cj~il h.f,t.<f>f:~ij f.,u-'}
X~:( f.f-oPH10OJ- (tOJ-' "fOO1lCj~ h1A..,tr-"""
Ooriilm"" f,}"'~ r?
I\.f, f"'IPd7? htf~ (ft9"ltt\.
t.il""~'}:"f;t-tlil
ftD?ht.AO"" foP1ICjt;:'}..;~ P'?
O<f>'I';t'~'}JtOJ-t\- Ooi1tfTOJ- ft1PlICj~ b:P'?J I\,e,
fht.flOJ- ;i-tlil h'}Jt<f>Cj~ilf,1.l;JA::

'

>

'

4) For purposes of Article 21, Sub-Article(3)(b)ofthe

Proclamation, a tax credit is not allowed for VA.:r.
."

-"

qn the purcha;;e bya registered person,of(estaurant

,

".

m~als fen- executives,

emplc>ye~

or customers,

or

for, VAT on the rental of a,l9dge',andthe ct)'4fge for

, food at a retre<\t for eml?loyees/T,heeJisaBowance
,rule, does nGt ,apply \0, pur~h~es Qf '.~~t~ain.!TIent"by ,,~.registere(tpersoP;jengaged,
in the
business
qf,. selling'
~entertainIl)ent':.
(sl!ch as a
,
.
.
"restaurant} if the, p.urcha.~es are,\jse,d din~ct1~ ~nthe
provision of taxable entertainment.
~

1~' Xi!f.it~ t..1..Ir/.\ ~;J~-'" ;1''""1 ct'1'C

?;.

H! ;rUVtp' ?if 4'"} Ii!n?; '}.9". Federal Negarit Gazeta - No. 1931soDecember, 2002-Page

1988

f"'~fII/&h~"" :t'hil Or'&. Itf. hfJIt\ O~It f-"OD

5) A person who registers after VAT becomes effective

can claim credit for tax on goods on hand when the
registration takes effect if the goods were acquired
/):PY':t:'} f1J1m- 9""tI11lm- h8CjO"" .,.'} Ok"" Illt-""
within the six month period before the effective date,
and
the goods are to be used in a taxable activity
iI ~ iI"" CD&...,. 1..H. m- il1' h IT., h Cj h., N.tJ'} /) :P Y'-:;carried on by the person after registration.
h9""tI11lm- O~It :t'h iI t\ OIJ.ht.AO""
f'}"'1~ r' &.
6)
Where
the total tax credits available to registered
h'},pil:P~ fOlJ.lm-ItTlD- hIT" '1m-II
person for an accounting period exceed the total
}.
f.t-ODtl10 {}m- Oh,}~ f;rhil tlOD'} m-il1' h'}-'t.,.Cj.,
amount of tax chargeable on taxable transactions for
iI 1\"" tt1.~"'1 fOlJ."ft\ CD<f:t'h iI ou m '} ~9"C ON.0that period, the amount of the excess is dealt with in
f :t'h iI tIou'} m-il1' 11he; tV" m- :t'h iI fOlJ.ht.A 0""
accordance with the refund rules under Article 27 of
"'111f."" Itf. ttht.A
h0lJ.11lm- :t'hil fOt\mh'}1.IT.,
the Proclamation.
0,0 A 651. f 0IJ.:t' f m- 'lit -n 0 h fJI}1: h,}'"
12.
Reverse
Taxation
.,.
'" ?)1 iIt\
1) The value of an import of services taxable under
oult7i 0.,.1."1,mOUlPl."" fOlJ.t.89" f.ITCjA:I
Article 23 of the Proclamation generally is the
I~'
017flD1 ilt\OIJ.{}O{}-n:t'hil
amount
of the consideration that the recipient is
h1AdJt\.."" .{}Q.1"m- hCj
Ii'
"''''Il~
"n~"""
IltTmobliged to pay for the services, except that if the
0 (IPIT.,. 9"h') ''''' CD1.h 1 C f0lJ.11l h 1 A"'11\-"" fJI;J
supplier and the recipient are related persons, the
f101
fJI;J t'}-'tIT'}
I']A.,.1.1.1 Oil.,..,.C
OhfJI}1:
value of the import is its market value.
h'}+", 1)r ouiPl."" :t'hil fOlJ.ht.AO""
CD1.h1C
2) Where a portion of the consideration charged for
m- il1' fOlJ. 111
1 A "'11\-"" fJI;J h 1 A "'11\-"" .,..,.11 ~
imported services taxable under Article 23 of the
"
t\h1A"'1/t"1: QDht.A litO"" fJI;J "m-II
Proclamation represents tax that is not accounted
.
..,.
OD
lP
I.
for
separately, the value of the import is the
~ 0 h fJI}1: h,}'" '" 1)r
:t' h il 0 OIJ.h t.A 0""
consideration under (1), reduced by an amount
CD1.h 1 C (D'il1' 00lJ.., 11h 1 A "'11\-"" Itf. ODht.A
I t\ 0""
equal to the tax fraction multiplied by that confJI;J .,.t\f..,.
:t'hil,)
fOlJ.lJ.l.9"C hIT'"
IA"'mV'"
sideration. The tax fraction is r( 100 + r), where' 'r"
fh1A"'1t\..-t; fJI;J .,.1.C'P fOlJ.CD{}1.m-O'}o-il
h'}"''''
is the rate of ta x applicable under Article 7, Sub(ji) h"'ODl\h"'m- fJI;J Itf. f:t'hil 'llt-n h.,..,.,,{} O:\It
Article (1) of the Proclamation.
f.ITCjAI:
13. Transactions by Agent
1) Where a taxable transaction has been made by an
Ir' Omh.A hO?I']~,,"" ilI\OIJ.hCjUJ'} "'1-nf.""
h,}
ji . Oh 'P}1:h '}.,. f)'!i '} 0- iI
agent on behalf of the agent's principal as specified
+ '" (ji) ou lP I."" OJh.A
'"
{}
CDI']f. OIT m- m- il9" :t' h iI fOlJ.h t.A 0"" "'1-nf.""
under Article 24, Sub-Article (1) of the
"
Proclamation, and the recipient of the taxable
f t.8OU h,} 1..,,, hCj :1'hil OOlJ.ht.AO"" "'1-nf."" 17f
transaction is a registered person, the agent may
flT'Im- f.,.outl10
{}m- hIT" CDh.1t- t\"'1-nf.1: f:t'hil
issue a tax invoice in accordance with the
1.1.(}~ QD il m"" I t\ 0"" ""IT'}' CDI']~ 1.1. {}~ OD iI m""
Proclamation in relation to the transaction; and the
f t\ 0 ""9"11
principal shall not also issue a tax invoice in
~.
CDI']f. OIT m- {}m- il9" t\ CDh. It- :t'h iI fOlJ.ht.A 0""
relation
to the taxable transaction.
"
"'1-n,e...,. f.,.t.8OU hCj UJI']~ f"'OOll10
{}m2) Where a taxable transaction has been made to an
hIT'"
OCDh.1t- 1'11: O"'1-nf.1: I\.,.lt+t.ccDh.A f;l-hil
agent on behalf of the agent's principal and the
1.l.{}~ tnt{}m"" 1t\0"" ""IT,}' h"'1-n.e.1: ;JC
principal
is a registered person, at the request of the
0"" III
agent, a tax invoice in relation to the taxable
t\ CDI']~ 'i"9"C 1.1. {}~ OD{}m"" f t\ 0""9" II
transaction may be issued to the agent; and a tax
I!i' f:1'hh O?iI:t'CDctlcpiJhCj fOlJ..,.c-nO"" htJ.:\'}
,
invoice shall not also be issued to the principal in
OhfJI}1: h,}"'''' f)'} f.,.1. "11m- f:f'hil O?iI:t'CD~1 Ilt\r'
relation to the taxable transaction.
AtlJ'" OOlJ.CDiI"m- ,piJ fOlJ.lI;J~ ITtf.
14. Form and MannerofFiling Returns.
U) Oh 'P}1: h '}+
ou lP I."" O:t' h iI IIou.,. m-il1'
A return required by Arti~le 26 of the Proclamation
'" f)'
ouht.A 1t\0""'} :t'hil t\"7illt"" fOlJ.lil"ft\m-'}
shall be in the form prescribed by the Authority, and
hilt.lt1.. oul.)f fOlJ.f.-n.' l
shall:t\)
11t\r' A tlJ.,. 0 OIJ.CDiI"m- h~:\ '} fOlJ.
(a) state the information necessary to calculate the
ODIT'}
"'C-n
taxpayable for the accounting period in accorhI\O""::
dance with Article 20 of the Proclamation, and
I~' :t'hil ",oult7i ilI\O?~I.'"
(b)
be furnished in the manner prescribed by the
ji. fh'P}1: h'}+?\ n '}O-il h,}"'''' ~(t\) f.,.ht.t\ :t'hil
Authority.
{}
tl10 {}m- O"'OD tl1 0 1..H. Oh}1: 0 0IJ.1~ /):P Y'"f Itf.
f.t-ht.t\
:t'hil h'}-'t"'Cj~ilt\""
ttmf.,p
fOlJ.-:;.t\m-

h "''''Cj

"

O~ It fOlJ."'l.m- '.,.004\

7i

lL1.l."'1

fOlJ. 111

'llt-n h-nc j IAOt\m hIT" f:t'h(}. 1lt\P'AtlJ,}

f.tJ,},} f1'}tI-n OUm'} ",oult7f 'h,}1."7I1.C"'1f.1."
"'1;JAr:ilt\(f"gu ",oult7f tt1.l."'1 V07.1t)m-'llt-n -nc
j tiJf.9" hN.tJ O;r"f hIT" f.tJ f1'}1I-n ODm"}
ItCD1.~""h'}-ti1';JiC +1.C.,.. O"'tlJf. f'lla-n tlOD'}
lLhLAIt0lJ.1t1m- :t'hil h'}-'t:i'h-n .e.1.I.;JA::

15. V,ATRefund.
1)

Article 27, Sub-Article (5)(b) of the Proclamation

provides the Authority is not obliged to refund
excess credits if the amount to be refunded is not
more. than 50 Birr. If the amount eligible for refund is

Birr or l.~ss,thi.sa~ount can be carried forward

and credited against tax due in the subsequent
accounting period.
~O

1~

Iitl-tit t..1..t.t.\ ~;MT .7""11~'I'C Iit ;ru'1P' t!1 +1 Iiin~ ~-,... Federal Negarit G~etaI'

~hil +001\11""}.lt1.l..,t\"" '1'f'k fD7.f+C-o f+oo

H10 (lm- +1n.m-") f~hil "'Iil~OJotf fl\+lO
""}1.If., f~h"" 11t\P'All)"}f+ooH10m- (lm- "'Iil~
OJotfm-") "ilhD7.f+C-o .(-lil OhCP~ h"}+;t t)~
00 IPl""

+001\ 11 t\.1.l..,

fD7.111m-"} 'l" -0

f,Ji

t\"'I~ f"" f,"fl\ A::

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2'

~.

f~h"" 11t\P'All)"} OhCP~ h"}+;t t)~ "}(}oilh"}+;t

(i) O+OJ(l.,m- 'tH. m-il'l' +001\11 t\.1.l.., fD7.111m-")
.,
'l"" n- +001\ 11 t\.1.l..,
'l"" -0 fA 00 t\ (l ")1.If
"
h D7.111m- +"} h"} il.,. "il h +00 t\ (l 0"" +") .(-ll1 1\t\m'LH. OJt\.(- f,htt:I\A::

No. 193111December, 2002-Page

1989

2) Where a registered person applying for a tax refund

has failed to furnish a required return, the Authority
may withhold payment of any amount refundable
under Article 27 of the Proclamation until the
registered person furnishes such return.
3) If the Authority does not pay the refund in a timely
manner as provided under Article 27, Sub-Article
(6), the Authority shall pay interest calculated from
the date on which the refund was due until the date on
which the payment of the refund is made.

16. Assessment of Tax

1) The Authority may issue an additional assessment in
a variety of circumstances, including the case where:
(a) a person fails to furnish a return as required by
Article 26 of the Proclamation fails to furnish an
import declaration as required by Article 5 of
f~hil "'Iil~OJotf fl\+lO OJf,9" ffLlJ 1."}-O
the Regulations;
h"}+;t ~ OD7.fHm- OOlPl"" ":J>sP"f"} OJ1. h1C
(b) the Authority is not satisfied with a return or
fil1110"""} .lthl\t-ftf'"} fl\+lO ""}1.If."
:~nportdeclaration furnished by a person;
t\) ~hil h4.~ f+lOm-"} f~hil "'Il1~OJotf OJf,9"
(c) the Authority has reason to believe that a person
":J>sP"f OJ1.h1C f1n-0"""} .lthl\t-ftf'"} f~h""
has become liable for the payment of an amount
l1t\P'All)"} h1'.7n. Iflj fl\11m- ""}1.If."
of tax but has not paid such amount;
th) f~h""
l1t\P'All)"} ~hil h4.~ t\.htt:A fD7.1
(d) a person, other than a registered person, sup11m-"}~hil fAh~t\
OOIf)'"} fD7.f""9""} oot
plies goods or services and represents that tax is
ooljf f11 ""}1.If."
charged on the supply;
00)
t\+{J;},"'I~
~hil
fA+ooH10
(lm(e) a registered person supplies goods or services
" ,.
l1+l 0 m- iJ:J>OJf,9" 0 (lm m- h 1 A.., 1\-"" I\f,
and the supply is not a taxable transaction or is a
~hil ""}1.+h~t\O"" h.(-C1o f+lO ""}1.If."
taxable transaction charged with tax at the rate
IP) f+OOH10 (lm- f+lOm- iJ:J> OJf,9" f(lmmof zero per cent and, in either case, the regish 1 A.., 1\-"" ~h il f"'l f, h~A 0"" ..,-0f,"" OJf,9"
tered person represents that a positive rate oftax
OUe' f"'ll1h~f Ah ~hil fD7.h~AO"" Iflj "t\
is charged on the transaction; or
hue' Ol\f, Olf., f"'lilh~f
Ah ~hl1 ""}1.+h~
(f) the Authority has determined the liability of any
t\ 0"" h .(-C1o f +l 0 ,,") 1.If., .
person in terms of Article 60, Sub-Article (2) of
l)
OhCP~ n"}+;t :j; "}(}oil h"}+;t (I) oolPl""
the Proclamation.
l1t\P'All)). f~hil
h4.~"} "'Yv~ O"7.oot\h..,.
2) The person assessed:
m ,). f(lm ,,"}1.1f., I
(a) in the case of an assessment under Sub-Article
f..,-nC m ,). fD7.(lmm-'
(1)(d) or (e) of this Article, is the person making
V) OttlJ n"}+;t "}(}oil n"}+;t ji(oo) OJf,9" (IP)
the supply; or
f+1."11m-"} OD7.oot\h..,. n:J>CPi:"} I1h'iOJ.,m(b) in the case of an assessment under Sub-Article
(lm- I\f,'
(1)(f) of this Article, is the person whose
.,
t\) O"}(}oiln"}+;t ji(l) f+1. 11 m-"} OD7.oot\h..,.
liability has been determined under Article 60,
OnCP~ h,+;t :j;"}(}oilh"}+;t (I) oolPl"" ~hl1
Sub-Article (2) of the Proclamation; or
fooh~A "'Yv~ 11t\0"" (lm- I\f,'
(c) in any other case, is the person required to
th) 0t\.1\-"f o-)'~sP"f
OnCP~ oolPl""
~hl1
account for the tax under the Proclamation.
3). In making an additional assessment under Article 29
fooh~A "'Yv~ 11t\0"" (lm- I\f,' f,1f'iA::
of the Proclamation, the Authority may estimate the
f~h"" 11t\P'All)"} OnCP~ h"}+;t t)i! oolPl"" ~hil
tax payable by a person.
h4. ~ 0 +{J;},"'I~ ,,"}.Ithtt:A fD7.mf,+m-"} ~h il 0..,9"""
4) Where an additional assessment has been made
t\.OJil"} ~"fl\A::
under Article 29 of the Proclamation, the Authority
OnCP:( n"}+;t t)i! oolPl"" f+lJJ."'I~ ~hl1 m ,).
shall serve
'"' a notice of the assessment on the person
f+(lm ""}1.If." f~h"" 11t\P'AtIJ"} t\~hil h4.~ fm ,).
assessed, which notice shall include"'Il1~OJotf f,Aht\~A::
f,1J9" fm ,). "'Il1~OJ4:.f'
(a) the tax payable; and
v) t\.h~A fD7.111m-"}~hl1' "'i
(b) the date the tax is due.
t\) ~h"" ooh~A f.,OlO"""} +"} 6J.I"9"CfD7.f,1f
5) The production of a notice of assessment under Sub00 If"} n t\ 0""::
Article (4) of this Article or a certified copy of a
OttlJ n"}+;t "}(}oil n"}+;t (!!) oolPl"" f+(lm fm ,).
notice of assessment is receivable in any proceedings
"'Iil~OJotf OJf,9" ftto- m ,). "'Iil~OJotf f+l.71m
as conclusive evidence that the assessment has been
:J>:( O..,.h h A f +(l m m ,). ,,"}1.If ., +~'I'e' O"'l'iTm-9"
duly made.
fhchc 00'(-lh O"'lilljf.,..,. ++I1f,""" f,Ij lCPA::

~hl1 ilt\ooOJ(l")
ji. f~h"" l1t\P'All)"} htltJ o~"f f+HlH~"""} lJJ.9"e'
0 +t\f~ 9"h"} f.,."f f +(J;},"'I~ ~h il m ,). t\. (l 'I'
f,"fl\AI
v) ~hil h4.~ fhCP~ h"}+;t t)i OD7.fHm- OOlPl""

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(i) r"'-H.,OtD- fa.. ''''g;},''7(' ~t\+ :l"h~
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r.,..,~ ~")1.II'~. ~'i

Federal Negarit Gazeta-

No.1 3rdDecember, 2002-Page

1990

6)

No assessment or other document purporting to be

made, issued, or executed under the Proclamation or
this Regulations shall be:
(a) quashed or deemed to be void or voidable for
want of form; or
(b) affected by reason of mistake, defect, or omission therein,
if it is, insubstance and effect, in conformity with the
Proclamation or this Regulation and the person
assessed, or intended to be assessed or affected by the
document is designed in it according to common
understanding.
17. Seizure of Property
1) While the Authority must give 30 days notice under
Article 31, Sub-Article (4) of the Proclamation
before seizing property of a person in default, after
making reasonable enquiries, the Authority does not
have sufficient information to identify the person on
whom the notice should be served, the notice shall be
deemed to have been served and then it shall proceed
to seize the property.
2) The Authority may authorize the delivery of goods
seized under Article 31, of the Proclamation to the
owner of the goods or the person who had custody or
control of the goods immediately before seizure,
where that person pays the tax or other amount due
that gave rise to the seizure.
18. Transitional Rules
1) In this Article:
(a) "qualifying goods" means an import or purchase of goods, including capital goods;
(b) "repealed legislation" means The Sales and
Excise Tax Proclamation No. 68/93; and
(c) "sales tax" means the sales tax imposed under
The Sales and Excise Tax Proclamation No. 68/
93.
2) The repealed legislation, including the rules governing the levy, payment, assessment, reporting, and
recovery of those taxes, continues to apply to a
supply or import that takes place prior to the date on
which the Proclamation comes into force.
3) Every' appointment made under the repealed
legislation and subsisting at the date of commencement of the Proclamation shall be deemed to be an
appointment made under the Proclamation;
4) Notwithstanding Article 21, Sub-Article (1), of the
Proclamation in calculating the amount of tax
payable by a registered person in respect of the fIrst
accounting period after the tax becomes effective,
the register~ person may claim as an amount
creditable under Article 21, an amount equal to the
sales tax calculated in accordance with Sub-Article
(6) of this Article and creditable under Sub-Article
(7) of this Article.
5) For purposes of Sub-~icle (5) of this Article,
(i) where a registered person held, at the end of the
last business day prior to the date the value
added tax comes into force, qualifying goods
being g~
acquired not more than six (6)
months before the tax comes into force; ,and

1Jt

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. (ii)

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h1A~f\o-f"f "f. f+Q;t.07t h{J."";rtlll hf.hLAIJO II

1931stDecember,2002-Page

1991

(ii) the Authority is satisfied that sales tax has been

charged to the person on a sales invoice and
paid on the acquisition or import of those
goods, and the sales tax has not been rebated,
the amount of the creditable sales tax shall be the
amount of such taxes paid on such goods, but with
respect to each item qualifying for the tax shall not
exceed the amount of tax which would have been
payable had the goods been subject to tax chargeable
under the Proclamation..
6) If, in any tax period, a registered person has sales tax
creditable under Sub-Article (5) of this Article, the
amount creditable is deemed to be tax creditable
under Article 21 of the Proclamation and is subject to
the provisions of Article 27 of the Proclamation
relating to the excess of credits over the amount of
tax charged for the accounting period.
7) No credit shall be allowed under Sub-Article (5) of
this Article for any sales tax paid in respect of the
acquisition of any goods if the VAT imposed on a
supply or import in acquisition of those goods after
the effective date of the Proclamation would not be
creditable under Article 21 of the Proclamation.
8) A person may claim a credit under Sub-Article (5) of
this Article for sales tax paid on qualifying goods on
hand on the date on which the Proclamation comes
into force, only if the person is a registered person as
of such date.
9) A person claiming a credit under Sub-Article (5) of
this Article shall submit with the fIrst VAT return
after the tax comes into force an inventory of all
qualifying goods on hand at the beginning of the first
day on which the Proclamation comes into force,
supported by documentary evidence of the payment
of sales tax.
10) A disallowance of a credit for sales tax imposed
before the date on which the Proclamation comes
into force, shall not be treated as a disallowance for
purposes of Article 4, Sub-Article (5) of the
Proclamation.
11) Where a contract is concluded between two or more
parties before the Proclamation comes into force,
and no provision relating to tax is made in the
contract, the supplier shall recover from the
recipient, tax due on any taxable transaction made
under the contract and made after the date on which
the Proclamation comes into operation.
12) Wher~ a contract concluded after the date on which
the Proclamation comes into operation does not
include a provision relating to tax, the contract price
shall be deemed to include tax and the supplier
under the contract shall account for the tax due.
13) Subject to Sub-Article (16) of this Article, if in
connection with a supply of goods or services,
(a) title to goods passes, delivery of goods is made
or services are rendered after the date on which
the Proclamation comes into force; and
(b)payment is received or an invoice issued within
nine months before that date,
for the p\4rPses .of determining the accounting
period in which the supply occurs or a tax credit is
allowable, the payment istreated as having been
made or the invoice is treated' as having been issued
on the date on which the Proclamation came into
force.
14)' If services subject to sales tax were rendered before
the date on which the Proclamation came into force
and payment is made within four months after the
Proclamation came into force, VAT is not imposed
on the supply of the services.

n'

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Federal Negarit Gazeta-No.

If;' h~fmO+mfl~ 1.tL A~~"" 'h1Jl~09" 0'/1:/.'1 OD'/.f

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hO'i'O"" ~1 04C."" +J:9"C' h'Plt hO'i'O"" ~1 O~"
fD'/.m'i'~c}> hlf~ : h'Plt hO'i'O"" ~1 04C.""f+flmmh1A'1f\o"" 'P;J f+h~t\mh'Plt hO'i'O"" ~1 O~"
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;J.tJ{) f'lUJ.o 1.tL m-{)1' t\;J-tJfl. I1t\FAflJ1 h~/.O i
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II
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h~A fl

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1992

15) If goods are leased under an agreement that

provides for periodic payments or if services
subject to sales tax were rendered during a
period that began before and ended after the
Proclamation came into force, VAT is imposed
on the consideration for the services rendered
after the Proclamation came into force, except
that to the extent the consideration for the
services rendered before the Proclamation
came into force is paid more than four months
after the Proclamation came into force, the
consideration is treated as consideration for the
rendition of services on the day after the end of
that four month period.
16) Notwithistanding Sub-Article (13) of this Article, if construction, manufacture or extension
of building or civil engineering work is performed under a written agreement executed before
the Proclamation came into force and the
property is made available to the recipient after
that date, VAT is imposed only on the value of
work performed after that date if the value of
the work on the day before the Proclamtion
came into force is determined in a manner
approved by the Authority and is submitted to
the Authority by the end of the supplier's first
VAT period after VAT comes into force.
17) If immovable property is provided under a
rental agreement, for a period that commences
before and ends after the date the Proclamation
comes into force, the consideration for the
rental shall not include the amount attributable
to the period that ends before the effective date
of the Proclamation.

0.""" t\ oo'i ~f h 1A '1f\o""

h{)~"1. flf~m-1 hoo'i~f
0."" ;JC fTffHm-1
CHAPTER 2
m~9" fH.lJo +~"''' flf~m-1 c}>1'C'1fl fD'/.Q;1.9"C
Exemptions
fl.lf1 : hoo'i ~f 0."" ;JC f+ f fHm-1 f'hC?f {1;J19. Dwellings
h~Q;1.9"C9" :: ()t\lf ~9" t\ ~'P~ 9''1- h 1A '1f\o""
1) A "dwelling," defined in Article 8, Sub-Article
fD'/.m-A m~ +1ihcl1~ O'/.fD'/.f fD'/.m{)1: f'1fl
(1)(b) of the Proclamation, includes that area
m-{)1' 00111: : f'h'1C 00111: : fOOIi~'7i F~&surrounding or appurtenant to the dwelling that is
foo'i ~f 0.-1: hl1A If'i ~.fm&-A::
necessary for its enjoyment, but not farm land
t\D'/.h&-~ oo'i ~f 0."" fD'/.m-A hJl{) m~9" f1t\1t\
adjacent to a dwelling. The land surrounding a
1.o/...,. t\00'1""" f+ooH10 flm- fmtJ)m- mm.
dwelling
complex,
h;J-hfl. ~, t\lf~m- oo'i ~f 0."" f'Pt\ hlf~ O'1Vmincluding the driveway, paths, gardens and lands'P;J ,,~ f+h~t\m- ;J-h{) 'h1Jl~liH' h~~~f:9"
II'
caped grounds for the use and enjoyment of residents
hlP~m- t\+~tJ)~9':t: O'~~"" OD'/.flmm- 1'c}>9"
is part of the dwelling.
2) A registered person who purchases a new or used
ooAtJ foo'i~f
0."" f+flm
'h1~lf~ +~'D'/.
g 1o-h h1~'"
(C)
property for lease as a dwelling is denied tax credits
fD'/.lf~m- Oh'Plt h1~'"
00 II'

/...,. t\ II' &-+7f'1~..,. f +fl m m-1 1'c}>9"

0' ~

hlP~m- 01'11: F&- 'h1c}>{):l'lI.m- 'l~"" m~9"

f1'11: F&- 'h1c}>{)*lI.m-1 m~+?ft\ ~/.~ t\0'/7i

;J1C 'h1~'Pt\m- oo4:mC l1~lf1 : Oh'Plt h1~'"

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g.

1931"December,2002-Page

~-

oom-fl1: ~m- :: hlP~m- h;J-hfl. ~, t\lf~m- O'~~""

t\+flmm- 1'c}>9"I1mtJ)m- m~ ,,~ fh~t\m- ;J-tJ{)
Oh'Plt h1+'" ?;li 0+~~11m-' OOIP/''''' +~'i'1i
'h1Jllf1 h~~+1:9" II
foo'i ~f 0."" hl1A flf~ f+1ihcl1~

O'/.fD'/.f F~&-

oo'i~f 0.-1:1 t\1.,m- flm- f+7im 'h1~lf~ mf-..iJ"

f+1ihcl1~ O'/.fD'/.f (1;rfoo'i ~f 0."" h.&-~ h I1A
If'i f+h&-f 'h1~lf~ h;J-hfl. ." ~lfliA ::

for tax on any costs attributable to the exempt lease

of the dwelling.
3) If an employer provides a dwelling to an employee as
a fringe benefit, the exemption for the supply under
Article 8, Sub-Article (2)(a) of the Proclamation
takes priority over Article 4, Sub-Article (3) of the
Proclamation treating fringe benefits provided to
employees as supplies by the employer in the course
or furtherance of a taxable activity. The employer
under Article 21 of the Proclamation is denied tax
credits for tax on costs attributable to the exempt
fringe benefit.
4) A sale of a parking space that is part of the dwelling
to the purchaser of a dwelling, or the le'ase of a
parking space as part of a -lease of a dwelling is
exempt from tax.
'

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Federal Negarit Gazeta - No. 1931 December, 2002-Page

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1993

,,~

20. Financial Services

1) Financial services as defined in these regulations
are exempt from tax under Article 8, Sub-Article
(2)(b) of the Proclamation, whether provided for
explicit or implicit fees.
2) The financial services exempt from tax include the
following:
(a) granting, negotiating, or dealing with loans,
credit, credit guarantees, or any security for
money, including management of loans,
credit, or credit guarantees by the grantor; or
(b) transactions concerning money (including the
exchange of curency), deposit, savings, and
current accounts, payments, transfers, debts,
cheques, or negotiable instruments, other than
debt collection and factoring; or
(c) provision of credit under a hire purchase
agreement or sale of goods, but only if the
credit is provided for a separate charge, and the
separate charge is disclosed to the recipient of
.
the goods; or
(d) to the extent provided in this regulation,
provision, or transfer of ownership, of an
insurance policy, or the provision of reinsurance in respect of any such policy; or
(e) provision, or transfer of ownership, of an
interest, of an interest in a scheme whereby
provision is made for the payment or granting
of by a benefit fund, provident fund, pension
fund, retirement annuity fund, or preservation
fund; or
(t) the arranging of any of the services in (a) to (d)
; or
(g) provision of int~rmediation services by a
buy-aid society or medical-aid fund;
3) For purposes of these regulations, the following
definitions apply;
(a) "cheque" includes a postal order, a money
order, a traveller's cheque, or any order or
authorization (whether in writing, by electronic means, or otherwise) to a financial
institution to credit or debit any account;
(b) "currency" means any bank note' or other
currency of any country, other than when used
as a collector's piece, investment article, item
of numismatic interest, or otherwese than as a
medium of exchange;
(c) "insurance policy" means insurance covered
under a policy treated as general insurance
business or as long term insurance business
under"- Proclamation No.86/1994: Licencing
and Supervision of Ins,urance Business (the
"Insurance Proclamation");
(d) "merchant's discount" means a charge made
to merchants for accepting a credit or debit
card as payment for the supply of goods or
services, or a similar charge made by a buying
organisation.
i:.,

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IlT'PAII

In addition to the definition of financial services

under these regulations, the Minister may issue a

directive listing financial services and specifying
their treatment as taxable, exempt, or zero-rated
supplies. The Minister may modify any such list,
including changes required by the introduction of
new financial services or modification of the nature
of the services specified in the list, with any such
modification or cancellation having prospective
effect only.
5) Financial services that are listed as exempt under

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6)

these regulations are exempt, whether rendered by

a registered bank or financial institution or by any
other person.
Some services are not exempt under Article 8,
Sub-Article (2)(b) of the Proclamation, whether or
not they are rendered in connection with an exempt
financial service. They include, but are not limited
to the following:
(a) Legal, accounting and record package

(b)
(c)
(d)
(e)

services, actuarial, notary, and tax agency

services (including advisory services) when
rendered to a supplier of financial services or
to a customer of that supplier of financial
services;
Safe custody for cash, documents or other
items;
Data processing and payroll services;
Debt collection or factoring services;
Management services, such as management of

a superannuating fund;
(t) Trustee, finanacial advisory, and estate planning services, and
(g) Leases, licenses, and similar arrangements
relating to property other than a financial
instrument.
7) For purposes of Article 20, Sub-Article (6) of these
Regulations, accounting and record package
services include a financial clearing system that
may be part of the settlement process, the posting of
financial transactions to customers' accounts the
maintenance of customers' accounts, and the rendering of services ancillary to the services just
described.
8) The mere acquisition of a debt is not a taxable
transaction, including debt acquired by a factor.
The services related to debt recovery, litigation, and
the management of the recovery of the amount due
from debtors are taxable, including sales accounting services under a factoring arrangement and
other services related to factoring.

'X'

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9) Zero-rated exports of financial services include:

(a) financial services rendered in connection with
an export of goods;
(b) financial intermediation services rendered in
connection with a loan to an unregistered,
non-resident person to finance the export of
goods; and
(c) fees imposed by an Ethiopian bank on banking
services rendered to a non-resident who is
outside Ethiopia when the banking services
are rendered, if they do not come within the
exceptions in Article 35 of these Regulations.
10) If an exempt or zero-rated financial service is
incidental to a main supply, or if such a financial
service is the main service, the rules in Article 5 of
the Proclamation on mixed supplies apply.
11) Financial institutions and others providers of
financial services that make both taxable (including zero-rated exports) and exempt supplies
may claim taJ!<credits under Article 21, Sub-Article (2) of the Proclamation only on purchases
(including rentals) and imports used in making
taxable transactions.
12) The provisions under Article 21, Sub-Article (2)
of the Proclamation on the allocation of tax credits
between exempt and taxable transactions do not
apply (and full tax credits are allowed) to a
registered person who derives more than 90
percent of the person's total supplies in an
accounting period from taxable transactions (Article 21, Sub-Article (3) of the Proclamation). For
this purpose, wh~n calculating the value of the
taxable and total supplies, the supplier should use
gross figures for supplies other than intermediation services and use net interest amounts
(interest income less interest expense) for financial intermediation services.
13) The Value Added Tax Directive to be issued by
the Minister of Revenue may give the Authority
discretion to determine the allocation of tax
credits between taxable and exempt supplies on a
bases that the Authority considers reasonable.
14) Regardless of method used to allocate tax credits
under Article 21 of the Proclamation, the registered person must retain records to substantiate the
method used. The Authority may require financial
service providers to submit statistical data on
various product lines.
15) The exemption for financial services extends to
the premiums for insurance cover under an
insurance policy.
16) Premiums attributable to riders attached to an
insurance policy that is exempt from tax constitute
exempt services if the riders are only incidental to
the provision of the insurance cover.

1~

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determine whether a non-insurance rider is incidental to the main insurance policy.

19) The premium on an insurance policy is exempt

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only if the premium is charged on a policy issued

by a person who is licenced to issue such policies

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20)

customers do not come within the exemption for

insurance as a financial service.
21) An insurance policy does not include insurance

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cover on a warranty in respect of the quality, or

performance of tangible property.
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Supply or import of securities

1) The exemption for securities under Article 8,
Sub-Article (2)(c) of the Proclamation covers:
(a) transactions relating to the issuance, transfer,
or receipt of, or any dealing with shares,
stocks, bonds, treasury bills, or other debt or
equity securities, other than custody services;
(b) transactions relating to financial derivatives,
forward contracts, options, or similar arrangements, and
(c) transactions relating to the creation, issue,
transfer, assignment or receipt of, or dealing
with, an option or warrant relating to securities
included in (a).
2) The underwriting of the issuance of securities
generally is exempt from tax. However, the exemp-

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under the Insurance Proclamation.

Commissions and other fees earned by brokers!
agents who provide insurance coverage for their

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t;1i

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the independent supply of those services would

be taxable.
18) .The Authority shall have the sole discretion to

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7iLl1. f.,.hLt\

2002-Page

insurance policies that are not incidental to the

insurance coverage are taxable to the extent that

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- No.1931sIDecember,

17) Services covered in riders to exempt

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tion for underwriting services does not extend to

other services obtained in connection with an
underwriting, such as advertising and printing
costs, accounting, legal, and advisers' fees.
3) The exemption for securities or for financial
services does not include management or administrative services provided to a business whose
principal activity is investing funds for shareholders, members, or other persons.
4) For purposes of this Article,
(a) "currency" means any banknote or other
currency of any country, other than when used
as a collector's piece, investment article, or
otherwise than as a medium of exchange;

,.. 111ft ~A
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FederalNeaaritO~ta-

.,ta+';" .,A+ 1.,1: AiD-'A.. III~"

A.'rl."'''7.~A''",

h~" '-+C1.

(b)

person, but does not include a cheque or an

M .,.-"...~
+
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A~A)."C""
tit) "'U"'+ I:c1I' 1'ta+'l" .,A+ C1ih.,, ~+
+ C1"''''m'' ~~+ "1:? t\~ 'A '1:C1I'
+ IIIU- 1M'11'~N:?"~1I' A". f"~ .....

interest or right that is a lease, licence or other

similar arrangement in respect of immovable
property; and

~....

C111-ft"" " 'A"

II. A1\.+,.I;, "'~~-r ft,h '1.".

"debt security" means any interest in or right to

be paid money that is, or is to be, owing by any

''''1.+ ;JC C1",,'1f

8'\.11"f =ftJ'1 ...,~,+-r+ta

No.1931-December,2002-Pqe 1997

(c)

"equity security" me~s any interest in or right

to a share in the capital of ajuristic person or the

GJC. GJI.A1C

...A""', ft+

interest in a close corporation of a member

OAn: A'4-", ~ '(Iota(I) (-) A1\.""""'''' ~-r ft'h

thereof.

'''''4'C''' IDC. GJM1C 01.1..0+ 1.", h?h"" ~,

7\,I."tIl" ''''1.~11'' ,_C. ''I'~+ I.I.~ GJ~"
IIII.A1C C1"t1ftO+~u. '1.'1'1." :toc" h..,,.+ "la'l'

22. Import of gold fOTNational Bank of Ethiopia

The exemption for the import of gold to be transferred to
the National Bank of Ethiopia under Article 8, Sub-Ar"~1ft '1\.+'''''''''''~1! ..'h ~f\.'''tIla1ft.., III~"
ticle (2)(d) of the Proclamation applies to imports by or
A.lt-":f ...,-":f Aft'11- lilt. A1C '-7.1la1&+'
GJC:"
~A)."~AtI
for the National Bank, regardless of the level of purity of
the gold or the form in which it is imported.
ft. f'lP""'+ GJ~" h'P"'l''''';JC
,.,."". Jr.1A1W":f
,

I'

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A.m~:"

23. Religious

OTChurch-related

Services

1) The supply of religious or church-related services by

a religious organization is exempt under Article 8,
Sub-Article (2)(e) of the Proclamation. Generally,
services rendered by a religious Qrganization that are
integral to the practice of that religion come within
the exemption.
2) . The activities of a religious organization that com"petewith the private sector or that are not integral to
the practice of the religion do not come within the
exemption. If the value of these taxable supplies
exceed the threshold under Article 16 of the
Proclamation, the religious organization must register. .
3) Article 8, Sub-Article (2)(p) of the proclamation
exempts books and other printed material. This
exemption for bopks applies to suppli~ of books or
, other printed material by a religious organization.
4) The donation in kind or money (such as church plate
donations) or services are not subject to tax if there is
no direct link between the payment and any benefit
received by the donor.
S) A receipt by a religious organization from a business
is not a supply for consideration if the receipt merely
entitles the ttansferor to be mentioned in a brochure
or program, but if a religious organization receives
payment when it sells space in a brochure or
program, the receipt is a supply for consid~ation that
does not come within the exemption for religious or
church-related services.
6)

A religious organization that operates taxable activities through a develoPlDent commission or

similar entity or through ~ division or branch may
apply for or be required to separately-register one or
more of the commissions, divisions, or branches as
provided under the Value Added Tax Minister of
Revenue Directive.

1~ H!n~,~f.t-&\

Iii ;r1..,P' fl"'')IiU~

~,?~""';Jt+lIJt"TC

".r., Federal Neg~t Gaze~-NoLI93.1I1Decemb.er,2002-Page 1998

>. -~,'

?}Q' f(hn9,"'i"1A'"1""-f"fhe;Othb.9"f"7..?""~~X-~t-f"f

Ii'
~~"'...~'

~ ')CJ.(l ,,')-t;t

O"cp~ ,,')-t;t
"1A~""-f"f

.:~

h'i

I(l)

f(hn9"'i

"'I.Ul'f:C'Oo,.lDlI)

Om.'i 1'0'+

1lt\1I'~9" Onii:'

'-"

" ,'1).

'

"

~'\";;,,,!;""',<i-"'-"
'"

"
Article
8, ,Sub-A11i~le(2)(t)

of the Proclamation

'"

exempts the ~l,KteringQhnedical services,and the

import and supply of prescription, drugs specified in

th~ 'directives'jssuedby
the 'Minister of Health.
'. ;.
.
.'
.'
'.
Me9ical servlces~ expmpt,w~ether provided
With
or without charge and wh~er paid,by the patient or
resident or, any 'thirdparty, if the medical services

f.,.l1m 0.11'')9''

CI~II',)9" : nii:'~') f LfJOotJ)8;l-""'I.~ m~9" """

"ll"'~ aPI') 0.11'')9'' f ihn9"'i "1A'"1l\-1: hflU
.fl;l-:f f"'Ul"~-1-')

",,

;'

oooo!,' OOtPl-1- Othb.9" -1-6tf'" '-o~ f"'l.l1m'iTm- "'-ot\~ f"'"l"~T

OD~t"'"f m" ."1C
l1.1{1-'i0"1C ~ll1' l1Ji'm- h;l-bll-~' h,)""7.II')'

~"~~~AII

-",""

n;,..~O
u_~~-'C' 03CrvlCCS
.lY.lCW&,;lU
lIUUrn::scnp
W6<7;
'."
Ii'onw~
""""-

,J.j~
~.,.

1Jct\-1-1Jc).;l-1P"ff"7.f":l." hll'~
"

h~nl1: ~, ~1I''iIM

V)

fii1n9"'i

meettwo conditions:

"1A'"1""i:

O;l-m.,.

f"'l1m~

(a)

f(hn9"'i "'*9" m~9" fihn9"'i "1A'"1""-1,

,<

h)

h')ll11'

UY.:

O"'l1m~

(b)
2)

~'fool1.',)

To be exempt, medical services must be rendered at a

.

medic31',facility includes the

offices of aqualified medica1practitioner, a hospital,

ma~rnity home, ort~inic.

- ";,;-~,

/-'

,;"..A"tt-i:

'f ihbfD'i

"

. heal~ ~are p~vid~ who is requited to~ register and

.registercxl with the Ministry,of Health.
4) 'Toqu~ify for the exemption, medical services must
.-,.

00-0-1-

.. "t;~;

;f"~.-M1,f~~

, ,."ft!'

m~9" ""ito"f f9":Coo~ "1A'"1

f"'UlU"," fihb9"'i

:1-'

"'.

''';,'

'treatment,

6fa dise~e,

'amelioration

prevention,

or

inci~aing ilibprqmotion of

ment;l1ttealth. ,
,5)

'

for purposes>of
.,

Sub-Arti~l~ (1) of this Article,

as exempt medical services

.seririces that <tUalify"
inc,lvdethe'~eivicespro~i~~ to a residentor patient
by .f> qualifiedi.medi~aI'''.prACtitioner..

'~

ill .a qualified

facility, u' we1I''iaS.meals and accommodations,

"nursi1\g ahd personal' care; and assistanCe with daily
<f:.

,~

:...,..,;

-,~.

.'f.:",

"

'!\

.living 'activities to, meet the needs of the resident or

""

.!

'.;

~5;:

'>

',-

~""
'

patient.
'.

-~

6) ('For, purposes

of S~b-Ar1iclc; {I) of this Article,

exempt medical semCe'Sirtc1udethe'following:

(a) medicines arl(1ilrugstltatare issuedin a hospital

'"

~..,
~.."

.;

'-'-;

'

"

~~

'YQiS~

-'-.

ls;no~epara~charge;

(b). ~laporatory,~.ra~, 9r~er diagnos~ service;

(C)f:medicaUlevicesllSdefinedin Sub-Article(7)of
, ;',

,',

:}':-:~:.

"";:""IJ~;'~

'''\''~'

or,clinicA)f

.:
.

OO1A1,1P"ft

-",

'.. involve'!tbe" d~rtosis,

;di) "fihb9!'i
l'11A.,, 1- Ooollm-}r; u.-1- 1'.}9"
,,~ f"7.~~
OflU 1'\')-t;t 1(J-it, ~..-t1\ (1;)

~OIIDOdat~oJls)i~a, qualifi~ medical facility, and

must involve the rendering Qfmedical, services by a
qualified medical "practitioner. Medical services
.'

'0) ,.,.t\f'bii:'
''''I~mfc}ftTmotrit'C;t-A
-,...(J)f,'r
Onl\.tb fihn9"'i~ '''1A'"1tr--1- "I1A
v\)

:..

'.

"consistol qu'alifiedservices (including meals and

'"

1'\1A..,,,,,-1-

,_c.

>t,

>".

"

(Ii) 1'\L~A"f h;l-nll- ~,

00 Y;~t-f'fi"

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~Q;},9" ~~II

1I'~(J)"ff1ll.ilm-

~.

,"'"

medical practitio~er includes a doctor,bealer, dresser,'he'illth' officer, physical therapist, and other

fOl'ff') OP-o..,.','.,.in.+"'I.I\.II'\>f"7."f".. O;l-ID-t

f ihb9"'i "'*9" ~ll1' '~b9"'i "1~ '"1""-"th ')ll11'
L:J>Y.: O"'lIm~ qt\" r +~-f t\"t:kh9" tD~9"
A"'~I\1i
?t}"7. f"'l.l11' fihbre;
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A;l-"~Y!" O.,.t\~ O'"1Af"7."l-',) .1',)'+'l:i "'~-f
,m~9" O"'QDc)"1i "~:J'h~Wih~~"'~
f6"-1.,,~tf;~,,-1-6Ct~;l-"'IY;l'"11,r~,t;Q.9"~A~~, .
1'\').,.;r (i)"L~~9"ihiJ'nll~,
i' ,AJJ.U1'\,)"';t,}~ll
fll'~-1- fihb9"'i
"1A..,tr--f"f,. f"7.h"'~""')

"j;. ,

,,),

-~' . .'

3} A q~ifi.e4.wedic~ sC;rvi~is Fx~mpt Hjt is provided

by, a'qualified "roedical practitioner...A qualified

.
'h?.\.l11' L:J' Y.: O"'l1th~ ""00-' ""1P1' ~1I''i Au
fihh9"Ij' "1A.,tt-:f'f"69"C'
m.'}~-1- "'I7f7fA')
ta.fDC'f fllk')~-1- 9"CtID-&;Jo'li;Jw') "7h9"i ooh"hAi
fm.;!)~-1- .,.).;J'') "77f7fA') f"7.f"++
~"II

~. t\flU "~"'W')cHr).').,.it

;."

~"'+"''''

"'m:J>"'I.'''.ir).fcit"f~:'" O;l-ID+fihb9"'i "'*9"

'''T~
~ f.,.":I." "1A'"1tr--1-(9"'"1-o'iOO~;l-Q;},9"C')
'he;' r ihh9"C;

qualified medical facility. For purposes of this

. Article, 'a q_ifte4

",, f"'l1m~ p-n"'Ci fCl,"hA thtL9-i fm.'i l.-;-1-i fm.'i

OO!.')')i ,,"fl"'f:~'Cll-1- "'i "'ft."f1r
fm.'i "1A
..,tr-..,. f"'l.l1n1. qt\oo-,1P"f') ~lA9"~AII
h;l-bll-

they qualify as e~~mpt medical servi~s in this

Article of the Regulations.

fihn9"'i"1A'"1A-+
h'))ll11" L.+Y.: f"'l1m~
.')A~1
",~",.')
fCJ"lJ'ht;m-,)O-1- ,"'(i.~:
1I'1l
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nl\.tn1, ~(iJ.).tr,'6-A"
"
C... ~ihn9"'i 1'\1(.\'"1tr--1-h;l-nll-~'
1\."') f"7."ft\~
fih)19"C; '1'\1A'"1tr--1- h,)-\l11' UY.:
O"'l1m~
qt\"..., l1.l11' ~~II fihn9"e; "1A'"1tt--1- h')ll11'
U Y.: f"'l1m~
Clt\"..., f"'l.Clt\~ Om.'i 1'0'+
"7.tll'f:COOoD1I1-o ,t\O-1-'i "'0011'"1(1,'"'Il~1Mi

"1A'"1tt--f"f

medical facility

and

OlJct\-I:9" hll'~: he;

f1lI..VJ',.')-O OOtPl-1- h;l-nll- ~, 1\.11'')f"7."fA

~.' . fihn9"'i

iDaqualified

or by a qualified medical practitioner, or both,

Clt\"..., m~9"

"1A.,""-1- hll'~u
f(hn~'i"1A
1""-1- h;l-nll- ~, l\.11',) f"7."ft\~
n;l-m~ f (hn~'i "'*9" f.,.l1m fl.1I',) ~~II t\flU
,,').,.;t "L~~9" f;l-m-t fihn9"C; "'*9" f"7.Clt\~

I'

they-are re~red

tAis;Arti~e 'ffiitf~
~

~150..". .~~., ;;'

',-""'~

,;:"1.

,'f

.:

prJvided as part of the

.t

.~ .

,*':,

supply' of qualified riiedical services;:

'

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't.,... Federal Negarit Gaze.ta-No. 193111December,2002-Page 1999

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th) n-A"7(\~
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''''~~OD-

(d) the use of operating rooms, case rooms, or

I
anesthetic facilities, including necessary ;
equipment or supplies;
(e) the use of radiotherapy, physiotherapy, or
occupational therapy facilities in rendering
exempt medical services;
(f) accommodation and ~eals (except in a res- '
taurant or cafeteria available to persons other
than patients or residents) provided to patients
or residents in the course of receiving exempt.
medical service;
(g) services rendered by the medical facility staff
(including orderlies or technicians) in connection with exempt medical services;
(h) dental, periodontal, andendodontal services
rendered in connection with a disease, trauma,
or congenital deformity, but not for general
dentistry or for cosmetic reasons; and
(i) psychoanalytic services.
7) For purposes of Sub-Article (6)(c) of this Article,
medical devices means devices that are supplied to a
resident or patient in a qualified medical facility,
supplied to

aqualified

medical facility, or supplied

on prescription in connection with the rendition of

qualified medical services, iflcluding:(a) a respiratory or heart monitor, dialysis machine,
or feeding utensil for use by an individual with a
disability;
(b) a medical or surgieal prosthesis or orthopedic
aid provided as part of the rendition of qualified
medical services; and
(c) medical or surgical equipment supplied to a
qaualified medical facility, or the sale or rental
of such equipment to a patient or resident.
25. Education Services
~
1) Article 8, Sub-Article (2)(g) of the Proclamation
exempts education services rendered by educational
institutions, and child care services at pre-school
i~stitutions. Qualified charges for education services
are exempt if the services meet two conditions:
(a) they are specified in these regulations; and
(b) they are provided to students by a qualified
educational
institution.
,.
2) T9 qualify for the exemption, the services must be
provided to students by an accerdited:
(a) pre-primary, primary, or secondary school;
(b) technical college or university; or
(c) institution established to promote adult
education, vocational training, technical
education, or education or training of physically
or mentally handicapped persons.

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5)

qualified education institution;

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education program of a qualified provic:ierof
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institution; and
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6)

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(c)

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cards, record keeping and other administrative
services ptovided by the educational institution
and directly related to the supply of education
courses;
(e) charges for course materials, the rental of

b:J'~"f

~.

- No.1931nI December, 2002-Page 2000

curriculum-related goods by the supplier of the

education (e.g., the rental of musical instruments), field trips directly related to the
curriculum if not predominantly recreational;
(t)

and
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supplied by the supplier of the education.

8) Qualified facility ~harges include charges for buildings, grounds, libraries, and computer, science and
other laboratories.

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No. 1931 rd December, 2002-Page

2001

9) The exemption for education services does not cover

the following education courses:
(a) course in sports, games, video recording or
photography or other hobbies or recreational
pursuits, unless they are part of a degree-or
diploma-granting program;
(b) course, such as picture framing, cooking, and
personal investment, that are designed to improve knowledge for personal purposes; and
(c) music lessons that are not part of a school
curriculum.
10) Religious workers receiving education are treated as
students for purposes of this Article of the
Regulations.
11) In addition to services exempt under (4), exempt
education services rendered by a pre-primary,
primary, or secondary school include (a) basic instruction, including special education
courses;
(b) fees or charges for a pre-school or after-school
program operated by the school;
(c) charges for the use of school musical instruments or sports equipment;
(d) services rendered by students or their teachers
as part of the instructional program; and
(e) charges for students to attend a school play,
dance, field trip, or other school-sanctioned
activity primary for the students.
12) Exempt education services rendered by a university
of technical college include courses, including
correspondence courses, that qualify for credit
toward a degree or diploma, wh~ther or not the
student is pursuing a degree or diploma program.
13) The education exemption for adult education,
vocational training, technical education, and
education or training of physically or mentally
handicapped persons includes charges for:
(a) adult education courses leading to a degree or
diploma or courses that are liekely to enhance
employment-related skills of the students enrolled in the courses;
(b) courses of study at a vocational school that
develop or enhance a student's occupational
skills;
(c) courses leading to, or to maintain or upgrade, a
professional or trade accreditation or designation recognized by the appropriate government acrediting agency; and
(d) a certificate or examination in a course or
program for accrediation-or designation.
14) Courses enhance employment-related skills if the
course objectives specify those skills that students will
acquire, and there is a reasonable expectation that the
skills taught will be used by the '<'studentsin their
employment, businesses, professions, 01'trades, rather
than for recreational, hobby, 'artistt'c,orcultutal purposes.
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15) The exemption for education services does not

include;
(a) the rental of facilities by an educational institution to an outside group;
(b) the sale of admission to school athletic events
open to the general public;
(c) commissions and other fees received from the
placement of coin-operated machines on the
institution's property; and
(d) the sale of non-course material, such as items
containing the schoollogo.

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26. Supplies of Humanitarian Aid, and Imports of Goods for

Rehabilitation after Natural Disasters, Industrial Ac?}j. t\l1-oq~ ~C~:J' fOl/.OJ-t\'h:"C(1.y.".f he; n.,.t.'fC' he; (}OJcidents, and Catastrophes

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1) The exemption for supplies of humanitarian aid

under Article 8, Sub-Article (2)(h) of the
Proclamation applies to goods imported or purchased locally by organizations registered as
humanitarian organizations, for such purposes.
2) The exemption under Article 8, Sub-Article (2)(h) of
the Proclamation covers the import of goods or
purchase of goods locally in connection with an
announcement or declaration of a natural disaster,
industrial accident, or catastrophe by the Disaster
Prevention and Rehabilitation Commission.

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"'It

Water
A supply of water is exempt from tax under Article 8,
Sub-Article (2)(i) of the Proclamation, unless it is
processed in a factory.

28. Imports Exempt by Law or Agreement

1) ArticJe 8, Sub-Article (2)0) of the Proclamation
exempts imports of goods by the government,
organizations, institutions or projects only to the
extent that they are exempt from duties and other
import taxes by law or by agreement.
2) An exemption by law covers an exemption for
certain imports granted by a Proclamation or, when
specifically delegated by a Proclamation, granted by
a Regulation or Directive.
3) An exemption by agreement covers tax exemptions
for certain imports ofgoods only if the agreement is
entered into by the government or the agreement is
entered into with permission granted by the government.
4) The exemption by agreement includes an exemption
provided under;
(a) a technical assistance or humanitarian assistance agreement entered into between the
Government of any country';
(b) the Diplomatic Immunitiesand
Privileges
Registrations,
(c) an ~ntern~tipnarconvention,h~vingthe force of
,law in.~tb.iopia;
(d) any -other, multilateral agreement to which
Ethiopia is a party; .

1X"

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Federal Negarit G eta - No. 19 31'1December, 2oo2-Page

Transport
1) The exemption for transport services under Article
.ji. 0"":( ",+;t ~ ,o-h ",.,.;t (I) (T) ,,""t-'h
8, Sub-Article (2)(1) of the Proclamation is a broad
rc"" "1 I.\""1\-"" f +l1m ~ h;1-)'u\. ." f OD If'
,~.,..,.
OD-o"" OIl7'iT~9"
""t-'h7"C""
l1sP~'
exemption covering the charges imposed for the
CD~9" iJ:f'sP~'
"117=\=\11 fDtL09'"
ht;:1
transport of passengers or freight by any mode of
II
111"";1- A
transport.
I' iJ:f'sP~' CD~9"OD'11.7f>~' 0'''9'' ".,.t;: ""t-'h
2) If a transaction involving the international transport
1.
fll7=\=\11h':" h:f' ().
7"C"" h" , ~ f1;1- CD
"'"
of goods or passengers qualifies for exemption
O"cp:( ",+;t ~ ,o-h ",+;t 1 (T) ODlPl""
under Article 8, Sub-Article (2) (I) of the
h;1-hl\- ." Olf"~ P'C fDtCD~:" hlf.,; ~IJ h':"
Proclamation, Article 8, Sub-Article (4) treats the
h:f'()' 0"":( ",.,.;t ~ 'O-h ",+;t () ODlPl""
transaction as zero-rated.
OtL~ fll7hhLI Ah ;1-hh fDthLAO"" ~1f'iAIl
30. Permits and Licenses
c!J. L:f'~ "117"'1"" fDtL~OO- ht;:lsP~
1) The exemption for permits and license fees under
ji' 0"":( ",+;t ~ ,o-h ",+;t (I) (.,) 117'iT~9"
Article 8, Sub-Article (2)(m) of the Proclamation is
f P' t- h ,:"h:f'(). "lI7h'iCD' "Dtl1'1' L:f' ~ fDtL09"
ht;:1 h;1-hh ." h'1.DtIf'
f+1."11~
+L~D7.
limited to fees charged for permits and licenses
fDtIf"~
OOD''''P''''' "11""" "Dtl1m L:f'P.~ 1I!F
issued by a government agency.
"~II
2) The exemption in (1) does not apply to licenses of
I' OtLlJ",.,.;t ,o-h ",.,.;t (i) f+OD"h+~ h;1-hl\intangibles and Qther licenses or permits, such as
."
fODIf'
OD-o"" ..,n-4-ce VAsP"" ftt."T~'
the right to use property, g ranted by private parties.
OD-o"'~ "ODm"'9" CD~9" "tt.I\-~ O,-ol""
I
of Customs
ODm+9" "OD"l1,,"OD-o"'~ O..,A +'P'Pf"~ fDtl1m 31. Imports Exempt under Schedule 2 'B"
Tariffs Regulations.
L:f' P.~' "~(J;).9"C9"1I
The exemption granted under Article 8, Sub-Article
c!Ji' O~9"~h ;1-&t;: 1.,-0 v."+~ OD1.-o(,,) h"'l'l' ."
(2)(n) of the Proclamation for imports of goods exempt
h"+1.l~ CD1."1CfDt10- iJ:f'sP~
under Schedule 2 of the Customs Tariffs Regulations is
0"":( ",+;t ~ ,o-h ",+;t (I) (1) 0+1."11~
limited to the exemptions granted under part (B) of
ODlPl"" O~9"~h ;1-&t;:1.,-0 v."+~ OD1.-o"'l'l' ."
f+1.l~ CD1."1C fDt10- iJ:f'sP~ h;1-hl\- ." h'.\If).
Schedule 2 of Customs Tariffs Regulations and under
f+L"'1.~
+L~Dt fDtIf"~
O~9"~h ;1-&t;: 1.,-0
Directives issued pursuant to those Regulations.
v."rf-~ OD1.-o (,,) "+HlH~"" h'i 01.'0- ODlPl"" 32 . Workshops for Disabled
ODtCDIJ) ODOD&1 h+l'l'
." "If), iJ:f'sP~ -o!F "~II
1) The exemption under Article 8, Sub-Article (2)(0)
~~+7f>~
fDtIP~qT~
~C~.,.~
01' "I1A
of the Proclamation. applies to goods sold and
i' 0"":( ",+;t ~ ,o-h ",.,.;t (I) (,,) f+1."11~
services rendered by workshops employing
h;1-hl\- ." fODIf' OD-o""+L~Dt fDtIf"~ f"I1A
physically or mentally disabled individuals.
fDtIIP~
CD~9" f"iJ9"~
~~+7f>~'
"''I'l~
2) To qualify for the exemption under Sub-Article
~c~"''f
"D7.1+C9.T~ iJ:f'sP~'i "1A "'I\-"'~
above more than 60 per cent of the workshop's
.
-o!F"~1I
employees must be disabled. The 60 per cent
I' htLlJo,,~ O,o-h ",.,.;t (ji) f+OD"h+~ h;1-hl\threshold is measured by the number of disabled
."
f ODIf' OD-o""+m:f'Dt "-If), fDt ~"'..,. hIP t-+
7f>!FT~ ODl1hA ~ OOD'" "I1A ~~+7f>~ ODIf'iT~
and total employees in the previous 12 months,
f+l;11m
~C~.,.~
'iT~1I hlPt-+7f>~ ODl1hA :!;
except that if the workshop has been in existence
OOD'" "I1A~~+7f>~
ODIf'iT~
fDtl;11in~
for less than 12 months, then the threshold is
q" 4-..,.!1 CDt-"" h., O~..,. m:""" IP t-+7f>~ ODl1hA
measured for the number of months the workshop
f"I1A ~+7f>~'
ck'l'C OOD"'~ OOD~l1~ "~II
has been in existence.
~v.' h':( ~C~1: P't- hJ:Oul hll CDt-""0;1-~
33. Books and other Printed Materials
hlf., ~C~1: P't- ,,~ O"fqT~ l.tLl"" ''''''''
1) The exemption under Article 8, Sub-Article (2)(p)
1Pt-rf-7fo'f -0 ,. OOD"h.I"""'1"..,"AII
of the Proclamation applies to a printed book or an
0;:' OD~,'ht;:""
update of a book. The exemption applies to a bound
i'
0"":( ",+;t ~ ,o-h ",+;t (I) (CD)h;1-hl\- ."
or unbound printed version of scripture of any
h"ODIf'
frf-1. "11~
+L~Dt
fDtIf"~
";1-+00l..,
religion.
OD' ,'ht;:""
h'i
ODbmt;:"'"
CD:";1-ce "117~
"DtCDm h""""~ "~II ~IJ h;1-hl\- ." fODIf'
2) The exemption for books generally does not apply
OD-o"" ";1-rf-00CD~9" "A;1-+00f~~lI7lf""
to an audio recording that is a spoken reading of a
;tth-c:~ ~9"C +L~Dt.,..,. ~lfl"AIi
printed book, except that the exemption under
",.,.;t 1 (CD)"'~"P'~t-'
I' f"":( ",.,.;t ~ ,o-h~~..,.
Article 8, Sub-Article (2)(p) of the Proclamation
l1sP~ o+,,~
CD~9" hq~ f"I1A
""qT~
applies to import and supplies of talking books (in
f+H;1:( +'1';1& OD','ht;:"" CD1."1C ODt10- CD~9"
cassettes or other forms of recording) specifically
0"1C ~h'l' ODt1rm l.tL +L'Dt hDtIf' Oh+.,.C
designed for the blind or severely handicapped.
"tt.I\-~ +'1';1& OD','ht;:"" + L~ Dt "~If' 9"11

?lit

. ..,.t- , hrC""

29.

2003

1K" lit~ t..1.t,./A ~;J(''''' ;JILtIJ "''PC

Iii ;J1..,P' ~I"',) Iitfj~ 'i.9".

Federal Negarit Gazeta

No. 193111December, 2002-Page

2004

CHAPTER 3
Supplies Subject to Zero Tax Rate
Off.e" fOlJilh.l1 ~tI :J'tlil
fDIJ.hL~I1:flD- ".}>CP"'~
34. Substantiation of Zero Rating
@! ff.e"fOlJilh.l1 ~tI "'L~DIJ. oPlf)'1 ilI\OIJill'-;""
Where a registered person has applied the rate of zero
I\".}>C
P-I:
ff.e'
f "'oP"1 0 lD- (}lD- 0 Il tJ 1.111 oP IP~..,.
percent to a supply under these regulations, the regisfOlJilhL1
~tl1 "'L~DIJ. 11.l1 hlf';; ff.e' fOlJilhL1
tered person shall obtain and retain such documentary
~tl1 l\oPm+9"
11<h fDIJ.11.C~"'"
'hfi O:J'tI(}. IMP'
proof acceptable to the Authority substantiating the
~ 11)1 .,.+I1f,"""
11\ :flD-1 f (}.,.('0 oP lj{ sP~ .,.+11 I\->
person's entitlement to apply the zero rate to the supply.
oP 111 ,,1\ 0""::
35. Export of Goods or Services
c9~ iJ:J>sP~1 'hfi "1~"l1\->"'~1
m1.lD-6f.I" ill\oPl\tI
1) In this ArticlelD-il1':Ii' OlltJ "'+'"
(a) "export country" means any country other than
0) " iJ:J>sP~ fDIJ.1\11-0"" "1 C" OIJ1\"" h"- ""f"k 1
Ethiopia and includes any place which is not
lD-Q;t. 11\ OIJfi:flD-9" "1C ll.1f1: h"- ""f"k 1 lD-6f.I"
situated in Ethiopia, but does not include any
fDIJ.1~1 OIJfi:flD-19" P:J' f,ca9"t-~::
1f'i9"
specific country or territory that the Minister of
f11"11fi
h.\'1'iDIJ. ~OIJ"" DlJ.til""~ ODlJ.fmll)lDFinance
and Economic Development may by
oPoP t.1 iJ:J> sP~fi
"1 ~ "l 1\->.,. ~ fDIJ.1\11-0"" "1 C
Directive designate as one that is not an export
.,.11 I\->"f,m (}.('o9" 11I\->fDIJ.(}f,oPlD-1 f.,.1\ f "1 C
country;
mf,9" "l""" "f,ca9"C9"==
(b) "exported from Ethiopia" in relation to any
1\) "h"- ""f" k 1 m 1. lD-6f.I""1 C f.,.1\ 11-" OIJ1\"" f.,.oP
movable goods supplied by any registered
"10 (}lD- 07i16f.1" mf,9" 0,&;,0. 7i16f.1" il9"9""""
person under a sale or credit agreement, meansoP IPl"" hDIJ.1+C 11:flD- fDIJ.1+.,,+ (}. iJ:J>sP~ ;JC
1) consigned or delivered by the registered person to
0""'":the recipient at an address in an export country as
Ii- 0"'oP"1 0 lD- (}lD- .,.+ (n~, 111\0"" "1 C 0 DlJ.1~
evidenced by documentary proof acceptable to the
".('ot-?f f.,.l\h l\oPlf). O"l11C "il1{llD- 111\P'
..,.
Authority; or
111\lD- f (}.,.('0 oPlj{ f.,.l
~ 11)1 .,.+ 11f,"
2) delivered by the registered person to the owner or
;J1m:
fDIJ.:}1f
charter of any foreign-going aircraft when such
I- "lD-e"TI\). iJ:J>sP~m1.DlJ.I\
11-0"""1C
aircraft is going to a destination in an export
h If., f"'oP"1 0 lD- (}lD- m1.lD-6f.I" "1 C 1\DIJ.'t.('o
country and such goods are for use or consumption
"lD-e'TI\1 111\0."" mf,9" .,.ht-f, iJ:J>sP~1
ll.1illtl11 mf,9" iJ:J>sP~0 "lD-e'T 1\). lD-il'l'
in such aircraft, as the case may be;
01'.}>9" I\f, fDIJ.lD-lt-hlf.,:
2) The following supplies are zero-rated exports within
If}t.
C
fDIJ.1\
1
1-".}>CP"'~
0"
I- fDIJ.h.,.lt-"" m1.lD-6f.I"
Article 7, Sub-Article (2)(a) of the Proclamation:
"1
(0)
oPlPl""
Off.e'
f
OlJilhL1
(a) a supply of goods where the supplier has
"'+'" ~ 10-il "'+'" 1
~tI :J'tlil fDIJ.hL~I}:flD- fi:flD-;
entered the goods for export, pursuant to the
0) ".}> t-{llDm1.lD-6f.I" 'h 1-\1\ 11- 0 ~9"~tI
"If ;Eo
Customs Proclamation, and the goods have
oPlPl"" -\tll\t-ll.f"1
flJPl\l1:flD- 'hfi 0".}>t-{l1lDbeen exported from Ethiopia by the supplier;
m1.lD-6f.I" "1C f.,.1\11- iJ:J>sP~:
h"-""f"k1
(b) a supply of goods where the Authority is
m1.lD-6f.I" "1C f.,.1\111\) 0".}>t-{l1lD- h"-""f"k1
satisfied that the goods have been exported
ill\oPlf).
f:J'tI(}.
111\P'~1I)1 OIJl;J166J. 111
from Ethiopia by the supplier;
11:flD- iJ:J>sP~:
(c) a supply of goods where the goods are not
m) ".}>CP-I: O.,.LfJoP 1.ff. 0"-""f"k1 lD-il'l' 1A"0~
situated in Ethiopia at the time of supply and are
.}>t- (llD- 0~9"~ tI "If ;Eo oP IPl"" 1\" 1 C
'hfi
not to be entered into Ethiopia for home
"
lD-il1' ~}!:J' 'h1-\lD-lt- m1."1C oP~(t f0lJ1il1
consumption
pursuant to the Customs
1}:flD- iJ:J>sP~:
Proclamation by the supplier of the goods;
oP) hlltJ O:J'~ h"'"l"~"" ;JC 0""
+'I'''-~ Olt.,
'"
(d)
a supply of services directly in respect of
oP11.('o f "'(}m "1 ~ "l 1\->""
(i) movable property situated outside Ethiopia at
(i) "1~"l1\->-I: O"'(}mO"" 1.ff. h"-""f"k1
the time the services are rendered;
lD-Q;t.f., 0 l .,.,+.,,:J>7i 111l"":
(ii)
goods temporarily imported into Ethiopia
(ii) O~9"~tI "If ;Eo9"iJt-~ ~ oPlPl"" 01.ff.1
under Chapter 5 of the Customs
ce.,"" m1. "-""f"k 1 fDIJ.10- iJ:J>sP~:
Proclamation; or
(iii) "h"-""f"k1
m1.lD-6f.I" "1C 1\"-1\11(iii)
a supply of goods referred to in (a) or (b) of
iJ:J>sP~" 0 "'(}mlD- ""C~9" fDIJ.1i
L ).
the definition of "exported from Ethiopia" ,
04.1.~ (1\) (Ii) mf,9" (1\) (I) f"'oPl\h-l:
(e)
a
supply
of goods in the course of repairing,
iJ:J> sP~ ".}>CP"":
(oP) (ii) "'L~DIJ.
IP) flltJ
renovating, modifying, or treating any goods to
"'+'" 10-il "'+'" 1
I\DlJ.If111:flD- iJ:J>sP~ 1'1fi: iJ.('o."..,.: 0IJ?f?f1
which Sub-Article (2)(d)(ii) of this Article
mf,9" t'htl9"fi 00lJ .('ol"l ,1."" 1'.}>9" I\f, fDIJ.lD-ltapplies and the goods supplied
iJ:J>sP~ 'hfi
(i) are worled into, affixed to, attached to, or
(i)
O'h.,lltJ iJ:J>sP~ I\f, f"'l\m~:
f"'1mOD-:
otherwise form part of those other goods; or
mf,9" f'h.,IlV- "11~
h'h"IlV- ;JC f""'~
(ii) being consumable goods, become unusable
flf). iJ:J>sP~:
or worthless as a direct result of being used in
(ii) 01'1fi OiJ.('o."..,.:00lJ?f?f1 mf,9" 00lJil.,.l1h1
that repair, renovation, modification, or
P't-sP~ ,1."" 1'.}>9" I\f, fOlJf,lD-lt- mf,9"
treatment process;
tI~~

'P;J fOlJf,'i t-:flD- f~}!:J' iJ:J>sP~:

1A" In:~ ~1.~A

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Ii ;J ",r ~I"''' Iin~ ,.,..

Federal Negarit Gaz~ta - No. 193111December, 2002-Page 2005

l) hh.+f"A"1 m-~ tu\ ODt.+ tD~" Ollv- ODt.+

,,~ "7i:fm-1,. "77f7f1 h"7.("l..,.;JC O., ;J-

(f) a supply of services directly in connection with

land, or any improvement thereto, situated
outside Ethiopia;
(g) a supply of services to a non-resident person
who is not a registered person comprising the
arranging for the person of a supply of goods
referred to in (a) and (b) of the definition of
"exported from Ethiopia";
(h) a. supply of services physically rendered else
where than in Ethiopia;
(i) a supply of services to a non-resident person
who is outside Ethiopia at the time the services
are supplied, other than a supply of services;
(i) directly in connection with immovable
property situated in Ethiopia;

a+ll" v-1.;J-f+f1m "1/.\..,tt-+i

(1) "hh.+f"A"1 tDf..m-6""1C f\+"h- iJ:J>9'"f"
O+f1mm- +C.,.,. h"7.('f~). O~f../.\ f\(i) tD~"
f\(1) h+ODf\h-J: iJ:J>9'"f~:"C{1+ ;JC 0+""
0h.+f"A"1 m-l\1' '1CPt1\/.\11"'1
1/'\+OD"10 f1mtt-.,."f:
f"7.f1m- "1/'\'"
('f) hh.+f"A"1 m-~ f+f1m-"1/.\..,tt-.,."fi
.,.) hlllJ O;J-"f 'h+"l"';'+
"1/.\..,tt-.,."f Ol\+"'Ci
0h.+f"A"I'1CPt"/.\II"'1~ih1/.\..,tt-+0+f1mO+
1.1f.hh.+f"A"I'm-~ f\'10l f1m- f+f1m- "1/'\'"
f\O.,."ff
(i) 0h.+f"A"1 m-l\1'h"7.1~
f"7~1"'''''''f1'H1l~
;JC 0., :," f"7.11'" 1\1/.\..,tt-.,."fi
(ii) "1/.\ ..,tt--J: h+f1m, O~" f"7.1.,...,.,.f1m1-nl-rhh.+f"A"1
m-~ 11/.\+"h Ol\+.,.C
"1/.\..,tt--J: O+f1m 1.t&.h.+f"A"1 m-l\1' 11f\

(ii) directly in connection with movable

property situated in Ethiopia at the time the

services are supplied unless the movable
property is' exported from Ethiopia subsequent to the supply of services;
(iii) comprising the refraining from undertaking
any taxable activityin Ethiopia; or
(iv) comprising the tolerating of another person
/.\ .., tt-.,. Ti
undertaking any taxable activityin Ethiopia;
0) f"7. h + It-+1 f"7.~9-';' "1/'\'" tt-.,."f,(j) a supply of services comprising(i) O"iJ,-C'Jice u-n+ OD-n.,."fhh.+f"A"1 m-~
(i) the filing, prosecution, granting, mainf\ODm"''- "7fttlu1f1-of ODh;J-+/'\i ODl\m+i
~:J>.("
tenance, transfer, assignment, licensing, or
dUmO:"f "7" cPiDCf "7"'+"f\~i
ODhm+ tD~" +~~"7. ~1-\11"1"7.("l..,:
'enforcement of intellectual property rights
(ii) 010-l\ ~1"'X- i) f+ODf\h+m-1 "1/.\..,tt-+
for use outside Ethiopia;
hODhm+ ;JC 0+""
(ii) incidental services necessary for the supply
"l\~"1. fll")' +=\.;:os
tt-.,."fi
"1/'\'"
of services refePred to in (i) above; or
(iii)f"iJ'-C'''ce
U-n+ OD-o.,."f1 hh.+f"A"1
(Hi) ,the acceptance by any person of an
m-~' OOO-It-tD~" Oh~A 01':"'- ,,~
obligation to refrain from pursuing or exerhIP/CP/.\ f\OD;J-.,.-n ..,1..:'" fD7.1h1f1- v-~;Jcising in whole or part, intellectual property
9'"T1 ~O/.\:
. ..,
rights for use outside Ethiopia;
r' 0ll1J ",..,.X- ODlPl+ CDf..m-"P'"1C fD7."h- iJ:J>9'"f~i
3) To obtain zero rating for the export of goods and related
Ah ;J-hf1- ~1-\h~
+"DJ:f 111/A..,tt-.,."T01f.C' f"7hh~
ervices under this Article, the exporter, at the port of
/.\ I1:fm- 1,\:"7.("~.., iJ:J>9'~ OD7.tDl1l'O + tD1.-0 fD7.11 m- h.
"
iJ*9'"f1
f\M "7."'f~ ~i Ol1f\P'/.\tIJ)' f"7.mf4:m-1
exit, must identify the goods and present documentary
ff1'1.(" ODl)f "7:",l-n ",f\O+u
proof required by the Authority.
. O"'r;( "''''X- 1;10-11
I(U)
tDf..m-6i'
"1C
f"7."h4) Zero~(ating.for exports under Article 7, Sub-Article (2)
"'~'t
lJ:J>9'"f01f.C' f~hh~/.\h
~hf1- ~1f.."7.h~/.\I1:fm(a) of th~ Proclamation does not apply to any export of
OD/.\(ttDf.."1C
f+f..'111m-ttm-~ 101 fDt/.\htJJ4
. ":"t-o. .
goods which have been or will be re-imported to Ethiopia
"h111:fmtD~'f\"7.1l\111:fmiJ:J>'I'"f +~~"7.
. .
by th~.supplier for export.
"~1I"1'-::
5) _'A ~upplyof~gi~le Personal property (including natural
~. f*ot."107f~iJ.4-9'~1
tDf..aJ.6""ic f\"7./.\hf+OD"10
.. resources; b~tnQt ,in.cJuding spirits, beer or tobacco)
"7i:fm-1'"'1~f*L+C'>
1I>ft+'dJ-m...,."f1
""'-C'
;." f"7.1"''''4:l\ 1-nl+ ;JC O"'1';J- 0+""
v-~;J- f+f1m "1/.\..,tt-+i
(iii) 0h.+f"A"1 m-l\... "7i:fm-1'- ;J-hl\ f"7.h~
/.\0+1 "1/.\..,tt-+ AODl\m+ OD;J-.,.-n1
f"7.~'-';' "1/'\'" tt-.,."f:
(iv) h.+f"ltl m-l\... ;J-hl\ f"th~/.\0+1..,-n~+
f"7.111".("1f1m- 1f\"7tDh1 f"t~,-.;.
"1

..,,,.4-ce UI\9-+' '11t:fm-1iM/.\-'

1-ol.,."f
)f"/.\te/.\
lIPftt.tI'T1i o.@lD~9"'+"IfIl""'f,a.l.'-C)
f('fro ~1f..lI"'1i
hlllJ n;J-~ 'f+Hl"~
v.~;J-9'"f f1.".7.It- iJ:J>9'~ 1f.C'

MtmL1/.\tJ

"'L~"I. f"t'f..C'll1:fm- ~II"i/.\:-

UhAVIfJ1o' ,"'tfle:"
iJ:J>."J.~~'1+
~i "..,11-0'1+
~; , ;,J\h_f\~~Al\f1'fr..!)
ODf..n~f1''''.('' P't- "11.("
I1IJC~ t;Q.""e-. t~.M~1A-1, f"'~
v-1.;J- ODlPl+
~.nP,1.t"l'"
f~').Jfh:tAm- ;~tDh';/.\ +-Ott- 0"7.1OD+
"6"C' 1.1f. ~(a1', ,,:rrtJJ:o, f+lhl1:fm-1
1-ol.,."f
.

f\m-6i'101 f"h hll"'1:

mad~.byar~~s~r~person to a registeredrecipientwho
. :willexporttf\e.goodsin zero-rated,if all of the following
conditions are met:
(a) the recipient exports the property as soon after the
g<><;>ds
are delivered

to the recipient as is reasonable

i. .,hayin,i regar~ to the f~cts of each situation,

and, where
.. applicable; the normal business practice of the

" .' i~chiding the. type .ofgoods.involved

recipient;

1~' ~iti

t..1.&-A ~;J("'" ;JUII) -Ir'rC

Ii :1""1"'''''1 +111121"''''

Federal Negarit Gazeta - No. 193111December, 2002-Page

2006

(b) the recipient has not acquired the "goods fot

1\) 1\h.tD- iI:J>9':r:')f1"tD- mI
,,' 1\1C h"'~1t'fcDo
040"" I\h1C tD-itlJ' tt:;(;1- (IJ~" 01\1C ClJeit1'
consumption, use or supply in Ethiopia before
IJ':"~ I\~ m~~ 0101 ~~ 7\')"'ClJeI\- A"'II:I."I
exportation;
t)Atf~:
(c) the goods must not be further processed, trans~) hit4..l\1. H: ""1';10. Otf~ fOh') 1:" f+1.14.. m~"
formed or altered in Ethiopia, except to the
iJ:J>tD-')hOY:}:}1I ., ,ClC :JC R+ll"
f+LKextent reasonably necessary or incidental to its
t)Atf~
Oit.,..,.c
iJ:J>9':r: OI\...,.,.A-l ClJeit1'
transportation, 8fte! delivery. and before its
""lJJ.O?t f~C"" '/.1."" 7\')Il1~4-'
Cllltl:fClJe
exportation; and'
h')-\.,.fC
m~~ O?'if'ifl ,7\~I."If1:fClJe t)~+,
(d)
the supplier must. maintain evidence satisfac1.1.1:
00) h:"~o.ID- iI:J>9':r: 0111-m-m1.tD1!" 1\1C f+l\htory to the Authority of exportation of the goods
ootf~,) fOf/.ll.;1"'1J' Dl/itl.)f
by the recipient.
""'1.0'
't..- I\10-it h')+2t (?;) h4..~R~!
6) For purposes of Sub-Article (5),0) 111-ID- iI:J>9':r:') m1.m-~ h1C I\-I\h
1+1. 7\'i
(a) the recipient must intend to export the goods
OhC"'tn~~"" fOf/.At):ftD- ooll',).hAO"""
and must in fact export the goods;
1\) f1I1TID-') iJ:J>9'':fm1.tD-~ h1C I\Of/.Ah f"'00"10
(b) a supply to a recipientwho intends to sell to a
11ID-1\00if1' 1\+1.11m- fOf/.4..1.f01I19- tJJ1.~
h1C
registered person who will export the goods is
1\Of/.A h 11ID-h,) 1..,..4..ROOi. :"C(1"" hUmCfO'
~) iJ:J>9'':fO~C..,. '/.1."" 7\')Jl!A4-' f1l1tl:fClJe 7\')0\
not treated as a supply to' a recipient who will
.,.fC m~~ O?'if'ifI7\')-\1.I...,q:fm"'11:1."1h+L1'
export the goods;
~hl 1\lD-6f Oit.,.+C Oil:J>9'=ti ~~ 1\"1\, m~"
(c) processing, transformation, or alteration inh.Of/.t)I\I 1\tD-1' O?ith.,.A f"'l.~~')
1\"1J1')!"'"
eludes preparation, handling or other activity
.
hl111 m~fO M +..,ClC ~t.U."6>AII 11'':''' fil:J>
that causes a physical or chemical change in the
~m~f
0?+1I+1I!
000 ;J"') ."'iit.,.OOIJ' m1.m-9property, other. than natural growth, but
1\00l\h O?if.., m~~
h')1.1'i "7if"l' O"'l.~hO""
generally does not inelude services such as
hl).'-') ~Ah"" 071:1.'1: aJy.m-9- O"'l.l\hO"" '11'')
inventory-taking, refrigeration, warehousing,
ooh"""": 00"1') m~fO O?m-I.I: fooial1l\- h1A"Ita.,.~') h~lJJ.~CfOu
export packing or repacking, export labeling,
(0) iJ:J>9'~ m1.tD-~ h1Cf+l\h-II'~,)
f"'l.1l.;J
export crating, loading or ul\loading; and
"'mID- O?itl.1f O;rhit ClI\FAtrJ~ "'+f1~~"" f11\m(d) evidence of exportation can be satisfied with
:"2t f""";J1: iJ:J>tD-m1. (JJ.6Jl"oul\h-") f"'l.1I.;J"I1J'
documents satisfactory to the Authority, such as
0111-m- fOf/."'ClI f~ithC ml.+"" 0011'') hAO"""
an eJport certificate from the ~ipient of the
91 fil:J>9'~ m~~ foo')11."lf':f ,}l\fO
J\+it:
f""~')itrc""
,
.
goods in a form acceptable to the Authority.
h1A..,ta-""
(!. Ollil h,)"'2t ID-itlJ'
36. 'International Transport of Goods or Passengers
0) Ul\""~")itrc:"
~;Jtt: 11m. fll'~ h1A..,ta-:""
1) In this Artiele0?1\:" iI:J>9'':f')S'oo61i') 7\'i 'Mm-I.~
h1A
(a) "ancillary
transport services"
means
..,f\o:": ~~i:,) fO?l1C m~f01."',)~i:,,) MI.;J11J'
stevedoring services, lashing and securing
h1A..,f\o:": 1iJ.1"~i:1.fOOOOCOOC h1A..,l\.""f
services,
cargo
inspection
services,
f.,.~~h
11~f.':f')'
11,)-I:~~C
''''":J1:'''''
preparation
of
customs
documentation,
conf 00"1 1'i fO?tD-1.Y: h 1A "'tta-+, f+=I=I"m-")
m~fO 1\00'1=111fT";J~m-'
ilJi OOO;J"") f"'iit
tainer handling services, and storage of trans.

+001J' h 1 A .., ta-:"~ tD-11

ported goods or goods to be transported;

(b) "foreign-going aircraft" means any aircraft
engaged in the transportation for reward of
passengers or goods wholly or mainly on
flights between airports in.Ethiopia and airports in exeort countries or betWeenairports in
.
export countries;
(c) "intemationaltransport services" means: .
, I. the services, other than ancillary transport
.,services, of transporting p~gersor

1\) um1.tD-~ h1C fOf/.OChID-C"T~")""7A"" "'1\000-1\-m~~ O'P~~~:" 01\...,.,.A-10"'l.1~ h",.C"

TI\,) 0?1.4ol h'i iJ:J>"~ m~tD1!" h.;C O-tl\
h-O:" htD-C"TI\,)Dl/1.4oloo"hA m~" 'iI~"~
m1.m-~ h1C fI"tt\h-i):fm- 1\m-~~"""I.~
,,,':f hh,)~ m1."'~m- t"I,,~ 7\'i .~""f")
Oh~1 0..,=1=111+..,ClC l\.r.f+""'~;I\"~~")

~m-u
.
~) u,}l\~ h+~ f:"~')itrC:" h1~"A-""" ~"..,.
Ii) l\:"~")itrc"" ~;Jtt:l1~hll'~ 1\1A.,.w-'f
,.' .
oit.,..,.c 119'':f')h'ilJ:J>sP'f1.(i) .,."m- m~fO y.,.". hliA fl\.:r-f-kn
,.

..,11""'h!tCfI1 f-L'/.~A:II"'"
h~"""A-l
mQ;1. htf ~ h,) Y: (1? hh. .}of-kl;iClJe"l

m1."'~ "''' (1;1-'

(ii) hI\. :""A-, ,9'"fQ. ~"\1~L(1;1- Qh...,.,.A-1
"tD-itlJ' m1."'1.1 ~ (1;1-1
(iii) OI\.."ft-A-l.m-it1' h-t,'S ',.~ hI\...,.,.A-l
,
m-1J-m1.-t1'S (i}J-,""
'Of-flitiOtD-Y:' Ol\fC P'A:rwh1~"'ta-"'"
,

",

'

'

,.

.'.

.'

..1'"

'.,

goods by land, water, or air.

(i) from. a place Otitside Ethiopia to
another place outside Ethiopia where
the.transport or part of the transport
is across the tenitory of Ethiopia;
(ii) from a plaeeoutside Ethiopia to a

~ ' . ~.
""
'~'. .

"

plaCein Ethiopia;or

(iii) from a place in Ethiopia to a place

outside Ehiopi.;

1A'

In:~ ~t-I:\

~;MfI",;Jtl.1IJ
Me

Xii

;J-1"1'"~I"" Iiin~ ,.,...

Federal Negarit Gazeta- No.1931It December, 2002~Page

2007

.,..ttw- Ohw-C'TI\1 f"t~IJ'" 'hli 0'/\'"

2) the service,sof transporting passengers from a place
O+tt:
f,,-o.A ho.f1i1 f11iL11i1 h1+Jt ~ "/\,/\9" O+tt:
in Ethiol>ia is to another place in Ethiopia to the
"7~~..,." O.,.i'tmw- TC""", f"tif~ 1 'hiahlf~
extent that the transport is by aircraft and cons~lia 00111.7fo'f1 Ott.Tf'kl w-iaT it/\ h11: (l;ttitutes "international carriage" as defined in Ar(l;t"7~~1J:
Ott.Tf'kl w-iaT m1."t1~ "'1\
ticle 8 of the Convention on International Civil
f:' h1A 1ll-i: OfltJ TC",,'" k1.A "u" f"'Hl.H~T
Aviation.
h1A1ll-..,.'f hitA 00011'1 Oh11: h1A1ll-T i'tQJ.,
3) the services, including any ancillary transport
f"ti'tT 'hiahlf~ ~ l.ia /\ T t-1 iarCT 1:;Jtt: i'tQJ.,
services, of transporting goods from a place in
fll'~ h1A1ll-..,.'f1 Q;t,..C' 6:1>sP'f1 Ott.Tf'A-1
Ethiopia to another place in Ethiopia to the extent
w-iaT h"t1~ h1~ (l;t- Ott.Tf'A-1 w-iaT m1."t1~
that those services are supplied by the same
"'1\ (l;t- 0"7~~1f f"ti'tT h.,A..,ll-T; m~'"
supplier as part of the supply of services to which
g' OfltJ TC""'" hk1.A (U) 'hiah (th) f.,.oo/\hi:T
(a) of this definition applies; or
.,.~~"t
/\"tIl'~I1:fw-!
fOO~1
h1 A"'ll-Tf
4) the services of insuring or the arranging of the
foo~1f f00111.7fo'f 'hli f6:1> "7~~1f h1A..,llinsurance or the arranging of the transport of
..,.'f1 f"7oo;F:fT h1A..,ll-Tu
passengers of goods to which (a) to (c) of this
I' hfltJ O;t-'f f"'Hl.H~T h~C(l""'f Oh":( h1+Jt 1
definition applies;
10-ia h1+Jt (I) (/\) 0"'1.~11W- oolPl.T tl.C'
f"7iah~ Ah ",~,"t ~1.l."'I1:fCPA!
2. The following supplies are zero-rated supplies within
u) 6:1>sP:r: 0.,.1\hoOT fw-~ h1C 00-1\- 000-1\Article 7, sub-Article (2)(b) of the Proclamation
(a) a supply of the goods under a rental agreement, or
T~'" I\~ f"tW-1\- hll'~ Oh.t-~ w-A 'hli
O;Fc.,.c w-A oolPl.T 6:1>sP'f1"7~l.-flf
agreement for chartering, where the goods are used
/\) hw-C'TI\~ h"-Tf'A-1 ~
m1.l1'~ h1C
exclusively in an export country;
f"tOC 'hli 6:J>sP:r: Ohw-C'TI\1w-ia1'/\tt:}!;t(b) a supply of goods delivered to the owner or
m~'" T~9" I\~ f"tW-1\- 'hiahll'~ 1:l.ia h"-T
charterer of a foreign-going aircraft when the
f'kl W-QJ.,/\"t~1f hw-C'TI\1 l1/\o.T m~'"
aircraft is flying to a destination in an export
"'ht-~ 6:1>,,'f1 "7~l.-fl;
country and the goods are to be used international
th) , /\,..
o+tt:
fT t-1 iarCT
h 1A..,ll-T
transport services;
ooiamT;
(c) a supply of international tran~port services;
00) htt.Tf'A-1 W-~ /\"t~1f hw-C'TI\1 f1'1li:
(d) a supply of services directly in respect ofthe repair,
f,)J; T m~'" fOO-l\- 61:PfT h 1A..,ll-T
maintenance, cleaning or reconditioning of a
ooiamT:
foreign-going aircraft;
IP) hfltJ O;t-'f f"'Hl.H~T1 h1A..,ll-..,.'f omh,A
(e) a supply services directly to a non-resident person
m~9" 0"'1\ i'tw-h"7it~~T "'~1I'1 O"-Tf'A-1
~,,~ I\AII'~ IA",ooH10
i'tw- O+1';tnot being a registered person, otherwise than
ooiamT:
through an agent or other person;
(i) h"-Tf'A-1 W-~ /\"t~1f hW-C'TI\1 0"(i) comprising the hapdling, pilotage, salvage, or
Tf'A-1 W-hT I1/\OT "ltl. f"ti't1' f"7ia+
towage of any foreign-going aircraft while
li11:: f"7-fll.C: f"7J;1f fOO1-+T h1A
situtated in Ethiopia; or
..,ll-T:
(ii) provided in connection with the operation or
(ii) h"- Tf'A-1 W-6J!"f"t~1f1 hw-C'TI\1
management of any foreign-going aircraft;
pt- I\~ h"7"A m~'" h"7ia+J;1.C ;JC
(t) a supply of services to a non-resident person
O+IIH h1A..,ll-T OOiamTf
who is not a registered person comprising the
l.) hfltJ O;t-'f f+Hl.H~T1 f"tlitTT
h1A
arranging for the person of..,ll-T O"-Tf'A-1 ~,,~ I\AII'~ IA+ooH10 i'tw(i) a supply of services to which sub-Article
ooiamT=(2)(d) or (e) of this Article applies; or
(i) ffltJ h1+Jt 10-ia h1+Jt 1 (00) m~'"
(ii) the transport of goods, including an(IP) +~~"t
f"t1l'111:fW-1 h1A..,
cillary transport services, within
"...,.'f:
Ethiopia;
(ii) /\T t- , iar CT 1:;J tt: i'tQJ.,f II'~ h 1A..,
(g) a supply of services comprising the repair,
ll-..,.'f, lJJ.9"C' 6:J>sP'f1 0"- Tf'A-1
W-iaT f"7~~1f h1A..,ll-T:
maintenance, cleaning, or reconditioning of a
i't) ""-Tf'A-1 W-iaT ~".~ IAII'~ IA+OOH10
railway train operated by a non-resident peri'tw- /\"tlitth.1.wf'l{t'C Tt-1iarCT
son ~ho is not a registered person.
f"ti't1' fT1li 'hli flJ1:PfT: f')J;T h1A..,ll-T:
37. Supply of Gold to the National Bank of Ethiopia
r!J%' /\"-Tf'A-I-flch.t-' 111h ia/\"t+C-fl mc~
A supply of gold to the National Bank of Ethiopia is
/\"-Tf'kl-flch.t-'
111h f"t+C-fl mc~ Oh".:( h'+Y\
zero-rated under Article 7, Sub-Article (2)(c) of the
% 10-ia h1+Jt (I) (th) oolPl.T tl.C' f"7iah4t1 Ah
+4t~"t f"t1.l...,OT "-11'1 /\"-T"A-1 -flch.t-~ 111h
Proclamation, and the import of gold to be transferred to
h1A..,ll-T 'h,-\w-A m1.h1C f"t111 mc~ Oh".:q:
the Nationl Bank exempt under Article 8, Sub-Article
h1+Jt ~ 10-ia h'+Jt (I) (00) oolPl.T h;t-hft- ~, ~aJo:l
(2)(d) of the Proclamation.
I'

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Federal Negarit Gazeta-No.

38.

Transfer of a Going Concern

1) The transfer of all or portion of a taxable activity as

Oh4.A OoD"}.,.".,.ia ~"}1."7.1~~C~:,. f.,."I\L

""
~"}1.IJ'~ O"}..,~ JP~ ~"}:"ia.4>(\81.:" 61"9" f"}"'~

a going concern is a supply in the course or

furtherance of the taxable activity under _t\rticle4,

JP~tlJ4"} m1..,.?f,\ I.lJr l\"7i1';J1C ~"}1."'hlJ'm~

":"C{1:" ~"}1."7.",mC O"ep~ ""}"'2t "}(J.{,
""}"'2t (it) "'1."}"'~Au ial\lJ'~9"f"7ia"'''I\4 .,...,flC

Sub-Article (9) of the Proclamation. If the tranfer

meets the requirements of Article 4, Sub-Article
(10) and Article 7, Sub-Article (2)(d) of the

0"":( ""}"'2t "}o-ia ""}"'2t (I) ~lJ' ""}"'2t j "}o-ia

""}"'2t I (OD)f"'HlH~:"") ODI\h.I~:f f"7.1~"

hlJ'~ ut: f"7iahLJ' All "'L'''7. ,,1.l..,O;l'Au
Oh":( ""}"'2t "}o-ia ""}"'2t (Ili) O"'HlH~:"

Oh4.A 61"9" 11D-~ 011D-~ O"'hlJ'm~tlJ4

.,...,flC fUt: "7iahLJ' All "'m.+"7.
f"7ia"'''I\~
~ "}"lIJ'"} h.,.1.l11 f"7ia"'''I\4 .,...,flC OOD"}.,.".,.ia
11\1D-"}~C~:,. 1\1tfID-(aID-;l'llia f"7.hLAO:"
""
"'11":" ~"}1.IJ'~ .,.1.Co) "",m~Au
fUt: "7iahLJ' All "'m.4>"7. I\ODIJ'"}.,.epep" m1tj:f
f"7. h.,. ~:,."} "7~,,:,. ,,1\ fITID-U
v-).;I'~:f

I-

U) "'11"-1: OOD"}.,.".,.ia
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Proclamation, the transfer can be zero-rated. In

appropriate cases described in Article 4, Sub-Article (11), a portion or the entire transfer that is zerorated to the supplier may be treated as a taxable
transaction to the person acquiring the going
concern.
2) To obtain zero-rating, the parties must comply with
the following requirements:
(a) The transfer must be of a going concern

f"7.1~"} ~C~:,.

1\)

h""}~ f"'ODH10 (aID-mI."''' f"'ODH10 (atlJ4

f"7ia"'''I\~ .,...,flC ODIJ'~ ODl;J11' "1\0:"r:
f"7ia"'''I\~ .,...,flC f.,.LOOD ODIJ'~"}f"7.1A2t

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"I\O:"u
"7ia;l'mctllD- f"7ia"'''I\4 .,...,flC O.,.LOOD

between registered persons;

(b) A notice of the transfer must be submitted in
writing and signed by the transferor and
transferee;
(c) The notice must be furnished to the Authority

llli"'"} 1.UlD-ia1' 1\;I'Ilfa-flI\JPAtIJ"} I\.1.Cia

"1f1Au
OD) "7ia;l'mctllD- ial\":"C{1-1: ODlPl;l''C flJ'~

within 21 days after the transfer takes place;

and
(d) The notice must include the essential details of

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1931I1December,2002-Page2008

the supply.
3) A going concern is an income-producing activity

4)

capable of separate operation that is in fact

operational and capable of being carried on without
interruption after the transfer, but not a dormant or
prospective business.
A transfer can be of a going concern even if the

transferred business in not profitable, or is being

transferred to a liquidator, receiver, trustee in
bankruptcy, or other persons appointed upon the
insolvency of registered person.
5) the transfer is zero-rated only if it taks place on or
after the effective date ofthe VAT.
6) A transfer of a going concern comes within the zero
rating of Article 7, Sub-Article (2) (d) of the
Proclamation if the transfer is to a person with no
previous interest in the business, or is a a transfer of
an existing business involving only a change of
legal entity or form of doing business, such as from
a partnership to an incorporated company.
7) It is not necessary for the transferee to operate the
particular income-producing activity acquired, so
long as it is capable of separate operation.
8) The supply of farmland alone is not a supply of a
going concern if it can be separately operated.

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9)

1931I1December,2002-Page2009

Unless the transferor and transferee both are registered

persons and both sign and file in a timely manner to treat
the transfer as a supply of a going concern as required
under Article 7, Sub-Article (2)(d) of the Proclamtion,
the transfer is not zero-rated, even if in fact it is a transfer

of a going concern.
10) The 21-day period within which the notice must be filed
is determined under the time of supply rules in Article
11 of the Proclamation.
11) If the transferee previously was not a registered person,
the supply can qualify for zero rating only if the
transferee is registered by the date the transfer takes
place.
12) If the parties file the required notice and the transfer
does not qualify as .a zero-rated supply of a going
concern under Article 7, Sub-Article (2)(d) of the
Proclamtion, the consideration charged for the supply is
treated as being exclusive of VAT, the transfer is
subject to tax, and the transferee can claim a tax credit to

the extent allowable under the Proclamation.

I\.mf,:" f,"f/t~1I
Ie. OtUJ ","'2t OUlPl"" I\~h"" ql\P'~tIJ' "1II/."'COm- 13) The notice to the Authority required under this Article
must include a complete list of the assets transferred, the
III/h~m-tl ".,./tI\4-..,., 'ofll.,."f ""'''.7./t 1JC1JC:"~I'.c;
,~, ".,./tI\L 'ofll"" "101 CP;1:"h.,./t/t4Lm- ""7.111"'"
market value of each asset transferred, the nature of the
1.m-, ",..,.(- P'~ qtM: ',,"l1: ".,./tI\LI\"" (\m- O',,"l1:
business conducted by the transferror and the business
""7.1I1't1.m-, ",..,.(- P' ~ , f, ~..,.. "h.,./t /t4Lm-O.,./t
to be conducted by the transferee with the acquired
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assets, and the length of time the transferor's business
""7.t;U.9"C oulj{ oul1J "1\0""11 "~h"" ql\P'~tIJ'
has been operated with the assets transferred. The
h"h.,./t/t4Lm- mf,9" h.,./tI\LI\"" (\m- mf,9" ho-l\1:9"
Authority may require additional information from the
.,.t;U.III/&
oulj{ I\.mf,:" f,"f/t~1I
transferor or transferee, or both.
Olll/h.,.
Ii' "h.,./t/t4Lm- Oou'.,.".,.h /tf, ""7.1"fm-, .(-C:E-""
14) If the transferor cancels its registration as part of the
/t1\4- 9"h"""
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f,tJ .(-';11. "h.,./t/t4Lm- O"cP:( ","'2t

transfer of a going concern, then goods not transferred

tt'li ou.lPl"" "~hh 117"''i~h 0lll/11~q:fm- /J:J>sP"f/tf,

"'L'''7. "f,II"9"1I
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values, except that this rule does not apply to goods for

Ii'

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(\~,."f, 1\.,./tI\LI\"" (\m- ouhm"" 11\0"" ""11":
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01 ~hh",oul\h"'m,,1\ 0 ""11
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as part of the going concern generally constitute a

supply of the goods by the trasnsferor at their market
which the transferor has not been allowed a tax credit
under Article 21 of the Proclamation.
15) The transferor and transferee, upon written application
signed
by both, may request a transfer of taxpayer
,
identification number and certificate of registration, and
the Authority has the sole discretion to grant or deny the
request.
16) If the appl\fation under (7) is approved,(a) the transferor must transfer VAT records to the
transferee, and the transferee must retain those
records for the time required for the retention of
records under Article 37 of the Proclamtion; and
(b) both parties are legally obliged to pay any VAT
liability incurred while the transferor owned the
business.

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Page2010

Directives

The Minister of Revenue may issue directives for the

proper implementation of these Regulations.
40. Effective Date

1.1~ f"7.flljO"" +1
f,tJ 1.111 1\CP:(. hfllj ri..,. +1 "f..?"r: ffllj f,tflj A:I

1\Jl'" 1\OCt;J-"'",P' f11+1 ljifj~ '-?"

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Federal Negarit Gazeta - No.19 3111

December,2002-

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Jl'l"ht-l1.1'e

tT11l\.h

m c}>I\f, "7.t"'''''C

{lcnc;

These Regulations shall come into force as of the date

the Proclamation comes into force.
Done at Addis Ababa this 31st day of December, 2002.
MELES ZENAWI
PRIME.MINISTER OF THE FEDERAL DEMOCRATIC
REPUBLIC OF ETHIOPIA

M9" """'lI7.11:C~"" ;r"'OD

BERHANENA SELAM PRINTING ENfERPRISE