1. Summary:

Value added Tax Regulation No. 570/2025 is issued by the council Ministers on March 17, 2025, pursuant to the Value Added Tax Proclamation No. 1341/2024. It provides a detailed administrative and legal framework for implementing the updated VAT proclamation in Ethiopia.

It mainly focuses on setting rules for taxpayer registration, defining taxable goods and services (including digital and platform-based activities), and outlining procedures for input tax credits and refunds. It requires businesses to maintain proper records, use electronic fiscal devices for invoicing, and file periodic VAT returns, while granting the tax authority powers to assess, audit, and enforce compliance. The regulation also addresses VAT treatment for imports and exports, aiming overall to improve efficiency, transparency, and modernization of the VAT system

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•  Purpose

This regulation provides detailed rules for implementing the VAT Proclamation, covering:

• Registration and tax collection powers
• Treatment of supplies (goods and services)
• Input tax credits and refunds
• VAT documentation (invoices, credit/debit notes)
• Use of electronic fiscal devices
• VAT for foreign suppliers
• Zero-rated and exempt supplies

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•  Key Provisions

A. Registration & Tax Collection:

• Regional revenue bureaus may collect VAT only if the Ministry of Revenue has no office there or electronic filing is limited.
• VAT registration certificates must include name, address, TIN, VAT number, issue date, and effective date.
• Suspension of registration prohibits taxable supplies, issuing invoices, or claiming refunds during suspension.
• Divisional registration is allowed for branches with independent accounting systems, subject to Tax Authority approval.

B. Supplies:

• Consignment sales are not supplies until ownership transfers.
• Goods from bonded warehouses exported are zero-rated; if sold domestically, VAT applies at standard rate.
• Employee services to employer are not supplies; employer-provided goods at a discount/free are taxable.
• Second-hand goods suppliers must keep detailed records of unregistered sellers.
• Gambling supplies tax = (total wagered – prizes paid) × tax fraction.
• General insurance premiums are taxable; insurance assistants’ commissions are taxable.
• Digital transport platforms (e.g., ride-hailing) must collect VAT on total passenger fees and issue daily invoices.

C. Input Tax Credits & Refunds:

• Input tax credit denied for passenger vehicles not used in transport business.
• Refunds may be withheld if VAT returns are outstanding.

D. VAT Documentation:

• Simplified tax invoice allowed for purchases ≤ 10,000 Birr.
• Tax invoices must include supplier/recipient details, serial number, description, consideration, and VAT amount.
• Credit/debit notes require detailed justification.

E. Electronic Fiscal Devices:

• EFD software must be approved by Tax Authority.
• Devices must be secure, tamper-proof, capable of transmitting data to Tax Authority, and printing QR-code invoices.
• Registered users must issue EFD-generated invoices for all taxable supplies.
• Tampering with EFD = fine up to 200,000 Birr + imprisonment up to 3 years.

F. Foreign Suppliers:

• Non-resident suppliers of e-services, telecom, or digital platforms must register for VAT if above threshold.
• Registration is online; foreign suppliers file VAT returns electronically (monthly or quarterly).
• VAT can be paid in USD, Euro, GBP, or other approved currencies.

G. Zero-Rated Supplies:

• Exports of goods and related services.
• International transport services (aircraft, shipping, travel agents).
• Export of financial services (e.g., loans for exports, banking to non-residents).
• Transfer of a taxable activity as a going concern – must meet strict conditions (notice, asset list, fair market value).

H. Exempt Supplies:

Exempt from VAT:

• Certain imported/domestic goods listed in Annex 1 (e.g., teff, wheat, bread, milk, onions, vaccines, military equipment – subject to directive).
• Residential premises (including parking spaces).
• Financial services (loans, deposits, securities underwriting) – but excludes payment processors, insurance brokers, and administrative services.
• Islamic financial services (treated similarly to conventional).
• Religious services integral to practice (but not commercial activities).
• Qualified medical services (diagnosis, treatment, surgery, prescribed devices).
• Education courses (degree/diploma programs, vocational training, school transport – but not hobbies or recreational courses).
• Employers of disabled persons (60%+ disabled workforce).
• Humanitarian aid imported via Disaster Risk Management Commission.

I. Penalties:

• Breach of EFD rules = 100,000 Birr per failure.
• EFD compliance required within 12 months of directive; extension possible (max 6 months).
• Related laws:

• Effective Date: March 17, 2025
  • Repeals:  Repeals VAT Regulation No. 79/2002.
• • Implements: VAT Proclamation No. 1341/2024
• • Amended by:
  • Implemented by: —

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•  Practical Implications

Area	Impact
Businesses	Must use approved EFD, issue QR-code invoices, register branches separately if complex.
Foreign e-suppliers	Must register, file returns, pay VAT in foreign currency.
Farmers & consumers	Basic food items (teff, bread, milk, onions, potatoes) are VAT-exempt.
Medical & education	Most core services are exempt; commercial side activities may be taxable.
Digital platforms (ride-hailing, e-commerce)	Must collect VAT on total fees, issue daily invoices, and remit to Tax Authority.

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• 4. Annex 1 (Exempt Goods – Partial List)

• Veterinary medicines
• Anti-malarial vaccines, condoms
• Cereals (teff, wheat, barley, maize, rice, etc.)
• Injera, bread, milk
• Unprepared onions, potatoes, vegetables
• Vitamins for food fortification

Ethiopia Value Added Tax Regulation No. 570_2025Download