Summary
Purpose the proclamation: Updates and modernizes Ethiopia’s VAT system to reflect economic changes, especially electronic transactions, while supporting investment, savings, and economic growth.
Scope of VAT (Taxable Transactions):
Supply of goods and services in Ethiopia.
Importation of goods.
Reverse-charged supplies.
Remote services and electronically ordered goods.
Key words: Value Added Tax (VAT), Consumption Tax, Taxable Supply, Taxable Activity, Registered Person, VAT Registration Threshold, Input Tax, Output Tax, Input Tax Credit, Creditable Acquisition, Zero-Rated Supply, Exempt Supply, Reverse Charge Mechanism, Import of Goods, Import of Services, Remote Services, Electronic Services, Digital Economy, Electronic Distribution Platform, Place of Supply, Time of Supply, Tax Invoice, Credit Note, Debit Note, Accounting Period, VAT Return, VAT Refund, VAT Withholding, Capital Goods (Exclusion), Taxable Person, Federal Tax Authority, Compliance & Enforcement, Penalties and Interest
Structure Reform: The Proclamation sets out core principles, while detailed rules are delegated to Regulations and Directives for clarity and flexibility.
Registration, Tax Base, and Rates:
VAT applies to registered persons and large unregistered suppliers exceeding the registration threshold.
Covers domestic supplies, imports, reverse-charged supplies, and remote services.
0% for taxable supply that is classified as zero-rated supply
15% for any other supplies
Exemptions:
Certain supplies and imports are VAT-exempt (listed in Schedules). Exemptions are targeted to benefit specific social and economic groups.
Electronic & Digital Economy:
Introduces VAT rules for electronically ordered goods, remote services, and electronic distribution platforms.
Ensures taxation of cross-border digital transactions consumed in Ethiopia.
Administration & Compliance, and Legal Structure:
Reported Monthly.
Mandatory issuance of tax invoices, credit notes, and debit notes.
Administrative penalties governed by the Federal Tax Administration Proclamation.
Records must be properly maintained for audit purposes.
Core VAT principles are in the Proclamation.
Governed by the Federal Tax Administration Proclamation
Detailed procedures are set out in Regulations and Directives.
Effective Date: August 21, 2024
Repeals: Without prejudice to Article 74 of this Proclamation, the Value Added Tax Proclamation No. 285/2002 is hereby repealed.
Amended by:
Implemented by: Value added Tax Regulation 570/2025
Repealed? No
Language: Amharic and English
Download (PDF):Ethiopia Value Added Tax (inc Annex) PROCLAMATION No. 1341_2024
Comparison of recent VAT Proclamations:
Proclamation No. 285/2002 vs Proclamation No. 1341/2024
| Area | VAT Proclamation No. 285/2002 (Old) | VAT Proclamation No. 1341/2024 (New) |
| Purpose | Replace sales tax and introduce VAT | Modernize VAT to reflect digital economy and global standards |
| Economic Context | Traditional, goods-based economy | Digital, service-oriented and cross-border economy |
| VAT Rate | 15% standard rate | 15% standard rate (unchanged) |
| Tax Base | Mainly domestic goods and services | Expanded to include remote services and e-commerce |
| Digital Transactions | Not addressed | Explicitly covers electronic services, platforms, and online supplies |
| Non-Resident Suppliers | Limited provisions | Clear VAT liability for non-resident digital suppliers |
| Electronic Platforms | No regulation | Platforms may be treated as deemed suppliers |
| Input VAT Credit | Standard credit system | Retained, but clarified and aligned with modern practices |
| Registration Rules | Focus on resident businesses | Includes large unregistered persons and digital suppliers |
| Structure of Law | Very detailed proclamation | Framework law + Regulations & Directives |
| Exemptions | Broad and sometimes unclear | More targeted and policy-driven exemptions |
| Administration | Manual-oriented compliance | Supports electronic administration and reporting |
| Flexibility | Rigid legal text | Flexible, adaptable to future economic changes |
| Alignment with Global VAT | Limited | Strong alignment with OECD & international VAT norms |
Key Takeaways
No. 285/2002 was designed for a traditional economy and focused mainly on physical goods and local services.
No. 1341/2024 responds to:
digital trade
cross-border services
electronic platforms
modern tax administration
The VAT rate remains the same, but who is taxed and how has significantly expanded.
The new law gives government greater flexibility through regulations rather than constant amendments.
Similar proclamations:Value Added Tax (VAT) Proclamation No. 285/2002