Title: Ethiopia Turnover Tax (TOT) Proclamation No. 308/2002

Overview: Turnover Tax (TOT) was introduced at the end of 2002 as a replacement to sales tax. It was adopted as part of a comprehensive tax reform initiative in 2002. It is a type of indirect tax which is imposed on goods supplied and or services rendered in the country by tax payers who are not required to register for VAT by reason of his annual turnover being below Birr 500,000 or threshold set by the Minister; or by reason of not having applied for voluntary registration; because of but who supply goods and services in the country.

Scope of Application:  Unless exempted, Turnover Tax (TOT) shall be payable on goods supplied and services rendered by persons not registered for Value Added Tax. TOT shall be charged at a rate of 2% or 10% of the value of goods or services depending on the type of transaction.

A). Taxable transaction:

1).  2% (two percent) on Goods sold locally;

2). 2% (two percent) on Services rendered by Contractors, grain mills, tractors and combine-harvesters;

3). 10% (ten percent) on others

B). Exempted transaction:

1). The sale or transfer of a dwelling used for a minimum of two years, or the lease of a dwelling; 2). The rendering of financial services; 3). The supply of national or foreign currency (except for that used for numismatic purposes) and of securities; 5). The rendering by religious organizations of religious or other related services; 6). The supply of prescription drugs specified in directives issued by the relevant government agency, and the rendering of medical services; 7). The rendering of educational services provided by educational institutions, as well as child care services for children at pre-school institutions; 8). The supply of goods and rendering of services in the form of humanitarian aid; 9). the supply of electricity, kerosene, and water; 10). the provision of transport; 11). Permits and license fees; 12). The supply of goods or services by a workshop employing disabled individuals if more than 60% of the employees are disabled; and 13) the supply of books.

Type of law: Proclamation

Key words:  Value; Turnover Tax; Taxable Transaction; Supply of goods; Tax rates; Exempt transactions; Collection Enforcement; Seizure of property to collect Tax; Record keeping; Appeal procedures; Administrative Penalties; Criminal Offenses;

Entry into Force: December 31, 2002

Repeals:

1). Ethiopia Sales and Excise Tax Proclamation No. 68/1993;

2). Ethiopia Sales and Excise Tax (Amendment) Proclamation No. 77/1997;

3). Ethiopia Sales and Excise Tax (Amendment) Proclamation No. 149/1999;

4). Ethiopia Sales and Excise Tax (Amendment) Proclamation No. 228/2001; and

5). Ethiopia Sales and Excise Tax (Amendment) Proclamation No. 237/2001

Amended by:

1). Ethiopia Turnover Tax (Amendment) Proclamation No. 611/2008

Implemented by: —

Repealed? No

Language: Amharic and English

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Similar laws: Ethiopia Value Added Tax Proclamation No. 285/2002

For more: http://www.mor.gov.et/