As of the new budget year, which starts at Hamle 2008 E.C and ends Sene 2009 E.C a new income tax rate will be in effect. Last month, June 2016 G.C the Ministry of Finance and Economic Cooperation (MoFEC) has announced this new tax proclamation.

The new income tax proclamation has employees and low earners at its benefiters. The proclamation reduces deductibles from this groups. The draft proclamation was prepared by a team drawn from the Ministry of Finance and Economic Cooperation (MoFEC), Ethiopian Revenues and Customs Authority (ERCA) and regional finance bureaus.

The government has also introduced new rates for house rate and small enterprises. These rates also make the tax payables smaller.

Furthermore the team prepared a draft bill for the amendment of tax administration. Which forces tax agencies to have license. We will dig deeper into these amendments later.

These new proclamations and a lot of other amendments are now part of BusinessTYC tax software. The software is updated to take this new rates for the new budget year.

new income tax in BusinessTYC tax software

new income tax in Ethiopia incorporated in BusinessTYC tax software

BusinessTYC tax will keep all employees for you and track their payroll according to the new income tax proclamation.

If you don’t use the software you can use this simple table and a tool we have developed below.

No. Salary Range (ETB) New Tax Rate Deduction (ETB)
1. 0 – 600 Birr Non-Taxable -
2. 601 – 1,650 Birr 10% 60 Birr
3. 1,651 – 3,200 Birr 15% 142.50 Birr
4. 3,201 – 5,250 Birr 20% 302.50 Birr
5. 5,251 – 7,800 Birr 25% 565 Birr
6. 7,801 – 10,900 Birr 30% 955 Birr
7. Over 10,900 Birr 35% 1,500 Birr


If you use generic software like microsoft excel to calculate and track your employees don’t forget to include pension rates into your calculations.

New Income Tax Calculation Tool

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