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~1ot.A. ., ;J~'T;JUll)FEDERALNEGARIT GAZETA

OF THE FEDERAL DEMOCRATIC REPUBLIC OFETIDOPIA

hM"'~ ~OD-r ~1'C c!j§hJln hO(}-i'l~~1 .,., Iuni

8thYear No. 34ADDIS ABABA-41hJuly. 2002

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CONTENTS

Proclamation' No. 286/2002Income Tax Proclamation page 1867

.PRQCLAMATION NO. 286/2002

.' INCOME TAX PROCLAMATION

WHEREAS, the Declaration on Economic Policy of theGovernment of the Federal Democratic Republic of Ethiopiainaugurates a new era in social ari'deconomic relations andinstitutions in this country;

O~IlU9'" v-).;t-PJ"f opLIIlC 9'"b')f-r hv-1 OF&- ",.ff\tD-1 f10. ..,11CFC~-r ()ODt\~'I''i O"'lh.,.tJhA O~' 10f WHEREAS, in consequence of these developments, theFe~-r tD-h1' hf\+f\f~ f1.{1.9'"')"","f hOlf.U'&-flTtD-f1,)"11 existing system of Income Tax needs to be changed and

~h ~,e, ODGIf9''f .?e~'It'Pdl1: "'11:1 , hhL"'L OODtr).J adjusted to the basic principles of fiscal treatment in a freemarket economy; .

f..,-fle Fe'i:') "OD'i'£ 0"'l1:1 ,'i f..,l1C ODU'I.i:1WHEREAS,it is believedthatmodernizing the tax system

f148'7hof.-r ~mfl,)'i 1\.')iL.h-rtlD")-r') "'I01.;t-;t--r LITf1 and broadening the tax base promotes economic growth byfh.,tlt;"!, 61:1-r A"'I9'"ITfTf"'U..,lI 0011'), ht\;t-OD~O-rJ encouraging saving and investment;

OiM OD')"'F-f: h,)"''' 2~(li) ~'i (Ili) ODU'I.-rfOlf.h.,.f\lD. NOW, THEREFORE, in accordance with Article 55(1);t-tD-~Ad and (11) of the Constitution, it is hereby proclaimed as

9'"6&-tf. li follows:

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n~"';1 5.00Unit Price

CHAPTER ISubstantive Provisions

Section 1General

1. Short TitleThis Proclamation may be cited as the "Income TaxProclamation NO.286/2002"

2. DefinitionsIn this Proclamation, the meanings of terms defined inother laws of Ethiopia apply unless a different meaning isexpressly provided herein. For the purposes of thisProclamation the following terms shall have themeanings given to them hereunder:

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F!IdnI Neaari! Gueta No. 34 4- July, 2002 Page 1868

l)"Person" shall mean any individual, body, or as-sociation of persons (including a business represen-tative residing and doingbusinessin Ethiopiaon behalfof the principal).

2) "Body" shall mean any company, registered part-nership, entity formed under foreign lawresemblinga company or registered partnership, or any publicenterpriseorpublic financial agency that cmies out

, business activities including body of persons cor-porate or pnincorporated whetOeu'createQ.ar recog-

nizedunder.,a 1~~,Jlf!?r~~~n Etbio~ja ~e1sewhereand any foreIgn b6dy~s" business agent doing

. business in Ethiopia C:)O~~alfof th,~rinqipal..3}. ' 'Association of persons' 'Shall mean~ as5ociation

of individualsor,an 8S$.qciationthat includes one ormore members who are not individuals, but notincluding any association falling within the de-finition of "body".

."

4) .."Related person" means:(i) a natural person and;

(a) any relativeof that nafurafperson';-'o'f(b) a trust in respect of whichsuch relative is

or may be a benefj9iary;or(ii) a trust and a person who is or may 1?ea

beneficiary,inrespect of that trust;~r '

(iii) a partnership,joint venture,or unincorporatedassociation,or body or private company; and(a) any"memberthereof; or(b) aoy otherperson wherethatperson and a. memberof suchpartnership,'j61l1tveit-

ture, or unincorporated association ~rbody, or private company as the casemay he, are related persons in tenn~of'thisdefinitiOn;or

(iv) an incorporated com'pany, other than a closed '

(a)'& person;otherthan an incOrporated Corn-pany, where that person or that person ~nd

a. pe~on a person related to thefustmentionedperson in tenns of this de~finition controls 10 percent ormo~ of; .

(i) the right to vote in the first mentioned

company; or,. ,

(ii) the rights to distributions capital or profltsof the first-mcQtioned company. eitherdirectly or through ooe or more interposedcompanies, partnerships, or trusts; or

(b) any other incorporated company in which

the first mentioned person refelTed to in(a) or that person and a person related tothat fU'Stmentioned person in tefms of thisdefmition controls 10 percent or more of:

(i) the right to vote in the first .mentionedoompany, or f.' ,

~.

"

11t' iUr:n ~ );Jt+ ;J1t.1IJ.1'C O»!iI\~ 31 on !ifni ,.,. Federal Negarit Gaz.eta -No. 34 4111 July. 2002-Page 1869

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tIJ~'/" if"'tnT"} At1fJ4'I'tfmf,'I" OIIl){9'T1 A"7{tlI{to.1-o;r flf., ",,}"If.,1

(ii) the rights to distributions of capital or profits of the

fIrst-mentioned company, either directly or

through one or more interposed companies, part-

nerships, or trusts; or

(c) any person where that person and the person referred

to in (a) or the other incorporated company referred to

in (b) are related persons in terms of this definition; or

(d) any person related to the person referred to in (c) in

terms of this definition; or

"Relative" in relation to a natural person; means:

(i) the spouse of the rpeson; or

(ii) an ancestor, lineal descendant, brother, sister,

uncle, aunt, nephew, niece, stepfather, step-

mother, stepchild, or adopted child of that person

or of the spouse, and in the case of an adopted

child the adoptive parent; or

(iii) the spouse of any person referred to in paragraph(ii) and for the purposes of this defInition, any

adopted child is treated as related to her adoptive

parent within the first degree of consanguinity.6) "Business" or "Trade" shall mean any industrial, com-

mercial, professionl or vocational activity or any other

activity recognized as trade by the Commercial Code of

Ethiopia and carried on by any person for profIt.

7) "Taxpayer" shall mean any person subject to tax underthis Proclamation.

8) "Withholding Agent" shall mean any person with a taxcollection obligation under this proclamation.

9) "Permanent Establishment" shall mean a fIxed place ofbusiness through which the business of a person iswholly or partly carried on. The following shall, in

particular, be considered to be a permanent establish-

ment:(a) an administrative, branch, factory, workshop, mine,

quarry or any other place for the exploitation of

natural resources, and a building site or place where

construction and/or assembly works are carried out.

(b) A person shall be considered not to have a per-

manent establishment if that person:(i) uses facilities solely for the purpose of storage or

display of goods or merchandise belonging to that

person;(ii) maintains a stock of goods or merchandise belon-

ging to that person solely for the purpose of

storage or display;(iii) maintains stock of goods or merchandise belon-

ging to that person solely for the purpose of

processing by another person;(iv) maintains a fIxed place of business solelly for the

purpose of purchasing goods or merchandise or a

collecting information for that penon's busiDesa;

'JJt 111::1" lJ.6.11. ).76"" .7l1tIJ 4t1'C <DR ...~ n +1 Illfj! 'J.,... . Federal Negarit Gauta - No. 34 4'" July, .2002 Page 1870

(V) f.,.wM P'tt-Ir 1 ~(J){" f,}'"1f: P' Ir f1;rlD-'} f"'l.m (v) 'IJ,1aintains a fixed place of business solely for the

"'9"0~ ~'}"l1: P' 1rlD- f"'l.m:"OO-lI'"1~"'"f'} purpose of caIT)'ing on, for that person's

wy.9" ~ff.V- P' 1rlD- -n:F f"'l.1'"1H- "''"1C}c:"f'} business, any other activity of a preparatory or

~"7hiJW~ hln: "lD-:: auxiliary character.

th) hff.U O"y. 0.,.1r k1.A. (u) ~iJ (~) f"'''1llD- 0. tjC9"1 (c) Notwithstanding the provisions of sub-Articles (a)wh.A.1 hff.U O;r"f Ok1.A. (IP) f"'oP~h'rlD- 'r~"''''l. and (b) above, where an agent, other than an agent of

f"'l.If'}O-r'} 1r00') "fl\- f"'l.IPIr'} wh.A. "Y.bQ.9"CI an independent status to whom letter (e) belowh')1:'}i (lm- wtll\- f"'l.lPlr hl1''' wy.9" owh~m- (lm- applies, acts on behalf of a person and has, and1l9" m-A.foPL89" P'A.nJ,} 1~lD-iJ Y.U')') P'A.nJ~') habitually exercises, an authority to conclude con-hHm-~c: f"'l.m"'9"O-r hl1'''' aJ'l~ wh.It- ~COo') tracts in the name of that person and has, andwtll\- f P' Ir ~').p1l:J>ll.lD-') O"'l.lhiJm-,)O-r f1;r habitually exercises, an authority to conclude con-09:"'l.":" f"'l.lPlr 1:C~~ ~ '}~~m- y..f>mlrA.:: tracts in the name of that person, that person shall beI1'tj9" wh.It- P'lrm-') f"'l.lh'im-,}O-r f.,.mM treated as if it has a pennanent establishment inP'lt-Ir fflm- 0.11'')9'' M:"'l."-r ~,)1."'l.1P1r 1:C~:r respect of any activities which the agent undertakes

OOlJlll.f>'I'?--r hff.U O"y. Ok1.A. (fI) O.,.HlH?--r for the person at the place at which those activities are

f P' Ir ~').pll:J>(l.sP"f".,.wf1'1 hl1''': O.,.wf1'1 P'tt-Ircarried on, unless the activities of such agent are

lf1m- fP'1r ~').p1l:J>(l.Oh.-rf"kf 09:"'l."-r f"'l.lPlr limited to those mentioned in letter (b) above which,

f,)"l1: 1:C~-r hf(ljlD-9"I if exercised through a fixed place of business, would

oP) "7')~m-9" (lm- 01."'" Om"""" f\'1"'l.'li') wh.A. not make that fixed place of business a pennanent

wy.9" 1r00'} "fl\- 011ll.1P1rO"7iJ:flD-9" """wh.A. establishment.

hOlJ'l~"-r f,)"l1: P'1r ~'}""1l:J>ll.') O"7hiJW~ -n~ (d) A person shall not be treated as if it has a pennanent

~,)1.ff.U flt--r wh.l\-"f f,)'"11: P'1r ~')""1l:J>ll.m-')establishment where it merely carries on its business

f"'l.fhiJm-~-r oPf.O~ f,}"l1: P' Ir:fm-') O"'l..fhiJm- activities through a broker, general commission agent

).O:r w.p:r 'lA.I1''' Oll+.,.C 09:"'l."-r f"'l.lPlr or any other agent of an independent status, provided

1:C~-r ~ ')~~m- hY..f>mC9"Ithat such agents are acting in the ordinary course of

IP) h,}1: h-C}')f "",,m-') \'1-C}')1OoP.f>nJm?-wy.9" 0"""their business. .

h-C},}f ~'I''I'C P'C f"'l.lPlr OoPl1'~ 9"tl'} f~ -n:F(e) The fact that a company controls OTIScontrolled by

h').c;. ftb"m- 09:"'l."-r f"'l.lPlr 1:C~-r ~,}1.I1'''another company shall not of itself constitute either

.,.1.C"" hf.W(l!:9"::company a Dennanent establishment of the other.

I. "10." "7f1-r "7iJTm-9" fh.\'1tj"'l. 1'''''9''f1.1f,): OoP1.O 10) "Income" shall mean every son of economic benefit

~~-r f"'11 C}f.I1',)9" h"7iJ:flD-9" 9",}~ 01'~ 1'}H1Iincluding nonrecurring gains in cash or in kind, from

wf.9" O'}f."-r OOlJiJ:flD-9" oPA.tl ~"l-nC h4-~ f.,.h whatever source derived and in whatever fonn paidcredited or received.

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(lllltn. h"''' -r 'i :fID-SI.

11) "Taxable Income" shall mean the amount of income

12) subject to tax after deduction of all expenses and otherdeductible items allowed under this Proclamation andRegulations issued there under;

"Employee" shaH mean any individual, other than acontractor, engaged (whether on a penn anent or tem-

porary basis) to perfonn services under the direction and

control of the employer;

(a) "Unskilled Employee" shall mena an employee

who has not received vocational training, does not

use machinery or equipment requiring special skill,

and who is engaged by an employer for a periodaggregating not more than 30 days during a

calendar year;(b) "Contractor" shall mean an individual who is

engaged to perfonn services under an agreement by

which the individual retains substantial authority to

direct and control the manner in which the services

are to be perfonned.

13) "Tax Authority" shall mean the Federal Inland Revenue

Head Office or any of its branch offices estblished in anypart of Ethiopia and the tax authorities of the Regional

States.

11; il7f..fc-il JJ..trA ~,?t-r ,?l1tTJ 4:1'C .zi~ fI~ ?Ii 4"J Iitffj~ 'H".

B!'

Federal Negarit Gazeta-Mo. 34 4. May, 2002.-Page 1871

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10.'

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14) "Minister" shall mean the Minister of Finance andEconomic Development and "Ministry" shallmean the Ministry of Finance and EconomicDevelopment.

15) "Fiscal Year" shall mean the budgetary year of theEthiopian Government.

16) "Category A taxpayer", "Category B taxpayer",and "Category C taxpayer" shall have the respec-tive meanings given to them in a regulation to beissued hereunder.

,3. Scope of Application. 1) This Proclamation shall apply to residents of

Ethiopia with respect to their worldwide income.2) The Proclamation shall apply to non-residents of

Ethiopia with respect to their Ethiopian sourceIncome.

4. Obligation to pay Income TaxEvery person having income as defmed herein shall payincome tax in accordance with this Proclamation

5. Residence1) An individual shall beresident in Ethiopia, if he:

(a) has a domicile within Ethiopia;(b) has an habitual abode in Ethiopia; and/or(c) is a citizen 'of Ethiopia and a consular,

diplomatic or similar official of Ethiopia postedabroad.

2) An individual, who stays in Ethiopia for more than

183 days in a period of twelve (12) calendar months,either continuously or intermittently, shall beresident for the entire tax period.

3) A body shall be resident in Ethiopia, if it:(a) has its principal office in Ethiopia;(b) has its place of effective mangement in Ethiopia;

and/or(c) is registered in the trade register of the Ministry of

Trade and Industry or Trade bureaux of theRegional Governments as appropriate.

4) "Resident person" includes a permanent establish-

ment of a non-resident person in Ethiopia.

6. Source of IncomeIncome taxable under this proclamation ahall include, butnot limited to:

(a) income from employment;(b) income from business activities;(c) income derived by an entertainer, musician, or

sports person from his personal activities;(d) income from enterpreneurial activities carried on

by a non-resident through a permanent establish-ment in Ethiopia;

(e) income from movable property attributable to a

permanent establishment in Ethiopia;(t) income from immovable property and appur-

tenances thereto, income from livestock andinventory in agriculture and forestrj, and incomefrom usufruct and other rights deriving fromimmovable property is uch property is' situated inEthiopia;

(g) mcome from the alienation of property referred to

in (e);

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if)

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i.

i'

.Federal Negarit Gazeta - July, 2002-Page 1872

(h) dividends distributed by a resident company;(i) profit shares paid by a resident registered partner-

ship;(j) interest paid by the national, a regional or local

Government or a resident of Ethiopia, or paid by anon-resident through a permanent establishmentthat he maintains in Ethiopia;

(k) license fees (including lease payments, and

royalties paid by a resident or paid by a non-resident through a permanent establishment thathe maintains in Ethiopia.

7. Foreign Tax Credit

1) If during the tax period a resident derives foreign

source income, the Income Tax payable by thatresident in respect of that income shall be reduced bythe amount of foreign tax payable on such income.The amount of foreign tax payable shall be substan-tiated by appropriate evidence such as a tax assess-ment, a withholding certificate or any other similardocument accepted by the Tax Authority.

2) However, the reduction of the Income Tax providedby Sub-Article (1) shall not ex ceed the tax payablein Ethiopia that would otherwise be payable on theforeign source income.

3) In the case of a taxpayer subject to Income Tax on

Schedule C income, any reduction of tax prescribedby Sub-Article (1) shall be limited to the tax thatwould otherwise be payable in Ethiopia computed asif Article 28 (loss carry forward) of this Proclamationapplied separately to each foreign country in respectof profit and losses derived from sources therein.

4) The reduction of tax prescribed by this Article shall

be calculated separately in respect of each foreigncountry from which income or profit is derived.

8. Schedules ofIncome

This Proclamation provides for the taxation of income inaccordance with four schedules, as follows:1) Schedule 'A,' income from employment;2) Schedule 'B,' income from rental of buildings;3) Schedule 'C,' income from business as defined in

Article 2(6), but not including activities covered bythe Rural Land Use Fee and Agricultural ActivitiesIncome Tax Proclamations issued by regional states;

4) Schedule 'D', other income including income from:

(a) royalties;(b) income paid for services rendered outside

of Ethiopia;(c) income from games of chance;(d) dividends;(e) income from casual rental of property;(f) interest income;(g) specified non-business capital gains.

9. Foreign Exchange Transactions

All net gains and losses arising from any transactions inforeign exchanges shall be brought to account for taxpurposes as additions to taxable income or deductiblelosses in the year in which they are realized.

hOD"'tnC fOlf.'~ fOlf.hll(\C»-

fmc ~QD(I}1f "'-fiC nOD"'~

hl1C ~l1hl1C

0 150 h..,l1C ."

151 650 10

651. 1400 15

1401 2350 20

2351 3550 25

3551 5000 30

h5000 O,,~ 35

Employment income Income Tax(per month) payable

Over Birr to Birr

0 150 exempt threshold

151 650 10

651 1400 15

1401 2350 20

2351 3550 25

3551 5000 30

Over 5000 35

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Federal Negarit Gazeta- No. 344111July, 2002-Page 1873

SECTION nSchedule' A' Income /Employment Income

10. Taxable Income1) Every person deriving income from employment is.

liable to pay tax on that income at the rate specifiedin Schedule A, set out in Article 11. The first Birr150 (one hundred fifty Birr) of employment

income is excluded from taxable income.2) Employers have an obligation to withold the tax

from each payment to an employee, and to pay to theTax Authority the amount withheld during eachcalendar month. In applying the preceding, incomeattributable to the months ofNehassie and Pagumenshall be aggregated and treated as the income of onemonth.

11. Tax Rate

Schedule A

12. Determination of Employment Income1) Employment income shall include any payments or

gains in cash or in kind received from employmentby an individual, including income from formeremployment or otherwise or from prospectiveemployment.

2) The type of taxable fringe benefits and the mannerof their assessment shall be determined byRegulations to be issued by the Council of Minis-ters.

3) Income received in the form of wages does notinclude representation and other similar expen-ditures (on social functions, guest accommodations,etc.)

13. Exemptions

The following categories of income shall be exemptfrom payment of income tax hereunder:(a) income from employment received by casual

employees who are not regularly employedprovided that they do not work for more than one(1) month for the same employer in any twelve(12) months period;

(b) pension contribution, provident fund and all formsof retirement benefits contributed by employers inan amount that does not exceed 15% (fifteenpercent) of the monthly salary of the employee;

(c) subject to reciprocity, income from employment,received for services rendered in the exercise oftheir duties by:

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h1lC 'hllh 1IC

'0 1,800 h'?1IC a1,801 7,800 107,801 16,800 15

16,801 28,200 2028,201 42,600 2542,601 60,000 30

h60,000 Ol\f. 35

Taxable Income from Rental Income Tax(per year) payable

Over Birr to Birr0 1800 exempt threshold

1,801 7,801 107,801 16,800 15

16,801 28,200 2028,201 42,600 2542,601 60,000 30

Over 60,000 35

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Ii'

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10. ,;JC f.1.OD~AI

Federal Negarit Gazeta-No. 344111July, 2oo2-Page 1874

(i) diplomatic and consular representatives, and(ii) other persons employed in any Embassy,

Legation, Consulate or Mission of a foreignstate performing state affairs, who are nationalof that state and bearers of diplomatic pass-ports or who are in accordance with inter-national usage or custom normally andusually exempted from the payment of in-come tax.

(d) income specifically exempted from income tax by:

(i) any law in Ethiopia, unless specifically amen-

ded or deleted by this Proclamation;(ii) international treaty; or

(iii) an agreement made or approved by the

Minister.(e) the Council of Ministers may by regulations exempt

any income recognized as such by this Proclamationfor economic, administrative or social reasons.

(f) payments made to a person as compensation or a

gratitude in relation to:(i) personal injuries suffered by that person;

(ii) the death of another person.

Section IIISchedule 'B' IncomelIncome From Rental of Buildings

14. Taxable Income

IncoI]le tax shall be imposed on the income from rentalof buildings.

15. Tax l<.ite

The tax payable on rented houses shall be charged,levied and collected at the following rates:(a) on income of bodies thirty percent (30%) of

taxable income,(b) on income of persons according to the Schedule B

(hereunder)

Schedule 'B'

16. Detennination of Income1) Income from rental of building shall be computed as

follows:(a) if the tax payer leased furnished quarters the

amounts received attributable to the lease offurniture and equipment shall be included inincome.

":"-~,~!L);1,~t?,(~1Ir_C,j}8_~.k.~~~IR{n'.?::,c, -Federa1~eg~t~2azeia:~No. 3141bjul~~2002-Pag~)875

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(b) sub-lessors shall pay the tax on the differencebetween income from sub-leasing and.the rent paidto the lessor, provided that the amoimt' receivedfrom the sub-lessor is greater than the an10untpayable to the lessor. ..

- (c) the following amounts shall be deducted fromincome in computing taxable income:(i) taxes p~d with respect !o the land and buil-

dings being leased; except income taxes; and(ii) for taxpayers not maintaining books of ac-

count, one fifth (1/5) of "the gross incomereceived as rent for buildings furniture andequipment as an allowance for repairs, main-tenance and depreciation of such buildings,furniture and equipment;

(iii) for taxpayers maintaining books of account,the expenses incurred in earning, securing,and maintaining rental income, to the extentthat the expenses can be proven by thetaxpayer and subject to the limitationsspecified by this Proclamation; deductibleexpenses include (but are not limited to) thecost of lease (rent) of land, repairs, main-tenance, and depreciation of buildings, fur-niture and equipment in accordance withArticle 23 of this Proclamation as well asinterest on bank loans, insurance premiums.

2) The owner of a building who allows a lessee to sub-leaseis liable for the payment of the tax for which the sub-lessor is liable, in the event the sub-lessor fails to pay.

3) At the earlierof the time construction of a rental buildingis completed or when the building is rented, the ownerand the builder are required to notify the administrationof the kebele in which the building is situated about suchcompletionand the name, address, and tax identificationnumber of the person (or persons) subject to tax onincomefrom rental of the building. The kebele adminis-tration has the obligation to communicate this infor-mation or information obtained by the administrationsown initiative to the appropriate tax authority.

Section IVSchedule 'c' IncomelBusiness Income Tax

17. Scope of Schedule 'C'Income

Income Tax shall be imposed on the taxable businessincome realized from entrepreneurial activity.

18. TaxableBusiness Income

Taxable business income shall be determined per taxperiod on the basis of the profit and loss account orincome statement, which shall be drawn lD com-pliance with the Generally Accepted AccountingStandards, subject to the provisions of thisProclamation and the directives issued by the TaxAuthority .TaxRate

1) Taxable buisness income of bodies is taxable at therate of 30%.

2) Taxable business income of other taxpayers shallbe taxed in accordance with the following Schedulec.

1of1C"f"th,IC.AO+ f4f0D+ if"t~I\fD< jf'~~~~ 'ffl. " "f'Ul"'/-ac ,OBD""~,-..J

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:

0 1,800 h"NIC ~,1.801 ,. 7.SOQ . 107,801 16,800 . 15

16,80 I 2&,~00 2028.201

"

42.600 25

"42,601. 60,000 jo

h60,000 () l\g, 35

1X"i~~f~ ~tA ~?t-1-;Ju.II)~'J'C~§c~i;~ +lIifj§",9"" F~;~fal Negaqt Gaze~:::;-~(), 34 41blqly, 700Z~P e 1876.,

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lP?m(.,v "m~!' ;~, ,.,<':

Taxable Business Income. , ( r, ear)Over Birr

~. ++'111 CD"'-1P"f".

~

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r. qMbt\f"«r~ All-I)'}!. fl'lm-r -o..('C ~'�f:p.~ bti:f 0"",,(" f;rblt "tID'}m-n1' Oh.,t]'Shll-q"),. "ht\M t]"C;rA ":1 J\&.-r"1'ti: 0""htn A"'~ "'i' A:p.~ hfi:,. MhL"'"8M: ~ J\u.~ M'" 0'4-' f"'~1l'"OlJ1hA'i"o.-~ tJ.q')""f 1\1."'L"~'"

01,8017,801

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"20. Ded~ctibJeExpcnses

In the determination, of business incQme ,subject totax in Ethiopia, deductions shall be allowed for,expenses incurred for the purpose of earning,securing, and maintaining that business income to theexteI1t that the expenses can be, proven by thetaxpayer and subjeCt to the limitations specified by. . . ~) .-;.

this Proclamation.

21. Non-Deductible Expenses1) The follow1n{ expenses shall not be deductible:

(a)1he cost of the acquisition, improvement,, renewal, 'JIld. reconstructipn of businessassets that are depreciated pursuant to

. ArticJe 23.of this Prqclamation;(b) an increase of the, share of capital of a

companyor the basic capital of a registeredpartnership; ,

(c) voluntary pension or providenJ.,Jundcqn.Ui,butiOnsover and above 1~% of themonthly salary of the employee.

"(d) declared dividends and paid-out profit'shares;

(e) interest in excess of the rate used betweenthe National Bank of Ethiopia and thecOmmerciAlbanks increased by two (2)percentage points.

'

(f) damages covered by insurance policy;(g) punitive damages and penalties;(h) the creation or increase of reserves.

provisions and other special.purpose fundsunless otherwise allowed by thisProclamation;

(i) IncomeTax paid on Schedule C income andrecoverable V a1ue~Added Tax;

(j) representation expenses over and above10% of the salary of the employee;

(k) personal consumption expenses;(I) expenditures exceeding the limitS set forth

by this Proclamation pr Rejulations issuedhereunder.

(m) entertainment expenses;(n) donation or gift.

2) Notwithstanding the provisions of Sub-Article (1)(n) of this Artiete, the Council of Ministers mayby Regulations allow donations or gifts Pl'Ovic1edfor public use to be deducted.

3) Interest paid to shareholders on loaDS andadvances shall not be deductible to the"extentthat the loan or advances in respect of which theinterest paid exceeds on average dUrin. 'the taxperiOd four times the IIDOIIDtorthe sb8N c:apital.1bis sub-Article does not apply 10 batab andinsurance companies.

,~ ii1£.~f~ U-&-IA ~:J&."f-:JfLIfJ.1'C @! "~?)1+' Bifji ~'9'" Federal Negarit Gazeta - No. 344'" July, 2002-Page 1877

1)1'

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4) In the case of bodies other than companies, Sub-Article (3) above shall apply as if for the referenceto share capital there were substituted a reference tobasic capital.

22. Trading Stock1) For the purposes of ascertaining the income of a

person for a tax period from a business, there shallbe deducted the cost of trading stock of the businessdisposed of by that person during that period.

2) The cost of trading stcok disposed of during a taxperiod is determined on the basis of the average-cost method, i.e. the generally accepted accountingprinciple under which trading stock valuation isbased on an average cost of units on hand.

3) The term "trading stock' means any business assetthat is either used in the production process andbecomes part of the product, or that is hold for sale.

23. Depreciation1) In the determination of taxable business income,

the owner of the business assets may deductdepreciation for business assets.

2) Fine art, antiques, jewelry, trading stock and otherbusiness assets not subject to wear and tear andobsolescence shall not be depreciated.

3) The acquistion or construction cost, and the cost ofimprovement, renewal and reconstruction, of buil-dings and constructions shall be depreciated in-dividually on a straight-line basis at five per cent(5%).

4) The acquisition or construction cost, and the cost ofimprovement, renewal and reconstruction, of intan-gible assets shall be depreciated individually on astraight-line basis at ten percent (10%).

5) The following two categories of business assetsshall be depreciated according to a pooling systemat the following rates:(a) Computers, information systems, software

products and data storage equipment: twenty-five (25%).

(b) All other business assets: twenty percent(20% ).

6) In each category as referred to in Sub-Article (5),the rate of depreciation specified in that Sub-Articleshall be applied to the depreciation base of thecategory .

7) The depreciation base shall be the book value ofthecategory as recorded in the opening balance sheetof the tax period:(a) increased by the cost of assets acquired or

created and_the cost of improvement, renewaland reconstruction of assets in the categoryduring the -tax period.

(b) decreased by the sales price of assets disposedof and the compensation received for the lossof assets due to natural calamities or otherinvoluntary conversion during the tax period.

8) If the depreciation base is a negative amount, thatamount shall be added to taxable profit and thedepreciation base shall become zero.

9) Ifthe depreciation base does not exceed Birr 1,000the entire depreciation base shall be a deductiblebusiness expense.

10) If a revaluation of business assets takes place, nodepreciation shall be allowed for the amount of therevaluation.

11) In determination of taxable business income adeduction is permitted in respect of each categoryof business assets for the maintenance and im-provement expenses of business assets belongingto that category for the acutal amount of theexpenses, but not in excess of twenty percent(20%) of the deprciation base of the category at theend of the year. Any actual expenses exceeding thistwenty percent (20%) shall increase the de-preciation base of that category.

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Federal Negarit Gazeta-No. 34 4th July, 2002-Page 1878.

24. 1'ransfers of Business Assets

I) When assets used in a business are sold, exchanged,

or otherwise transferred, gain or loss is recognizedon the transfer.

2) Transfers of business assets among companieswhich are parties to a reorganization are not treatedas a disposal of the property.

3) The value of business assets held by a company or

companies which are parties to a reorganization isthe same as the value of such assets immediatelybefore the reorganization. Similarly, the balance

value of any depreciation categories shall be carriednvp.r.

4) "reorganization" means:

(a) a merger of two or more resident companies;(b) the acquisition or takeover of fifty percent

(50%) or more of the voting shares and fiftypercent (50%) or more of all other shares byvalue of a resident company solely in ex-change for shares of a party to the reor-ganization;

(c) the acquisition of fifty percent (50%) or moreof the assets of a resident company by another

resident company solely in exchange forvoting participations with no preferentialrights as to dividends of a party to thereorganization;

(d) a division of a resident company into or more

resident companies; or(e) a spin-off

The Tax Authority shall ensure that the mer-ger, acquisition, takeover, division, or spin-offis not having tax avoidance as a principalobjective.

5) The rules of Sub-Article (1) - (4) shall not apply tothe transfer of assets described under Article 23(5).

6) Loss shall not be recognized on the transfer of abusiness asset to related person within the meaningof Article 2(4).

25. Bad DebtsIn the determination of taxable business income, adeduction shall be allowed for a bad debt if thefollowing conditions are met:(a) an amount cOITesponding to this debt was

previously included in the income;(b) the debt is written off in the books of the taxpayer;

and(c) any legal action to collect the debt has been taken

but the debt is not recoverable.26. Special Reserves for Finance Institutions

In the determination of taxable business income offinance institutions a deduction shall be allowed forspecial (technical) reserves in accordance with thedirectives issued by the National Bank of Ethiopia; thebusiness income, however, shall be increased byamounts drawn from such reserves.

27. Participation Deduction1) If a resident company or partnership reinvests the

profit it earned to raise the capital of anothercompany or partnership subject to the conditions inSub-Article (2) and (3); such amount shall bedeductible from its taxable income.

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2) The deduction mentioned in letter (a) of Sub-Article (1) shall apply to shares of resident com-panies that are subject to taxation under Scdedule Cand in which the investing body has a shareholdingof at least twenty-five percent (25%), by value or bynumber, in the share capital or the voting rights.

3) The deduction mentioned in letter (b) of Sub-Article (1) shall apply to basic capital of residentregistered partnerships that are subject to taxation

under Schedule C and in which the investing bodyholds at least twenty-five percent (25%) by value ofbasic capital.

4) The Council of Ministers shall by reg;ulationsdetermine the manner in which the; incentivegranted in this Article shall be applied.

28. Loss Carry forward

1) If the determination of taxable business incomeresults in a loss in a tax period, that loss may be setoff against taxable income in the next five (5) taxperiods, earlier losses being set off before laterlosses.

2) If during a tax period the direct or indirectownership of the share capital or the voting rightsof a body changes more than twenty-five percent(25%), by value or by number, Sub-Article (1) shallcease to apply to losses incurred by that body in thattax period and previous tax periods.

3) A net operating loss may be carried forward anddeducted only for two periods of three years.

Transfer Pricing

1) Where conditions are made or imposed betweenpersons carrying on business in their commercial orfinancial relations which differ from those whichwould be made between independent persons, theTax Authority may direct that the income of one ormore of those related persons is to include profitswhich he or they would have made but for thoseconditions. The Tax Authority shall do so inaccordance with the directives to be issued by theMinister.

2) In order to ensure the just and efficient applicationof this Article the Tax Authority may makeagreements in advance with persons carrying onentrepreneurial activities, subject to conditions ifnecessary, that specified conditions betweenrelated persons do not differ from those whichwould be made between independent persons.

30. Exemptions

1) The following categories of income shall beexempt from payment of business income taxhereunder:(a) awards for adopted or suggested innovations

and cost saving measures, and(b) public awards for outstanding performance tax

any field.(c) income specifically exempted from income tax

by the law in force in Ethiopia, by internationaltreaty or by an agreement made or approved bythe Minister.

The revenue obtained by:2)

1~ /iittfif ~Y-oIrA ~.76T .7H.flJ (t). ~~ .,.'} IHfjQ q.9". Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1880

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(a) the Federal, Regional and Local Governments ofEthiopia;

(b) the National Bank of Ethiopiafrom activities that are incidental to theiroperations shall be exempt from tax on ScheduleC income.

SECTION VScheduled Income/Other Income

31. Royalties1) Royalties shall be liable to tax at a flat rate of five

percent (5%).2) The withholding Agent who effects payntnt shall

withhold the foregoing tax and account to the TaxAuthority within the time limit set out in thisProclamation.

3) Where the payer resides abroad and the recipient is aresident, the recipient shall pay tax on the royaltyincome within the time limit set out in thisProclamation.

4) This tax is a final tax in lieu of a net income tax.5) The term "roayalty" means a payment of any kind

receivedas a consideration for the use of, or theright to use, any copyright of literary, artistic orscientific work, including cinematography films,and films or tapes for radio or television broadcas-ting, any patent, tradework, design or model, plan,secret formula or process, or for the use or for theright to use of any industrial, commercial orscientific equipment, or for information concerningindustrial, commerciaLar..scientific experience.

32. Income from Rendering of Technical Services'-'1) All payments made in consideration of any kind of

technical services rendered outside Ethiopia toresident persons in any form shall be liable to tax ata flat rate of ten percent (10%) which shall bewithheld and paid to the Tax Authority by the payer.

2) The term "technical service" means any kind ofexpert advise or technological service rendered.

33. Income from Games ofChance1) Every person derving income from winning at

games of chance (for example, lotteries, tombolas,and other similar activities) shall be subject to tax atthe rate of fifteen percent (15%), except for win-nings of less than 100 Birr.

2) The payer shall withhold or collect the tax andaccount to the Tax Authority in the mannerprovided in Article 67.

3) This tax is a final tax in lieu of income tax.

34. Dividends1) Every person deriving income from dividends from

a share company or withdrawals of profits from aprivate limited company shall be subject to tax at therate of ten percent (10%).

2) The withholding Agent shall withhold or collect thetax and account to the Tax Authority.

3) This tax is a final tax in lieu of income tax.

35. Income From Rental of Property

Every person derving income from the casual rental ofproperty (including any land, building, or moveableasset) not related to a business activity taxable underArticle 17 shall pay tax on the annual gross income atthe rate offifteen percent (15%). This tax is a final tax inlieu of a net income tax.

11\ li1£.~fitli ~1-..t,.1A .,;Jt-r ;JtLlIJ ll~ t)~.,.'} Iiifj§ ~'9'" Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1881

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36. Interest Income on Deposits

1) Every person deriving income from interest ondeposits shall pay tax at the rate of five percent(5%).

2) The payer shall withhold the tax and account to theTax Authority in the manner provided in Article 67.

3) This tax is a final tax in lieu of income tax.

37. Gain on Transfer of Certain Investment Property

1) .Income Tax shall be payable on gains obtainedfrom the transfer (sale or gift) of property describedin this Article at the following rates:(a) building held for business, factory, office 15%

(fifteen percent)(b) shares of companies 30% (thirty percent)

2) Gains obtained from the transfer of building heldfor residence shall be exempt.

3) The basis for computation of gains obtained fromthe transfer of properties described in this Articleshall be determined by Regulations to be issued bythe Council of Ministers.

4) Any exchange of shares in a resident companywhich is a party to a reorganization - as defined inArticle 24(4) - in exchange for share in anotherresident company which is also a party is not adisposal of the shares.

5) The value of the shares given in exchange underSub-Article (4) shall be equal to the value of theoriginal shares.

6) Loss on the transfer of such property shall berecognized and be available to offset gain subject tothe following limitations:(a) Loss on transfers under this Article may be used

to offset gain on transfers under this Article, butmay not be used to offset any other income orgain. Unused losses may be carried forwardindefinitely.

(b) No loss shall be recognized on transfer toassociates within the meaning of Article 2(4).

7) Any person authorized by law to accept, register orin any way approve the transfer of capital assetsshall not accept, register or approve the transferbefore ascertainig that the payment of the tax hasb~en duly effected in accordance with this Article.

CHAPTER IIProcedural Provisions

Section 1General Provisions

38. Powers And Duties ofTax Authority

1) The implementation and enforcement of thisProclamation and of Regulations issued hereundershall be the duty of the Tax Authority.

2) Notwithstanding anything to the contrary in anyother law, the Tax Authority shall be empowered toinvestigate any statements, records and books ofaccount submitted by any taxpayer at any time by:

(a) sendmg duly accredited inspectors to the placeof business or practice of the tax payer to checksame or any vouchers, stocks of other materialitems of the taxpayer;

'IX" {ia.tfitl ~1v("&\.,;Jt:" ;JH.ilJ (}); ?;'~ .,.1 Ii!f12 q.9'" Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1882

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(b) requiring the taxpayer or any employee thereof whohas access to or custody of any information, recordsor books of account to produce the same and toattend during normal office hours at any reasonablyconvenient tax office and answer any questionsrelating thereof;

(c) requiring any person including municipality, Body,Financial Institution Department or Agency ofFederal or Regional Government to disclose par-ticulars of any information or transactions, in-cluding any lending or borrowing which it mayhave relating to the taxpayer.

39. Confidentiality ofTax InformationI) The Tax Authority and all persons who are or have

been its agents or employees shall maintain thesecrecy of all information except such informationas are required by the Commercial Code ofEthiopia to be published by trade gazette, onparticular taxpayers received by them in an officialcapacity, and may disclose such information onlyto the following persons:(a) employees of the Tax Authority, for the purpose

of carrying out their official duties;(b) law enforcement agencies, for the purpose of

the prosecution of a person for tax violations;(c) courts, in proceedings to establish a person's

liability for tax, penalties, or interest, or in anycriminal case;

(d) tax authorities of a foreign country, in accor-dance with an international treaty to whichEthiopia is a party.

2) Persons who receive informaion under Sub-Article(1) must maintain the secrecy of that informaion,except to the minimum extent necessary to achievethe object for which disclosure is permitted. Otherpersons who receive information the disclosure ofwhich is regulated by this section may not furtherdisclose the informaion and must return documentsreflecting the informaion to the Tax Authqril\'.

3) Information concerning a taxpayermay be disclosedto another person with the taxpayer's written con-sent.

40. Code of Conduct for Tax Authority EmployeesI) Each employee of the Tax Authority shall:

(a) be honest and fair, treating each taxpayer withcourtesy and respect;

(b) apply the law, regulations and rulings to eachcase on the basis the objective facts in that case,showing no partiality to members of his familyor to friends;

(c) refrain from participating in any determinationthat will affect his or his spouse's tax liability;

(d) where either a known family relationship or abusiness interest might influence any deter-mination he must, as an employee, make public(in the manner provided by regulations) suchrelationship or interest;

(e) Subject to Article 39 protect the confidentialityof any tax or duty information, and

(f) not solicit or accept any bribe or perfonn anyother improper act relating to the duty todetermine or collect any tax.

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~§.

Federal Negarit Gazeta-No. 344th July, 2002 Page 1883

2) No employee of the Tax Authority shall act as a taxaccountant or consultant or accept employment fromany person preparing tax declarations or givino taxadvice.

e

41. Co-operation of other Entities1) All Federal and Regional government authorities

and their agencies, Bodies, Kebele Administrationsa~d Associations shall have the duty to co-operateWIth the Tax Authority in the enforcement of thisProclamation.

2) (a) No Ministry, Municipality, Department or Of-

fice of Federal or Regional Government shallissue or renew any license to any taxpayerunless the applicant produces a certificate fromthe Tax Authority to the effect that tax due inrespect of the preceding year or years, have

~een paid or where the taxpayer is seekinglIcense for the first time that he has registeredwith the Tax Authority unless appeal is pen-ding, or time for payment is extended by the

.Tax Authority.

(b) If the Tax Authority refuses to issue a certificate

it shall, on demand by the applicant for thelicense, provide him or it with a writtenstatement of its reasons therefore.

(c) Any applicant who is aggrieved by the reasons

stated by the Tax Authority for refusing to issuea certificate or by the revocation of his or itslicense may appeal in writing to the ReviewCommmittee.

42. Powers of the MinisterIn addition to any powers specifically vested in him inthis Proclamation the Minister of Finance andEconomic Development may:(a) enter into agreement with other Government for the

avoidance of double taxation on activities or tran-sactions liable to tax in the territories of both parties;

(b) in his discretion, waive tax upto an amount of birr100,000 in cases of grave hardship due to natural orsupervening calamity or disa~ter, or in cases ofexceptional personal hardship not attributable tonegligence or any failure on the part of the taxpayerto discharge any duty under this Proclamation; and

(c) no amount of tax in excess of Birr 100,000 shall bewaived except with the approval of the Council ofMinisters.

(d) issue Directives for the better implementation ofthis Proclamation and Regulations issued thereunder.

TIN Requirement(a) Every person having a tax obligation is required to

obtain a tax payer identification number ("TIN"),but in no case may a person obtain more than oneTIN.

(b) No taxpayer is to be charged a fee for obtaining aTIN.

(c) The registration process shall proceed according tothe timetable to be prescribed by directives to beissued by the Tax Authority.

44. Supplying TIN to the Tax Withholding AgentA person subject to tax withholding is required tosupply the TIN to the withholding agent. When payingover the withheld tax, the withholding agent shall listthe taxpayer's TIN number along with the amount of taxwithheld with respect to that taxpayer.

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FederalNegarit Gazeta-No. 34 4thJuly, 2002-Page 1884

45. Business Licenses1) A person obtaining a license to carry an a business

accupation is required to. supply the TIN to. thelicensing autharity. All public badies and ins-titutians issuing a business ar accupatianallicenseshall nat issue or renew such license unless thetaxpayer has supplied the TIN.

2) Natwithstanding Sub-Article (1) the licensingautharity may nat require the taxpayer to.supply aTIN if accarding to. the registratian scheduledistributed as per Article 43 shaws that the date farhis registratian is nat yet due.

46. DirectivesThe Minister af Revenue is hereby empawered to. issuedirectives to.provide procedures far TIN registratian aftaxpayers. In accardance with thase directives, the TaxAutharity shall prepare a schedule af registratian far aTIN, which shall inter alia cantain specific dates farregistratian af a given class af taxpayers, and shalldistribute capies af the timetable to. all licensingautharities.Change of Address and Cessation of Business1) Any taxpayer who.makes a change af address shall

natify the Tax Autharity af the change within thirty(30) days.

2) Any taxpayer who. ceases a trade ar businessactivity shall natify the Tax Autharity within thirty(30) days that the activity has ceased. In the case afa cessatian af activity, any declaratian af incamerequired by this Proclamaatian to.be filed at the endaf a tax year, shall be filed no. later than sixty (60)days after the activity haS ceased. Any tax due farthe periad in which the cessatian accuITed shall bepaid on ar befare the declaratian due date deter-mined under this provisian.

3) Where:(a) any incame is derived by a persan in a tax year

from any business, activity, investment ar athersaurce that has ceased either befare the cam-mencement af the year or during the year, and

(b) if the incame had been derived before thebusiness, activity, investment ar ather saurceceased it wauld have been chargeable to. taxunder this Proclamatian,this Praclamatian shall apply to. the incame anthe basis that the business, activity, investmentar ather saurce had nat ceased at the time theincame was derived.

48. Record Keeping Requirement1) All persans who.are engaged in a business or trade

as defined in Article 2(5), ar wtlO awn buildingsheld all ar in part far rental, except far Categary Ctaxpayers shall keep boaks and recards.

2) A persan who.is required to.keep baaks and recardsin accardance with Sub-Article (1) shall keep thefallawing infarmatian:(a) a recard of the business assets and liabilities,

including a register af fixed assets shawing thedate af acquisitian the cast af acquisitian, andthe CUITentboak value af each asset;

(b) a recardaf all daily incame and expensesrelated to.the business activity and the matter to.which they relate;

(c) a recard af all purchases and sales af goods andservices related to. the business activitiyshawing: .

1~ lifi.tfit~ ~1.6-&\ ";Jt-r ;JtLllJ {t~ t!% +'} lUng 'i.9". Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1885. -

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(i) the particular goods and services sold;(ii) the name of the buyers and sellers or providers

in such a manner that they can be identified bythe Tax Authorities;

(iii) and using pre-numbered invoices containingthe vendor's tax identification number;

d) a record of trading stock on hand at the end of the

accounting period, including the type, quantity andcost of that stock as well as the method of valuationof that stock;

(e) any other document relevant for the detennination

of the tax liability.3) If a taxpayer has certain books or records in a

foreign language, the Tax Authorities may requirethat they be translated into one of the officiallanguages of Ethiopia at the taxpayer's expense.

4) The books and records mentioned in Sub-Article(2) shall be kept by the taxpayer for a period of ten(10) years after the end of the tax period to whichthey relate.

Submission of Memorandum of AssociationCompanies, partnership and other business or-ganizations shall submit to the Tax Authority a copy oftheir memorandum of association and statutes and shallnotify the Tax Authority of any subsequent changetherein.

50. Public Auditors1) Any auditor, when requested by the Tax Authority in

writing shall submit the audit report of his clients.2) Where any auditor fails to submit the report within

the time specified in the letter referred above, the TaxAuthority shall notify the Licensing Authority towithdraw the license of the auditor.

SECTION ITWithholding Procedures

Withholding of Tax on EmploymentlncomeAn employer shall withhold tax from every "paymentto an employee, unless the payement is expresslymade tax-exempt by this Proclamation.

2) The obligation of an employer to withhold tax haspriority over all other obligations to withhold anyother amounts from payments to an employee.

3) An employer shall pay the withheld tax to the TaxAuthority within thirty (30) days of the end of eachcalendar month, and each payment shall be accom-panied by a statement with respect to each employeewho derives taxable income for the month.

4) The statement referred to in Sub-Article (3) shall be

in the form and furnished in the manner prescribedby the Tax Authority, and shall contain the followinginformation:

(a) the name, address, and TIN of each employee;(b) the amount of taxable income derived by each

employee from the employment;(c) the amount of the tax withheld from that income,

and

(d) the amount of any tax-exempt income derived by theemployee.

1'" ii1l~fft t..1..Ir/.\ ~:M-r ;JILilJ (}1 3'~"" Ii!f1~ 'i.9". Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1886

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n. 52. Collection of Tax On Imports1) A current payment of income tax shall be collected

on Schedule C income at the time of import of goodsfor commercial use, and the collected amount treatedas tax withheld that is cr~ditable against the tax-payer's income tax liability for the ye<1r.

2) The amount collected on import of goods shall be

three percent (3%) of the sum of cost, insurance, andfreight ("CIF value").

3) If the amount of income tax collected on the import

of goods results in underpayment ofbusiness incometax due for the year, as determined at the time ofdeclaration of income tax, the taxpayer is required topay the difference with the declaration. If the amountrepresents an overpayment of income tax due for theyear, the Tax Authority shall after ensuring theaccuracy of the books and records refund thetaxpayer the amount overpaid within 3 monthsperiod.

4) The tax collected under this Article shall be recorded

and accounted - for using the taxpayer's name,address, and TIN; provided, however that if ataxpayer is not required to obtain a TIN the recordsshall be kept using only the taxpayer's name andaddress until such time as the taxpayer supplies aTIN to the collecting agency.

5) For purposes of implementing the provisions of this

Article the Minister shall by directive define the term"for commercial use."

53. Withholding of Income Tax on Payments1) Origanization, having legal personality,

" govern-ment agencies, private nonprofit institUtions, andnon-governmental organizations ("NGOs") shallwithhold income tax on payments which byRegulations to be issued by the Council of Ministersare subject to withholding Tax.

2) The amount withheld shall be two per cent (2%) Of

the gross amount of the payment.3) Within ten days from the last day of each month, the

withholding agent shall transfer to the governmentthe amount required to be withheld on payments

made during the month. The withholding agent'saggregate monthly transfer shall be accompanied bya statement lising separately each specified personto whom payments were made; the person's TIN; themonthly total of payments made to that person; andthe amount of income tax withheld results ingovernment with respect to that person.

4) Ifthe amount ofincome tax withheld on payment to

specified person results in underpayment of incometax actually due for the yeary as determined at thetime of declaration of income tax, the taxpayer isrequired to pay the difference with the declaration. Ifthe amount. of income tax withheld results inoverpayment of income tax actually due for the year,the Tax Authority shall refund thetaxpayer withinthe time and in the manner prescribed under Article76.

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Federal Negarit Gazeta-No. 34 4thJuly, 2002-Page 1887

5) If a withholding agent fails to withhold or underwithholds he shall be made to pay the full amount ofthe tax to the Tax Authority.

54. Withholding of Schedule' 'D" Income Tax on Payments1) The payer of any payment subject to tax under

Schedule "D" shall withhold from the paymentthe amount of tax required by Schedule' 'D" .

2) The obligation of the payer to withhold tax haspriority over all other obligations to withholdamounts from payments to a payee (the taxpayer).

3) A payer shall pay the witheld tax to the TaxAuthority within fifteen (15)days of the end ofeach calendar month, and each payment shall beaccompanied by a statement with respect to eachtaxpayer who received payments during the month.

4) The statement referred to in Sub-Article (3) shall be

in the form and furnished in the manner prscribedby the Tax Authority, and shall contain thefollowing information:(a) the name, address, and TIN of each taxpayer;(b) the amount of payments subject to tax under

Schedule D;(c) the amount of the tax withheld from the

payments.5) At the time of making a payment to a taxpayer, the

payer shall furnish each taxpayer a tax withholdingcertificate (in the form prescribed by the TaxAuthority) showing the date of the payment andstating the information listed in Sub-Article (4); thetaxpayer's right to contest the amount of taxwithheld; and the manner of doing so.

6) The tax-witholding certificiate is proof of the

amount of tax withheld on payments subject to taxunder Schedule D.

55. Issuance of Identification CardThe Tax Authority shall issue identification cards toWithholding Agents.

56. Record of Payments and Tax Withheld1) A withholding agent shall maintain, and make

available for inspection by the Tax Authority,records showing, in relation to each fiscal year:

(a) payments made to a payee, and(b) tax withheld from those payments.

2) The withholding agent shall keep the recordsreferred to in Sub-Article (1) for five (5) fiscal yearsafter the end of the fiscal year to which the recordsrelate.

3) The Tax Authority may require a withholding agentto furnish a copy of the records to be maintainedunder Sub-Article (1) in the manner, form' and atthe intrvals prescibed by the Tax Authority.

57. Adjustment To Tax Due For YearAnd Withholding Agent's Indemnity1) Except for tax withheld with respect to final taxes,

withheld tax (or tax paid currently under Artide 53or Article 54 or collected on import under Article52 is included in ascertaining a taxpayer's tax duefor the tax year.

:s.

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Federal Negarit Gazeta-No.34 4111July,2002-Page 1888

2) A withholding agent who has withheld under this

Proclamation and remitted the amount withheld tothe Tax Authority is treated as having paid thewithheld amount to the payee for the purposes of aclaim by the taxpayer for payment of the amountwithheld.

SECTION illTax Accounting Principles

58. Method of Accounting1) Subject to this Proclamation, for the purposes of

ascertaining a person's income accruing or derivedduring a tax period, the timing inclusions anddeductions shall be made according to generallyaccepted accounting principles,.

2) Without prejudice to Sub-Articles (1) and (3), andunless the Tax Office prescribes otherwise in par-ticular case, a taxpayer shall account for tax purposeson a cash or accural basis.

3) A company shall account for tax purposes on an

accrual basis.4) A person may apply, in writing, for a change in t~at

person's method of accounting and the Tax offIcemay, by notice in writing, approve the applicationbut only if satisfied that the change is necessary toclearly reflect that person's income.

5) If the person's method of accounting is changed,

adjustments to items of income, deduction, or creditshall be made in the tax period following the change,

so that an item is not omitted or taken in accountmore than once.

59. Cash-Basis AccountinJ?1) A person who is accounting for tax purposes on a

cash basis shall acoount for amounts to be includedin calculating that person's income when they arereceived by, or made available to that person.

2) An outgoing or expense is incurred by a person who

is accounting, for tax purposes, on a cash basis whenit is paid by that person.

60. Accrual-Basis Accounting1) A person who is accounting for tax purposes on an

accrual basis shall account for amounts to beincluded in ascertaining that person's income whenthey are receivable by that person.

2) An outgoing or expense is incurred by a person who is

~ccounting for tax purposes on an accrual basis when itISpayable by the person.

3) Subject to this-Proclamation, an amount is receivableby a person when that person becomes entitled toreceive it, even if the time for discharge of theentitlement is postponed or the entitlement ispayable by installments.

4) Subject to this Proclamation, an amount is treated aspayable by a person when all the events thatdetermine liability have occurred and the amount ofthe liability can be determined with reasonableaccuracy, but not before economic performance withrespect to that amount occurs.

5) For the purposes of Sub-Article (4), economicperformance occurs:

11\ ~ffi lJ,/rofA ~;M+ ;JJl.tIJ (l). n +1 !iifj§ '-9"".. . ~ . -. -

. ._- .. -. .-

Federal Negarit Gazeta-No.34 4th July, 2002-Page 1889

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(a) with respect to the acquisition of services orproperty, at the time the services or propertiesare provided;

(b) witn respect to the use of property, at the timethe property is used; or

(c) in any other case, arthe time that person makespayment in full satisfaction of the liability.

61. Prepayments .Without prejudice to Article 21 of this Proclamat1?n, adeduction for an outooing or expense incurred on a serVIce orother benefit which :xtends beyond twelve months includingcost of lease of land, shall be allowed proportionately over thetax periods to which the service or other benefit relates.

62. Claim of Right1) A taxpayer who is accounting for tax purposes on a

cash basis shall treat an amount as received and anoutgoing or expense as paid, even though that personis not legally entitled to receive the amount or liableto make the payment, if that' person claims to belegally entitled to receive, or legally obliged to paythe amount.

2) Where Sub-Article (1) applies and that person laterrefunds the amount received or recovers the out-going or expense paid, an appropriate adjustmentshall be made to that person's income c+the taxperiod during which the refund or recovery occurs.

3) A person who is accounting for tax purposes on anaccrual basis shall treat an amount as receivable andan outgoing or expense as payable even though thatperson is not legally entitled to receive the amount orliable to make the payment, if that person claims tobe legally entitled to receive, or to be legally obligedto pay the amount.

'

4) Where Sub-Article (3) applies and that person laterceaSeSto claim the right to receive the amount or toclaim an obligation to pay the outgoing or expense,an appropriateadjustrnent shall be made to thatperson's income of the tax period during which thatperson ceases to make the claim.

Long Term Contracts1) 1n the case of a person accounting for tax purposes

on an accrual basis, the timing of inclusions in anddeductions from income relating to a long-termcontract of a business of that person shall beaccounted for on the basis of the percentage of thecontract completed during any tax period.

2) The percentage of completion is determined bycomparing the total costs allocated to the contractand incurred before the end of the tax period withthe estimated total contract costs including anyvariations or fluctuation.

3) Whereduring the tax period m which a long-t~rm contract of a business is comp1eted theperson carrying on the business:

(a).

incurs a loss;or(b) has an unrelieved loss available for carrying

forward under Article 28(1);.which is attributable to the long-term contract,~

the Tax Authority may allowthe loss to be:(c) carried back to preceding tax periods, and(d) applied against an amount of income of a tax

period not exceeding the amount, by whichinclusions in the income of the business relatingto the long-:term contract forthat period exceeddeductions therefrom.

'''' li?(~gj ~1.t,.1A ~.?~..,. .?tLtlJ .U t!~ .,., Iiifj!! ~.,...Federal Negarit Gazeta-No.34 4111July, 2002-Page 1890

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4) A loss .incurred by a person in carrying on a businessduring a tax period is attributable to a long-termcontract of the business to the extent that deductionsallowed in ascertaining the income from the businessrelating to the long-term contract for that periodexceed inclusions in ascertaining that income.

5) In this Article, "long-term contract" of a business ofa person means a contract for manufacture, ins-tallation, or construction, or, in relation to each, theperformance of related services, which is not com-pleted within the tax period in which work under thecontract commenced, other than a contract estimatedto be completed within twelve (12) months of thedate on which the work under the contract commen-ced.

SECTION IVDeclaration and Assessment

64. Tax Year1) Unless otherwise provided, the period for tax assess-

ment ("tax year") shall be the fiscal year, that is, theone-year period from 151RamIe to 30thSene.

2) The tax year of a person is:(a) in the case of an individual or an association of

individuals, the fiscal year;(b) .in the case of a body, the accounting year of the

bodv. .1 ' t3) A body shall not change its accountmg year un ess 1

obtains prior approval, inwriting, from the TaxAuthority and complies with any condition that maybe attached to the approval.

4) The Tax Authority may, by notice in writing, revokean approval granted to a company under Sub-Article(3) if the body fails to comply with any of theconditions attached to the approval.

5) Where the tax year of a person changes as a result ofSub-Article (3) or (4), the period between the last fulltax year prior to the change and the date on which thenew tax year commences shall be treated as aseparate tax year, to be known as the "transitionalyear. "

65. Certificate and Assessment of Schedule A Income1) The tax-withholding certificate issued by an em-

ployer to an employee shall be proof that tax in theamount stated was withheld on the employee'sSchedule "A" income of the amount stated.

2) The amount of tax withheld on an employee'sSchedule A income, paid to the Tax Authority andaccompanied by the employer's statement (asrequired by Article 51) shall be the amount assessedby the Tax Authority effective on the date the tax ispaid, and subject to later amendment if the TaxAuthority determines that an error or omission hasbeen made.

3) In the case of an employee whose taxable income fora tax year consists exclusively of Schedule "A"income, no declaration of income is required.

4) Notwithstanding the preceding, an employeeworking for more than one employer or an employeeof international organization having diplomatic im-munity or working in embassies, missions ana otfierconsular establishments of a foreign governmentshall himself declare and pay taxes on his schedule"A" income with the time prescribed under Article51(3).

5) If'an employer finds out that his employee has morethan one employment income and if he ascertainsthat the other employer(s) have not aggregated saidincome, he shall aggregate and withhold the taxthereon.

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66. Declaration and Assessment of Schedule Band CIncome

1) Every taxpayer who has Schedule B or Schedule Cincome shall prepare a declaration of his income in aform prescribed by the Tax Authority. Taxpayersshall submit the tax declaration to the,Tax Authorityat the time of submitting the balance sheet, and theprofit and loss account for that tax year within thetime prescribed below:

(a) Category A taxpayers within 4 months fromthe end of the taxpayers tax year.

(b) Category B taxpayers within 2 months fromthe taxpayers tax year.

2) The type of records to be submitted to the TaxAuthority in accordance with Sub-Article (1) aboveshall be determined by Regulatons to be issued bythe Council of Ministers.

3) The tax calculatedin accordancewith the tax declaration.reduced by the tax with heldin accordance withArticles 52 and 53 of this Proclamation and theamounts provided by Article 7 (foreign tax credit) ofthis Proclamation during the tax year, shall be trans-ferred by the taxpayer to the Tax Authority simul-taneously with the tax declaration.

4) Any excess payments over the tax calculated accor-ding to Sub-Article (3) of this Article shall berefunded by the Tax Authority to the taxpayer withinninety (90) days of becoming satisfied on the taxdeclaration.

5) The amount of tax due for the year, as stated in thedeclaration, shall be the amount assessed by the TaxAuthority although the Tax Authority may deter-mine that an error or omission has been made andtherefore may issue an amended assessment.

67. Declaration and Assessment of Schedule D Income1) Every taxpayer who has Schedule D income, not

subject to withholding at source constituting a finaltax, shall prepare a declaration of that income in aform prescribed by the Tax Authority. Taxpayersshall submit this declaration to the Tax Authoritywithin two (2) months from the end of the EthiopianFiscal Year.

2) The tax calculated in accordance with the de-claration, after the amounts provided by Article 7(foreign tax credit) paid during the year with respectto the Schedule D income subject to declarationhaving been reduced, shall be transferred by thetaxpayer to the Tax Authority simultaneously withthe declaration.

3) The amount of tax due for the year, as stated in thedeclaration, shall be the amount assessed by the taxAuthority unless the Tax Authority determines thatan error or omission has been made.

68. ~)'tandardAssessment for Category C Taxpayers1) A standard assessment method shall be used to

determine the income tax liability of Category Ctaxpayers.

2) The standard assessment shall be a fixed amount oftax determined in accordance with a Council ofMinisters Regulations establishing a schedule 9fstandard assessment amounts that reflect variationsin the type of business, business size, and businesslocation. The taxpayer shall pay the tax determinedin accordance with standard assessment on the 7th

day of July to the 6thday of August every year, unless,

the taxpayer requested and is allowed to makeinstallment payments in accordance with Council ofMinisters Regulations.

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3) The period during which the standard assessmentamount will be used and the basis for the revisedamount shall be determined by a directive to beissued by the Minister. The Minister shall distribute therevised standard assessment to the tax Authorities.

69. Assessment by Estimation1) If no records and books of accounti are maintained

by the taxpayer, or if, for any reason, the records andbooks of accounts are unacceptable to the TaxAuthority, or if the taxpayer fails to declare his or itsincome within the time prescribed by thisProclamation, the Tax Authority may assess the taxby estimation.

2) The manner of assessing tax by estimation shall bedetermined by directives to be issued by the Ministerof Revenue.

70 Aggregation.A taxpayer who derives income from different sourcessubject to the same schedule shall be assessed on theaggregate of such income.

71. Limitations1) If a taxpayer has submitted a declaration of income

within the time limit and manner as prescribed in thisProclamation, the Tax Authority has five (5) years toamend. the assessment. The five-year assessmentperiod runs from the due date of the declaration.

2) If a taxpayer has submitted a declaration in themanner required by this Proclamation, but after thedue date for making a declaration, the Tax Authorityhas five (5) years to amend the assessment. The fiveyears assessment period runs from the date thedeclaration was received by the Tax Authority.

3) In case where the taxpayer has not declared hisincome or has submitted a fraudulent declaration, nottime limit provided in any other law shall bar theassessment of the tax by the Tax Authority.

SECTION VAssessment Notification

72. Contents of Assessment NotificationEvery assessment notification shall contain thefollowing elements:

1) gross income and deductions applicable underthis Proclamation;

2) taxable income;3) rates applicable or percentage;4) taxes paid and due;5) any penalty or interest;6) the taxpayer's name, address, and TIN; and7) a brief explanation of the assessment and a

statement of the taxpayer's rights.73. Service ofTax Notices

1) Income tax assessment notices or other noticesissued by the Tax Authority to any taxpayer shall becommunicated in writing as follows:(a) In the case of a resident individual, by registered

letter or by delivery to the taxpayer in person, orif he is absent, to any adult member ofhis familyor any person employed by him at his residence,or place of business or, professional practice,provided that, if, no person can be found toaccept such service, then, the same may beeffected by affixing the notice to the door orother available part of the said residence orplace of business.

(b) in the case of a resident body, by registered letterto the registered address of the body or bydeli very to any director or employee of the bodyat any of its places of business.

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Federal Negarit Gazeta - No. 34 4thJuly, 2002-Page 1893

(c) in the case of non-resident persons, to their agentor agents in Ethiopia, or by affixing to the door orother available part of the residence or place ofbusiness of such agent if he could not be served inperson;Provided that, if in any case none of thesemeasures are effective, service may be dischargedby the publication in any newspaper in whichCourt notice may be advertised. The cost of suchpublication shall be charged to the taxpayer.

2) Any assessment of income tax duly served on thetaxpayer shall become final when:(a) the taxpayer tails to pay the tax due or to lodge

his or its appeal with the Tax Appeal Commissionwithin thirty (30) days from the date of receipt ofan assessment notice orfrom)the date of decisionof the review committee,

(b) the time for appealing the decision of the TaxAppeal Commission has expired; or

(c) the Court of Appeal renders its final decision.3) A taxpayer who does not pay the final assessment as

provided under Sub-Article (2) of this Article is indefault.

SECTION VIPayment

Tax Payable when DueAny tax (including whithheld or collected tax) that is tobe paid to the Tax Authority by a stated date shall bepayable on that dat~. Failure to make a timely paymentshall result in the imposition of interest and the latepayment penalty.

75. Interest1) If any amount of tax is not paid by the due date, the

taxpayer is obliged to pay interest on such amountfor the period from the date the tax is due to the dateit is paid.

2) The interest rate under Sub-article (1) of thisArticle is set at 25% (twenty five percent) over andabove the highest commerciallending interest ratethat prevailed during the preceding quarter.

3) Interest shall be collected in the same manner as thetax to which it relates.

74.

76. Credit and Refund1) Where the Tax Authority is satisfied that tax has

been paid by a person, whether by withholding,installments, or otherwise, in excess of the person's tax.libality to which the payment or payments relate,the Tax Authority shall:

(a) credit the overpaid tax. against any liability ofthat person in respect of:(i) other taxes under this Proclamation;(ii) withholding of tax under this

Proclamation;(iii) any other amount due to the Tax

Authority under this Proclamation; orany other tax law; and

(b) refund the remainder to that person within 90days of becoming satisfied.

2) The Tax payer shall be entitled to an interest set atthe highest commercial lending interest rate in-creased by 25% (twenty five percent) thatprevailed during the precedjng quarter if befIt hasnot received the refund within the time prescribedunder Sub-Article (1) (b) of this Article.

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Federal Negarit Gazeta - No.344tbJuly,2002-Page 1894

3) Without limiting the general~ty of Sub-Article(l) of

this Article, a person may apply for a refund

under this Article. A refund application shall be

made to the Tax Authority in writing within e

three (3) years of the later of:

(a) the date on which the Tax Authority hasserved the notice of assessment to which therefund application relates, or

(b) the date on which the tax or interest was paid.-4) The Tax Authority shall, within forty-five (45)

days of making a decision on a refund applicationunder Sub-Article 2, serve on the person applying forthe refund a notice in writing of the decision.

5) A person dissatisfied with a decision referred to inSub-Article 4 may challenge the decision only

through. the appeal procedure as though the de-cision were that of an assessment. L

SECTION VIICollection Enforcement

77. Seizure of Property to Collect Tax

1) Subject to Sub-Article (4) of this Article;-if anyperson liable to pay any tax imposed by thisProclamation is in default under Article 73(3), itshall be lawful for the Tax Authority to collect suchtax 'and such further amount as shall be sufficient

to cover the expenses of the seizure Jby seizing anyproperty belonging to such person. Seizure may bemade on the accrued salary or wages of anyemployee, including a government employee, byserving a notice of seizure on the officer who hasthe duty of paying the salary or wages.

2) For purposes of this Section; the team "Sezure"inCludes seizure by any means, as well as, collec-tion from a person who owes money or property tothe taxpayer, Except as provided in Sub-Articles(3) and (6), a seizure shall extend only to propertypossessed and obligations existing at the time theseizure is made. The Tax Authority may request apolice officer to be present during seizure. Wherethe Authority seizes any property as providedhereinabove, it shall have the right to sell the seizedgoods at public auction or in any other mannerapproved by the Authority within not less than 10days after the seizure, except that when the goodsseized are perishable the Authority can sell thegoods after any reasonable period having regard tothe nature of the goods.

3) Whenever any property on which seizure had beenmade is not sufficient to satisfy the claim for whichseizure is made, the Tax Authority may, thereafterand as may be necessary, Qroceed to seize oth~rproperty, liable to seizure, of the person agamstwhom the claim exists until the amount due, togetherwith all expenses, is fully paid.

4) Seizure may be made under Sub-Article (1) ofthisArticle on employee's remuneration or otherproperty of any person with respect or any unpaidtax only after the Tax Authority has notified suchperson in writing of its intention to make suchseizure. The notice shall be delivered not less thanthirty (30) days before the day of the seizure.

.,~ iif.~fj~ IJ.t-A ~;Jt~ ;Jti,1I)4:1'Cwi! I'Ik n"" Iufji! 'HI".

?;.

Federal Negarit Gazeta- No. 34 4'" July. 2002-Page 1895

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1:,

5) If the Tax Authority makes a finding that the

collection of the tax is in jeop~dy! a demand forimmediate payment of such tax may be made by theTax Authority and, on failure or refusal to pay thetax, collection thereof by seizure shall be lawfulwithout regard to the 3D-days period p~ovided inSub-Article (1) and the days provided in sub-Article(4).

6) The effect of a seizure on employee remunerationpayable to a taxpayer shall be continuous from thedate such seizure is first made until the liability out ofwhich such seizure arose is satisfied or becomesunenforceable by reason of lapse of time.

7) The following shall be exempt from seizure:(a) such amount of employee remineration or other

periodic income payable to an individual asdoes not exceed the exempt amount accordingto Schedule A; and

(b) all other income and property that are not liableto attachment or lien under Ethiopian law.

78. Enforcement of Seizure1. Any person in possession of (or obligated with

respect to) property subject to seizure on which aseizure has been made shall, unless such property is,at the time of such demand, subject to an attachmentor execution under any judicial process or is encum-bered by law with the preferred right of othercreditors as stipulated under Article 30, on thedemand of the Tax authority surrender such property(or discharge such obligation)

2. Any person who fails or refuses to surrender anyproperty subject to seizure, on demand of the TaxAuthority, shall be personally liable to the govern-ment in a sum equal to the value of the property notso surrendered, but not exceeding the amount oftaxes for the collection of which seizure has beenmade (together with costs and interest on such sum).

3. In addition to the personal liability imposed by Sub-Article (2), if the failure or refusal to surrender iswithout reasonable cause, such person shall be liablefor an additional charge equal to fifty percent (50%)of the amount recoverable under Sub-Article (2).

4. Any person in possession of property who surrendersor makes payment in accordance with this Articleshall be discharged from any obligation or liability tothe delinquent taxpayer or to any other person arisingfrom such surrender or payment.

79. Production of BooksIf a seizure has been made or is about to be made on anyproperty, any person having custody or control of anybooks or records containing evidence or statementsrelating to the property subject to seizure shall, ondemand of the Tax Authority, exhibit such books orrecords to the Tax Authority.

80. Preferential claim to Assets1. From the date on which tax becomes due and payable

under this Proclamation, subject to the prior securedclaims of creditors, the Authority has a preferentialclaim over all other claims upon the assets of theperson liable to pay the tax until the tax is paid.

,,,/in:~f7i t.1.t-A ~.7t"" .7t1.lrJ -IITC c!.i~ flj>,1)1;.,.') Iitfj~ ~'9".

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Federal Negarit Gazeta - No.34 41hJuly,2002-Page 1896

2) Where a person is in default of paying tax, the

Authority may, by notice in writing, inform thatperson of the Authority's intention to apply to theRegistering Authority to register a security interest inany asset situated in Ethiopia which is owned by thatperson, to cover any unpaid tax in default, togetherwith any expense incurred in recovery proceedings.

3) It the person on whom a notice has been servedunder Sub-Article (2) fails to pay the amountspecified in the notice within 30 days after the dateof service of the notice, the Authority may, bynotice in writing, direct the Registering Authoritythat the asset, to the extent of the defaulter's interesttherein, shall be the subject of security for the totalamount of unpaid tax.

4) Where the Authority has served a notice on theRegistering Authority under Sub-Article (3), theRegistering Authority shall, without fee, registerthe notice of security as if the notice were aninstrument of mortgage over or charge on suchasset, as the case may be, and such registration shall,SUbject to any prior mortgage or charge, operatewhile it subsists in all respects as a legal mortgageover or charge on the land or building to secure theamount due.

8!. Jeopardy AssessmentIn exceptional cases where the Tax Authority hasreasonable grounds to believe that the collection of taxis in jeopardy, and where a state of urgency exists, theTax Authority may issue an administrative order to theBank with a statement of justification supplementing itsorder to block the accounts of the taxpayer and secureinformation thereon, and may make an immediateassessment of tax for the current period; provided,however; that the Tax Authority shall obtain courtauthorization within ten (10) days from the date ofissuance of its administrative order and further that suchpowers may only be used to elucidate informationrelevant to the assessme~t.

82. Priority of claim on Tax. Withheld.1) Tax withheld by a withholding agent under this

Proclamation:(a) is held by the withholding agent in trust for the

Tax Authoritv:(b) is not subject to attachment in respect of a debt or

liability of the withholding agent; and(c) in the event of liquidation or bankruptcyuf the

withholding agent, does not form part of theestate in liquidation, assignment, or bankruptcyand the Tax Authority has a first claim beforeany distribution of property is made.

2) An amount that a withholding agent is requiredunder this Proclamation to withhold from apayment is:(a) a first charge on that payment; and(b) withheld prior to any other deduction which

the withholding agent may be required to makeby virtue of an order of any court or any otherlaw.

Taxpayer SafeguardsAny property seized under this Section shall be seized,held. and accounted for onlv bythe Tax Authority. Noother agency of the government may require the propertyseized under thfs section to be transferred or given overto it for any cause whatsoever. If any property seizedunder this Section is sold, any portion of the proceeds inexcess of the taxpayer's liabilities under this sectionshall be returned promptly to the owner of the property.

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Federal Negarit, Gazeta - No. 34 4thJuly, 2002-Page 1897

,SECTION VIIIRewar-ds and Administrative Penalties

84. Reward for Verifiable Information1)

,

Where a person provides a verifi'able and objectiveinfoqnation of tAXevasion through concealment,

, under reporting, fraud or any other impropermeans, the infonner shall be granted upto twentypercent (20) of the amount of tax evaded at the timeof collection of the said tax.

2) The infonner shall notbe entitled to such a rewardwhere:(a) he/she has participated in the tax evasion; or(b) where such reporting is part of hislher em-

ployment duty.3) Details shall be provided by the directives of

the Tax Authority85. Reward for Outstanding Perl'onnance

1) The Tax Authority shall reward tax payers and taxofficers for outstanding perfonnance and dis-charge of duties.

2) , Details shall be provided by the directives of theMinister of Revenue.

~6. Penalty for Late Filing or Non-FilingA taxpayer who fails to file a timely tax declaration isliable for a penalty equal to:(a) 1,000 Birr for the first thirty (30) days (or part

thereof) the declaration remains unfiled);(b) 2,000 Birr for the next thirty (30) days (or part

therepf) the declaration remains unfiled);(c) 1,500 Birr for each thirty (30) days (or part

thereof)thereafter that the declaration remains un-filed.

87. Penalty for Undcrstlltement of Tax1) If the amount of tax shown on a declaration

understates the amount of tax required to be shown,the taxpayer is liable for a penalty inthe amount of 10% (ten per cent) of theunderstatement or 50% (fifty per cent) if theunderstatement is considered substaintial in accor-dance with Sub-Article (2) of this Article).

2) The understatement is considered substantial if itexceeds the smaller of the fonowing two amounts:(a) twenty-five percent (25%) of tbe tax required

to ~ shown on the return; or(b) 20,000 Bin".

3) The penalty shall continue to apply until, theAppeal Commission or a Court, as the case may be,shall have rendered its final decision.

88. Penalty for Late PaymentA taxpayer who fails to pay tax liability on the due dateis subject to:

(a) a penalty of 5% (five percent) of the amount of

unpaid taxon the first day after the due date haspassed: and f(b) an additional 2 % (two percent) of the amount 0

the tax that remains unpaid on the first day ofeach month thereafter.

89. Penalty for Failure to Keep Proper Records1) The taxpayer shaH be liable for a penalty of 20% of

the tax assessed if he failed to keep proper books ofaccount, records, and other doc1.unmts ~gmdm.g acertain tax year.

2) If the Tax Authority finds that a tnpayer has failedfor two consecutive tax years, to keep proper booksof account, records, and other documents:

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(a) the licensing,authQfity,shan fOJ1hw~thsuspend thetaxpayer's license.;Ob notificatJqR py the TaxAuthority; ,',

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(b),'~.{f in asubsequ~!1t year"the Tax Authority again.finds.that t.be,~ayerhas failed to .keep proper~' books,' records, and documents, the licensing

'authbrity shall revoke the taxpayer's license on,

' notification by the Tax Authority; ,(c) A fmding by ~e Tax Authority'that the taxpayer's

, failure.justifies notifica~onof ~e licensingauthontyfor purposesof suspensioQortevocationofthe 'taxpayer's license shan for all purposes of thisPfuclaIJ1.ationbe treated as an ssessment andnotification may not be sent to thelicensingauthorityuntil the TaxAuthQrity'sfmdingis finat'

90: f}'enaltyfor Failure to Withhold Tax'1), A withl10ldingagent who fails tQwithhold tax in

accordance with' this.Proclamation is personallyliable to pay to the Tu Authority the amountof taxwhich has not been withheld, b':ltthe withholdingagent is entitled to recover this amount from thepayee.

2) The tax withholding liability imposed by this.Proclamationshall.be treated as a tax liability forpurposes of any Article providing taxpayers withthe right to contest the amount of tax 'due or torecover tax paid. .

3) In addition to any ~ount for which a withholdingagent is liable under'Sub-Article (1), an age~t whofails to withhold tax in accOrdance with thisProclamation shall be liable for a penalty of.1,000Birr for each instance of failure to withhold theproper amo\lDt.

4) A penalty of Birr 1,000is imposedon the followingindividuals:(a) a manager who knew or should have known of

the failure described in Sub-Article (1);(b) a chief accountant or another senior officer

who is responsible for supervisionor controlofwithholding procedures and who knew orshould have known of the failure described inSub-Article (1), or whose impropersupervision failed to prevent it.

91. Penalty for Failure to Meet TIN RequirementsTaxpayers failing to meet the requirements for TIN aresubject to the following penalties:1) a withholding agent who makes a payment to a

person who has not supplied a TIN is required to .withhold thirty percent (30%) of the amount of thepayment.

2) a taxpayer who has not supplied the TIN to thewithholding agent, in addition to what is stipulatedunder Sub-Article (1) of this Article is liableto paya fine of 5,000 Birr or the amount of the payment.whichever is less.

Collection of and Appeal AgainstPenaltiesAdministrativepenalitiesshallbe paidonnoticeanddemand by the Tax Authorityand shall be assessedand collected in the same manner as taxes. Anyreferences, in this Proclamation,to "tax imposed"shall be deemed to include administrativepenaltiesimposed.

92.

'J~ liit~f7illJ.t,.A ~;J6:" ;JIL"I ~'1'Ca9i f1~n +, Iif7i ,.9". Federal Negarit Gazeta - No. 34 4111July, 2002-Page 1899

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93. Exoneration of Taxpayer from LiabilityIn the event that errors that led to incorrect deter-mination and execution of tax obligations are correctedindependently before commencemC(nt of a tax ex-amination, the taxpayer shall be released from liability,with the exception of paying the tax and interest.

SECTION IXCriminal Offences

94. Procedure in Tax Offence CasesA tax offence is a violation of the criminal law ofEthiopia and shall be charged, prosecuted, and appealedin accordance with the Ethiopian criminal procedurelaw.

95. TIN ViolationsIf a person subject to tax is convicted of obtaining morethan one TIN, that person shall be liable to pay a fine ofnot less than 20,000 Birr and not more than 50,000 Birrand to imprisonment of five (5) years per additional TINohtained.

Tax EvasionA taxpayer who evades the declaration or payment oftax commits an offense and, in addition to the penaltyfor the understatement of income referred to in Article86, may be prosecuted and, on conviction, be subject toimprisonment for a term of not less than five (5) years.

97. Making False or Misleading Statements1) A tax payer who:

(a) makes a statement, to an officer of the TaxAuthority, that is false or misleading in amaterial particular; or

(b) omits from a statement made to an officer ofthe Tax Authority any matter or thing withoutwhich the statement is misleading in a materialparticular;

commits an offence and is liable on conviction.2) Where the statement or omission is made without

reasonable excuse,(a) and if the inaccuracy of the statement undetec-

ted may result in the underpayment of tax by anamount not exceeding 1,000 Birr, the tax payershall be liable to a fine of not less than 10,000Birr and not more than 20,000 Birr, andimprisonment for a term of not less than one (1)year and not more than three (3) years, and

(b) if the underpayment of tax is in an amountexceeding Birr 1,000, he shall be liable to afine of not less than twenty thousand Birr andnot more than 100,000 Birr and imprisonmentfor a term of not less than three (3) years andnot more than five (5) years.

3) Where the statement or omission is made knowin-Illv or recklessly,

.

(a) and if the inaccuracy of the statement undetectedmay result in an underpayment of tax by anamount not exceeding 1,000 Birr, to a fineo fnot less than 50,000 Birr and not more than100,000 Birr, or imprisonment for a term of notless than five (5) years and not more than ten(10) years; and

(b) if the underpayment ot tax is in an amountexceeding Birr 1,000, to a fine of not less than75,000 Birr and not more than 200,000 Birr, orimprisonment for a term of not less than ten (10)years and notmore than fifteen (15) years.

,~ lii(itf ~1.~l\ ";Jt-r ;JtJ.1IJ ~'I'C ~§ ...~ Z'?;+1 Iitf1§ <HU. Federal Negarit Gazeta - No. 34 4thJuly. 2oo2-Page 1900

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98. Obstruction of Tax Administration1) A person who,

(a) obstructs or attempts to obstruct an officer ofthe Tax Authority in the performance ofduties under this Proclamation, or

(b) otherwise impedes or attempts to impede theadministration of the Proclamation,

commits an offence and is liable on conviction to afine of not less than 10,000 Birr and not more than100,000 Birr, and imprisonment for a term of two(2) years.

2) The following and similar other actions are con-sidered to constitute obstruction:(a) refusal to satisfy a request of the Tax

Authority for inspection of documents,reports, or other information related to ataxpayer's income-producing activities;

(b) non-compliance with a Tax Authority requestto report for an interview;

(c) interference with a tax officer's right to enterthe taxpayer's business premises.

99. Offences by Tax Authority EmployeeAny person employed for carrying out the provisionsof this Proclamaton who:(a) directly or indirectly, asks for or receives in

connection with any of the officer's duties, apayment or reward, whether pecuniary orotherwise, or promise or security for thatpayment or reward, not being a payment orreward to ~ch the officer is lawfully entitled toreceive, or

(b) enters into or acquiesces in an agreement to do orto abstain from doing permit, conceal, or con-nive at any act or thing whereby the tax revenueis or may be defrauded, or which is contrary tothe provisions of this Proclamation or to theproper execution of the officer's duty;

(c) exeeds the authority conferred upon the TaxAuthority or misuses such authority;

commits an offence and is liable, on conviction, to afine of not more than 50,000 Birr and to imprisonmentfor a term of not less than ten (10) years and not morethan twenty (20) years.

100. Unauthorized Tax CollectionAny person who is not authorized to collect tax underthis Proclamation collects or attempts to collect tax (oran amount the person describes as tax) commits anoffence and is liable, on conviction, to a fine of not lessthan 50,000 Birr and to imprisonment for a term of notless than five (5) years and not more than ten (10)years.

101. Aiding or AbettingA person who aids, abets, incites,or conspires withanother personto commit a violation againstthisProclamation also commits an offence under thisproclamation and shall be subject to prosecution, andshall on conviction be liable to a fme and imprisonmentnot in excess of the amount of fme or period ofimprisonment provided for the offence aided or a betted.

102. Offences by Entities1) Subject to the provisions of Sub-Article (3) of this

Article, where an entity commits an offence, themanager of that entity at the time of the Commission ofthe offence is treated as havingcommitted the sameoffence and is liable to a fme and imprisonment underthis Proclamation.

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Federal Negarit Gazeta - No. 34 4thJuly, 2002-Page 1901

2) Subject to the provisions of Sub-Article (3) of thisArticle, where an entity commits an offence byfailing to pay an amount of tax, including an amounttreated by this Proclamation as though it were tax,every person who is the manager of that entity at thattime, or was a manager within six (6) months prior tothe date of commission shall jointly and severally, beliable with that entity and that other person to the TaxAuthority for the amount.

3) Sub-Articles (1) and (2) do not apply where:(a) the offence is committed without such per-

son's knowledge or consent; and(b) such person has exercised the degree of care,

diligence and skill that a reasonably prudentperson would have exercised in comparablecircumstances to prevent the commission ofthe offence.

4) Any person who refuses to supply goods or renderservices to a withholding agent, by reason of himwithholding an amount of tax from the payment tothat person, shall personally be liable to a fine of notless than Birr 5,000 and not exceeding Birr 10,000and to imprisonment for a term of not less than oneyear and not more than two years.

5) In Sub-Articles (1) and (2), "manager" means,(a) in the case of a partnership, a partner or

manager of the partnership or a person pur-porting to act in either of those capacities;

(b) in the case of a body, a director, manager, orofficer of the company or a person purportingto act in any of those capacities; and

(c) in the case of an association of persons, amanager or a person purporting to act in thatcapacity.

103. Publication ofNames1) The Authority shall from time to time publish by

notice in daily Gazettes a list of persons who havebeen convicted of offences under Articles 93 to101.

2) Every list published in terms of Sub-Article (1)shall specify:

(a) the name and address, of the enterprise or ofthe person;

(b) such particulars of the offence as theAuthority may think fit:

(c) the tax period or tax periods in which theoffence occurred;

(d) the amount or estimated amount of the taxevaded;and

(e) the amount, if any, of the additional taximposed.

SECTION XAppeal Procedure

104. Review CommitteeMembers of the Review Committee shall be appointedby the Minister of Revenue or the competent authorityof the regional government, as appropriate, upon therecommendation of the head of the Tax Authority.

105. Powers And Duties ofReview Committee1) The Review Committee shall be accountable to the

head of the Tax Authority and shall have thefollowing duties:

(a) to examine and decide on all applicationssubmitted by tax payers for compromise ofpenalty, interest, and waiver of tax liability;

(b) to gather any written evidence or informationrelevant to the matter submitted;

- 1'~-1iW:~fC i:i:i;;;-;;32:F;JILflJ' 'h'T'C c!i!1 M. ~% .,..}Iiltl!! 'H'''. FederaJ Negarit Gazeta - No. 34 4tl' July, 2002-Page 1902

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(c) to summon any person, who directly orindirectly has dealt with the assessment, toappear before it for questioning him about thecase under its investigation; and

(d) to review determination made by the Tax

Authority for accuracy, completeness, andcompliance with this Proclamation.

2) The !=ommittee shall only review applicationssubmitted to it within 10 days of receipt of taxassessment notification.

3) The Head of the Tax Authority may approve therecommendations or remand the case, with hisobservations, to the committee for further review,

106. Waiver of PenaltyThe Review Committee may waive administrati\'epenalties in accordance with the directives issued bythe Minister of Revenue.Right of Appeal against Assessment of Income1) Any taxpayer who objects to an assessement may

appeal to the Tax Appeal Commission (hereinafterreferred to as the "Appeal Commission") upon thefulfillment of the requirements hereunder.

2) No appeal shall be accepted by the AppealCommission, unless:(a) a deposit of th~y-five percent (50%) of the

desputed amount is made t6 the TaxAuthority; and

(b) the appeal is lodged with the Appeal Com-mission within thirty (30) days following theday of receipt of the Assessment Notice orfrom the date of decision of the ReviewCommittee.

108. Date of Lodging AppealThe date on which an appeal is submitted shall be thedate of:

(a) its registration by the archives of the AppealCommission if it is delivered other than byregistered mail; or

(b) registration by the post office if sent by regis-tered mail.

109. Contents of Memorandum of Appeal1) The memorandum of appeal shall be sumbitted in

diplicate and shall include:(a) a statement of the specific subject matter of

the appeal and the reason for the appeal:(b) the taxpayer's name, address, and TIN,

and(c) as attachements, any relevant supporting

documents and a photocopy of the receipt forthe appeal deposit.

2) Where anyone of the first three conditions underSub-Article (1) is missing, the Appeal Committeeshall require the aDDellant to correct the de-ficiency within five (5) days, failing of:

w~ich the appeal shall be rejected.110. Service of Documents

1) Prior to the first hearing of any appeal:(a) a copy of the memorandum of appeal shall be

served on the Tax Authority by the AppealCommission; and

(b) the Tax Authority shall submit its reply to theAppeal COmmission while at the same timegiving a copy thereof to the appeallant.

2) The appellant shall have the burden of proof witha view of establishing his or its claim.

'lJr 1i1tllfrIJ.t-A ~:J~:r-:JtLlII."C 9)1 (a~n +, !iifU ,.9". Federal Negarit Gazeta - No. 34 4111July, 2002-Page 1903

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111. Decision of Appeal Commission1) After reviewing the case, the Ap~al Commission

shall issue a written decision setting out the TIN ofthe appellant and the date of decision, the namesof the panel members and the panel's chairperson, and a statement of the decision.

2) The statement of the Commissions decision shallinclude:(a) the holding (whether the appellant's claim is

justified and accepted partly or wholly,whether the claim is remanded with instruc-tions to the Tax Authority; and the amount theappellant is required to pay, if any, and othernecessary detailes of appeallant's liabilities);

(b) the factual findings, citation to the aplicablelaw, legal interpretation, a conclusion on eachrelevant issue presented; and any dissentingopInion.

(c) a summary ofthe appellant's appeal rights.3) The decision shall be signed by the panel mem-

bers present, and the Seal of the Appeal Commis-sion shall be affixed thereon.

4) The Appeal Commission(;may decide ,ex-partewhere:(a) any appellant fails to give counter reply when

neccssary, or to appear before it on twooccasions, after lodging appeal;or

(b) the Tax Authority, after receiving thememorandum of appeal, fails to give reply orto appear before it on two occasions.

112. Appeal from Decision of Appeal Commission1) Any party dissatisfied with the decision of the

Appeal Commission may appeal to the competentcourt of appeal on the ground that it is erroneouson any matter of law within 30 days from the dateof receipt of the written decision of the AppealCommission.

2) The court of appeal shall hear and determine anyquestion of lawarising.on appeal and shall, afterreaching its decision tlrereon,return the case to theCommission.

J) An appeal to the next court of appeal from thedecision of the lower court of appeal may be made

by either party, within thirty (30) days of thedecision of the lower court of appeal.

4) A taxpayer's appeal shall not be accepted by thecourt unless at the time the appeal is lodged, thetaxpayer has paid the tax liability determined bythe Appeal Commission.

113. Bstablishement of Appeal Commission1) The following Tax Appeal Commissions shall be

established:(a) Federal Appeal Commission, at the Federal

level;(b) Regional Appeal Commission, in each

Regional Government town;(c) Zonal Appeal Commission, in each Zonal

town; and ,(d) Woreda Appeal Commission, in each

Woreda Administrative town.

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Federal Negarit Gazeta - No. 34 4110July, 2002-Page 1904

2) Notwithstanding the provisions of Sub-Article(1), if the Regional Government finds it unneces-sry to have a separate Appeal Commission at anyof the above mentioned levels, it shall make anarrangement in such a way that such areas may becovered by the Appeal Commission established inthe neighboring locality.

3) The Federal Appeal Commission shall be account-able to the Minister of Justice; City administration,appeal commissions to the executive organs of cityadministration, region, zone, woreda, as the casemay be.

114. Appointment of Members1) Members of Appeal Commission at every level

shall be appointed from among persons havinggood reputation, acceptability, integrity, generaland professional knowledge, and from amongpersons who have not committed any offense inconnection with tax and tax administration.

2) The Minister of Justice or executive organs of cityadministrations and regions, as the case may be,shall issue directives setting out the criteria to beapplied in the selection, appointment and com-position of members of Appeal Commissions.

3) On the basis of said directive members of theappeal commissions and panels shall be selectedand appointed by the Minister of Justice or theappropriate city administration, regional, zonal orworeda executive organ, as the case may be.

4) The Appeal Commission's President shall beappointed by appropriate entities listed underArticle 113(3)above.

5) Each Appeal Commission may have more thanone (1) panel. In such cases each panel shall havefive (5) members and s~all elect one (1) membersto serve as Chair person.

6) The person term of office of an Appeal Commis-sion member shaH be two (2) years. A memberappointed to chair an Appeal Commission or apanel shall serve in that capacity for two (2) yearsor the remaining period of Ithatother member'sterm if he is a substtute.

7) The Chairperson and other members of theCommission shall be entitled to receive suchattendance fees for sitting on panels as shall befixed from time to time by the Minister or theExecutive body of the Region, as appropriate.

115. Powers and Duties of Appeal Commission and of itsChairperson1) The Appeal Commission shall have the authority:

(a) to confirm, reduce, or annul any assessmentappealed against on the basis of establishedfactual grounds and the law, and make suchfurther consequential order thereon as mayseem just and necessary for the final dis-position of the matter;

(b) to instruct the Tax Authority or the taxpayerto submit new facts, if any; and

(c) to order the Tax Authority or the taxpayer orany other person or governmental departmentor agency, as the case may be, to producesupporting evidence relevant to the tax-payer's allegation.

1,," li1tilf61J.t-1\ ~;M+ ;JtillJ rfr'l'C01 f\k 1M;+') xun ",... Federal Negarit Gazeta- No. 34 4thJuly. 2002-Page 1905

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1D"9" f'1ftFI:\IlJ~' ",."'t~ f.",,:J>moolD- fa",."If'i" 1:\11

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~'{I f07",."'+ FI:\IlJ' 1-fa"'''':1'I:\::I' f1'"{I'i" A.l'ttj."" 1:\"7+ .""tltT~ OH.Uh"'~

f1-fam"'" FI:\IlJ' ft"7ltL09" ooootl "-lmllJSECTION Xl,,'fltl\lI

T .. alPro . .htt:1:\hF &-h' 1: .I.ranSItJon VISIons

foo'{i;J1&11:,:n?,'f 118. TransitionalProvisions

lifI~' foo'{i;J1&11:';J1.. .

n . . ..IL j\H repealed ~a,,:s. ~ereunder, shall continue to

Ii' "U hCP~ OPt-'It,f. O.""aij~tFf>i!T'¥i~l,~:if . . ,~¥t? all lIabilItIes ~at w:e already due an.d

Ift'1:f(J)o'j"OoohLI:\ It,f.~~'i~~.'\I'~t~.~ .~ .'~yabI9i ~pon the cormng. Into force ~f thlsm,f.9" h07e;:f",.9" ''''I1i~'i!J;f~..t.~l:~l'',}": "'~'~;:;::'-';;,;;;:;.t~l..tlOn o~are accrued.Inrespect.of Incomefi1h.1i, F &-e; h07'i":f",.9" Ibit=i- F &-?,'f

. . 9'ririn fiCle, busIness,profession, vocatIonsor any

f1-,T' ,0. m,f.9"01rUT '1-00"'0' 0""'00 otheractivitytaxablethereunder.Ah+ OH.UhCP~ f1-?\'~ ih1-'f v-Ir 1-L''''''~+

2) All existing Tax Appeal Commissions shall con-hlt:f",.11 tinue to function until such time as new Tax

I' OIf.U hCP~ 1:';J1.?''f OOlPlT ',f."'I'1'S fa."" Appea)Commissionhas been established in accor-?-'1,\jP'f "lth.",,*!tCJDo.('llt OhV-~ 1.", OF&- dance with the provisions of this Proclamation.It" IlrT ',f."'I'1'S fa."" I't""'fl.f'tj'f rN\" 119. Repealed and Inapplicable LawsF&-:f",., ""~.1-ftoo1."" 007t}~" ,f.+.,.ltlr" 1) The Income Tax Proclamation No. 173 of 1961

lifIu' '1-?\'~ "e; 1-L''''''~+ f07,f.tj &-:f"" ii":"1' and all amendments thereto are hereby repealed.

Ii' h07'i":f",.9'"'o. "'I1IC ltft07l\hLI:\ flDlfJ",. 2) Payment of Tax on Gains from Capitalh"'~ ~.,.C lifttr/Ijf2r h~07?\'?\'I?'=t:. Proclamation No. 108/1994 is hereby repealed.

I' ht}1::1'A CP;J61:1T .,.:,.9" It,. "'I{lC ft07l\hLI:\ 3) Federal Tax Appeal Tribunal EstablishementflDlfJ"" hCP~ ~.,.C n~/Iufn' Proclamation No. 23312001.

r' f~1.&-1:\ f"'111C,f."'It)'S fa."" "1-'1'\' ft07!t!t9" 4) All laws which are inconsistent with thisflDlfJ"" Ijf1r hCP~ ~.,.C fleDr Iiinr' Proclamation shall not apply on matters coveredOH.Uh"'~ 1-1ilCPI:\:: under this Proclamation.

!!. hH.u "".~ ;JC f~l~ 07'i":f",.9" A.h-'f .ih1-'f OIf.UhCP~ ",.h.,. O+'{iL~ "JoJSf''fIt~ 120. Eff.ectJveDate.

. th

1-L'."" ~T h~tj &-:f"",-::This ProclamatIon shall come Into force as of the 4

r f .tr. ".0"," f ~. day of July 2002, and shall apply to all incom.e.,paid,Jl anT ""'°'10-,- +, received or earned from Hamle 1/1994E.C. onward.

f.U hCP~hfa~n +, IUn!! ,.9'" 1:9'"C'fO'i"000'''').

'h') f..h. :"f'k f "~lfJroC hm9'"A. Ii +, Iii f1!! ,.,- Done at Addis Ababa. this4thday ofJuty, 2002.1.,.t: n."" 1 'S10. It,. 1-L ,."" ~T hft",.11

""ll\hO'1 ...~ n +, Ijn!! "9"'1CO? 1D1:\1.1.f'c11i

fh.Tf'kl ~1.&-It'£ "l'PtJ&-fI.1'£&T{I,,-hT&.IlJS'T

2) An Appeal Commission's Chairperson shall:(a) make preliminary examination of

memoranda of appeal;(b) prepare the agenda for the panel;(c) preside over and guide the proceedings;(d) ensure that the arguments are properly recor-

ded in the minutes and that the decisionconforms to the prescribed form; and

(e) submit an annual report about the aCCOm-plishment (performance) of the commissionhe presides over.

116. Burden of ProofThe burden of proving that an assessment is excessiveor that a decision of the Authority is wrong lies on theperson objecting to the assessment or decision.

117. Power to Issue Regulations and Directives1) The Council of Ministers shall issue regulations

for the proper implementation of thisProclamation.

2) The Minister of Finance and Economic DeveJop-ment shall issue directives for thecarrying out ofany power delegated to him under thisProclamation.

GIRMA WOLDE GIORGISPRESIDENT OF THE FEDERAL

DEMOCRATIC REPUBLIC OF ETIllOPIA