Who must file
There are two categories of taxpayer, not three — Category C was abolished with effect from the 2025/26 tax year. Category A is any body, and any other person whose annual turnover is ETB 2,000,000 or more. Category B is everyone else except bodies. Category A files a profit and loss statement and a balance sheet with the declaration; Category B files a profit and loss statement. Category B is normally taxed on annual gross sales rather than profit, at 2% up to ETB 100,000, 3% to 500,000, 5% to 1,000,000, 7% to 1,500,000 and 9% from there to just under ETB 2,000,000 — but not if you supply professional services (accounting, architecture, consultancy, construction contracting, engineering, finance, economics and investment, health care, law), not if you are VAT-registered, and not if you elect into net-income taxation by filing under Schedule C. Those three keep books like a Category A taxpayer and are taxed on profit. An employee with a single employer and no self-withholding obligation does not file at all.
Tax year and deadline
The tax year for an individual runs Hamle 1 to Sene 30 — 8 July to 7 July. A body uses its own accounting year and the deadlines run from that. Category A files within four months of the end of the tax year; on a Sene 30 year-end that is Tikimt 30, around 9 November. Category B files within two months; on a Sene 30 year-end that is Nehase 30, around 5 September. Category A pays the tax when the annual declaration is due. Category B pays 25% of last year's tax as an advance within 30 working days of the end of each quarter starting from the end of Hamle, and settles the balance with the annual payment. A brand-new Category A taxpayer pays for its first year when the first annual declaration is due; a brand-new Category B taxpayer pays between Hamle 1 and Hamle 30. An employee with more than one employer in a year, or with a self-withholding obligation, files within 30 days of the year end. A deadline falling on a Saturday, Sunday or Ethiopian public holiday moves to the next business day.
Filing step by step
- Work out which category you are in on this year's turnover, and whether you are taxed on gross sales or on profit. The Authority can reclassify you for a tax year on the strength of the declarations you have filed or any other information it holds.
- Keep the books your category requires. A Category A taxpayer keeps full records — sales and purchase records, receipts, a year-end stock record showing type, quantity, value and valuation method. A Category B taxpayer taxed on gross sales keeps the gross receipts; one that keeps full books can be assessed on those books under Schedule C instead. Fail to produce the books you are required to keep and the Authority assesses you by estimate, and an estimated taxpayer cannot use the Category B gross-sales rates.
- Fill the declaration for your trade. The Ministry publishes separate business income tax declaration forms for general trade and commission work, for banks and for insurers, plus the English 'Balance Sheet and Annexes' form with its five annexes — receivables, inventories, other current assets, other investments, and the fixed-asset and depreciation tables. Tick Schedule C for business income, or Schedule B if you are also declaring rental income, and file a separate balance sheet for each schedule.
- File and pay through eTax at etax.mor.gov.et within four months of year end for Category A, two months for Category B. Expect to need the TIN, the sub-TIN if the branch has one, and the tax centre shown on your registration.
- Check the minimum tax. Where your assessed profits produce tax below 2.5% of turnover, you pay a minimum alternative tax instead — 2.5% of turnover, or of net banking income for a bank, gross life and non-life premiums for an insurer, or the commission for a price-regulated supplier. It is reduced by the business income tax you already paid for the year, and what you pay under it is creditable against business income tax for up to five years. It does not apply to a taxpayer on the gross-sales regime.