Free invoice generator and tax tools for Somalia

The Income Tax Act 2025 came into force on 11 May 2025, and the Income Tax Regulations 2025 were signed on 15 May 2025. They replaced the 1966 Direct Taxation Law. The Ministry of Finance's Revenue Directorate published an Income Tax Manual in November 2025, and its Inland Revenue Department (IRD) collects income tax and sales tax at federal level.

A business that earns income in Somalia registers with the IRD on Form TR1. The tax year is the calendar year unless the IRD approves another. Income tax is paid in four quarterly instalments (31 March, 30 June, 30 September and 31 December), and the annual return and any balance are due by 31 March of the next year. Employers withhold personal income tax from staff each month and pay it by the 15th of the following month.

Sales tax is separate. The Revenue Directorate's Annual Report 2025 describes sales tax on imports, airline tickets, telecommunications, hotels and electricity, and a 5 percent withholding applied through the Electronic Tax Administration System (ETAS) to businesses that take payment into merchant mobile-money accounts.

Small sole traders can use the Presumptive Tax Regime (PTR) under Articles 9 and 97 of the Income Tax Act 2025. It is open to resident individuals, not companies, whose business income all comes from Somalia and whose turnover stays within USD 50,000 a year, measured as a rolling three-year average on a cash-receipts basis. A partner in a partnership cannot use it. Instead of calculating profit, the individual pays quarterly instalments equal to the higher of USD 37.5 or 1.5% of that quarter's turnover. Professionals such as doctors, nurses, pharmacists, lawyers, accountants, architects, engineers, teachers and journalists are excluded, and so are businesses that mainly lease out immovable property. The Revenue Directorate can also refuse or cancel PTR registration if it is not satisfied the taxpayer can keep adequate records. Source: Ministry of Finance Income Tax Manual, November 2025, section XVI.