Ethiopia and Luxembourg signed an agreement on the Elimination of Double Taxation

Ethiopia has a tax system that follows certain principles related to revenue source ownership, regional or national character, convenience of levying and collecting taxes, population distribution, and regional development standards. The federal government of Ethiopia imposes income taxes, property taxes, and value-added taxes (VAT) on the population, with a standard rate of 15% for VAT. Excise tax is imposed on specific goods that are in high demand, such as luxury goods. Rates for excise tax vary between 10% and 100%. Turnover tax is a simplified tax system for small businesses with an annual turnover of less than ETB 1 million. The rates for goods are 2%, while services are taxed at a rate of 10%. Income tax is levied on the income of individuals and businesses.

The rates range from 0% to 35% for individuals and from 10% to 35% for businesses. A business profit tax is a tax on the net profit of a business. The rates are the same as the income tax rates for businesses. Ethiopia's tax system is designed to promote economic growth and development. Double taxation can be a problem in many countries, including Ethiopia. It occurs when income is taxed twice on the same source of income, which can lead to financial losses and create problems for those involved.

To address this, Ethiopia has ratified Proclamation No. 1295/2023, which is a convention between the Government of the Federal Democratic Republic of Ethiopia and the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion concerning Taxes on Income. The convention aims to prevent double taxation and tax evasion between both countries while providing for the exchange of information between their tax authorities. In conclusion, Proclamation No. 1295/2023 ratifies a convention between Ethiopia and Luxembourg, which aims to prevent double taxation and tax evasion between both countries. It is a significant step towards ensuring fair and effective taxation, which is essential for economic growth.

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