Withholding tax calculator for Ethiopia: 3% and VAT by buyer
See what a buyer in Ethiopia must withhold from a payment, depending on who the buyer is: 3% income tax for companies, traders with a TIN and government bodies above the threshold, and half the VAT for government bodies only. The result also shows which e-invoice type (B2B, B2C or B2G) to issue.
The rules used
3% income tax on the amount before VAT: goods over ETB 20,000 in one transaction, services over ETB 10,000 in one contract
Withholding agents: companies and other bodies, government bodies, NGOs, and any person registered for VAT, including an individual trader with a TIN
A consumer without a TIN is not a withholding agent
Only government bodies withhold VAT: 50% of the VAT, under VAT Proclamation 1341/2024 Article 62
Please note
Some summaries of the 2025 amendment still quote the older thresholds of ETB 10,000 for goods and ETB 3,000 for services. If the seller gives no TIN, 30% is withheld instead (see the VAT calculator). This tool is a guide, not tax advice; confirm special cases with the Ministry of Revenue.
Does a private company withhold VAT?
No. Only a government body that the Ministry of Revenue requires to withhold VAT does so, and it withholds 50% of the VAT. A private company or an individual pays the full VAT to the seller; it may still withhold the 3% income tax.
Can an individual withhold 3%?
Yes, if they are a registered taxpayer: any person registered for VAT, including an individual trader with a TIN, is a withholding agent. A private consumer without a TIN is not.
Which e-invoice type should I issue to a customer who withholds?
B2B for companies and traders, B2G for government bodies. On a B2C invoice the buyer's TIN is not sent to the Ministry of Revenue, so their withholding receipt cannot be matched to the invoice.
Is withholding worked out before or after VAT?
The 3% income withholding is worked out on the amount before VAT. The government's VAT withholding is half of the VAT itself.