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8.2.2. Withholding Taxes

The withholding tax (‘WHT’) rates levied on income received / derived by the non-residents from sources within Ethiopia are as below:

Dividend

Tax is withheld at the rate of 10% on dividends paid by Ethiopian resident entities to non-residents.

Interest

Tax is withheld at the rate of 10% on interest paid by Ethiopian resident entities to non-residents.

Royalty Copyright

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Royalty Patent

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Royalty Trademark

Tax is withheld at the rate of 5% on royalties paid to non-residents.

Service Management

Tax is withheld at the rate of 15% on service management fees paid to non-residents.

Service Technical

Tax is withheld at the rate of 15% on service technical fees paid to non-residents.

Others

Tax is withheld at the rate of 5% on insurance premiums paid towards the insurance of risks in Ethiopia. Winnings from games of chance sourced from Ethiopia are subject to WHT at the rate of 15%.

Further, where a non-resident without a PE in Ethiopia supplies technical services or the lease of equipment to a recipient who is either a resident person or the Ethiopian PE of a non-resident, and the fee is paid by a non-resident person related to the resident recipient and then recharged by the payer to the recipient, then the fee is deemed to be from Ethiopian sources and is subject to WHT.

Below is a discussion of domestic withholding tax rules for most of the common cross border payments.

Capital Gains 30.0 %
Dividends 10.0 %
Interest 10.0 %
Royalty Copyright 5.0 %
Royalty Patent 5.0 %
Royalty Trademark 5.0 %
Sales 0.0 %
Service Management 15.0 %
Service Technical 15.0 %

* Rates are current as of 18 September 2022