background image
5.2. Treatment of Foreign Profits / Losses

Resident entities are assessed to tax in Ethiopia on their worldwide income. Losses attributable to a business conducted through a permanent establishment outside Ethiopia may be set off against future positive income assessed to tax under Schedule “C” (business income). Excess losses may be carried forward for 5 years. However, resident entities may not carry-forward foreign losses for more than two consecutive years. Therefore, if a resident entity reports losses relating to its foreign business during more than two consecutive years, then only the losses attributable to the first two years may be carried forward.

See Sec. 5.1. above.