In Ethiopia, laws and taxes on each imported vehicle govern an intense import activity. Some vehicles such as ambulances or buses imported for tourism activities, do not pay these taxes and are not subject to VAT, excise duties or registration tax.
Double tax on car imports
Ethiopia began importing cars (mainly opportunities) via Djibouti. The difficulty is that cars are taxed in Djibouti by local taxes before being taxed again in Ethiopia. The different surcharges thus reach 200% of the original price. Ethiopia is about 10,000 new cars registered every year, as well as 2,000 second-hand cars arriving from abroad ... And 1,500 opportunities entered illegally in the country.
The Ethiopian tax system
Apart from customs duties on import products varying between 0 and 35%, the Ethiopian tax system comprises four main indirect taxes:
- The Tax on the Importation of all products which is applied at a rate of 3% on the cost price, insurance and freight (CAF)
- The VAT introduced at the beginning of 2003 (and replacing the "sales tax") is applied at the uniform rate of 15% on goods and services produced locally or imported. Only companies with a turnover of more than 500 000 ETB are currently required to charge VAT.
- The turnover tax for companies that are not subject to the VAT regime (turnover below 500 000 ETB)
- The indirect contribution tax (excise duty) is applied to consumer products manufactured locally by FIRA, and to import by customs, at a rate ranging from 10 to 150%.
The accounting period for the payment of the Turnover Tax is every 3 months from the 1st day of the Ethiopian fiscal year or the Gregorian calendar subject to the approval of the tax authority. In the tax year of imported products, VAT is paid to the customs authorities when the goods are cleared.
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