Living in Ethiopia: Conventional deductions of 10 %, 5 % and 7.5 %, counting of days of presence and the 2025 amendment law

This page reports on information published by the Ethiopian Ministry of Finance, the Ethiopian Investment Commission (EIC), the BOFiP (French Official Tax Bulletin), and impots.gouv.fr (the French tax authority). The Ministry published Income Tax Amendment Law No. 1395 online on July 23, 2025. Its implementing regulations specify how days of presence are counted: a fraction of a day counts as a full day, and transit time between two locations outside the country is not counted. The Franco-Ethiopian Convention of June 15, 2006, caps withholding tax at 10% on dividends, 5% on interest, and 7.5% on royalties.

The threshold of presence that makes a natural person a resident and the applicable scale are not detailed here.

Tax residency: what the texts specify

Federal income tax is governed by Proclamation No. 979/2016. The Ministry of Finance publishes the text of a Cabinet regulation issued for its implementation, the number and date of which are left blank; Article 69 makes it applicable to income earned on or after July 8, 2016. Article 5, entitled "Resident," specifies how to count days of presence in Ethiopia for the purposes of Article 5(2)(c) of the Proclamation:

• a fraction of a day spent in Ethiopia counts as a full day of presence;
• Days of leave or vacation spent in Ethiopia are counted under the conditions set out in this article;
• Days spent in Ethiopia solely in transit between two locations outside the country do not count.

The regulation does not reproduce the text of the proclamation: it does not specify the minimum number of days required for individuals. This minimum number and the other residency criteria of domestic law are not detailed here. For dual residency between France and Ethiopia, Article 4, paragraph 2 of the convention applies the following order: permanent home (then center of vital interests if the home exists in both States), habitual residence, nationality, and amicable agreement of the authorities.

Employment Income: Amendment Act No. 1395

The list of tax legislation published by the Department of the Treasury includes Income Tax (Amendment) Proclamation No. 1395, released online on July 23, 2025. This document amends the federal Income Tax Proclamation. Section 11 replaces the monthly employment income tax brackets, which have a first bracket of 0.% up to 2,000 birr per month. The complete brackets, the effective date of the legislation, and details of other amendments are not provided here; they can be found on the Department of the Treasury website.

The same list indicates, as of February 26, 2026, a draft regulation to amend income tax and, as of May 15, 2026, a draft amendment to the proclamation on tax administration: texts in preparation may modify these rules.

Dividends, interest, royalties and capital gains

The EIC's "An Investment Guide to Ethiopia," dated August 2017, indicates a tax of 10 % on dividends, 5 % on interest from local savings, and 5 % on royalties, as well as a tax of 0 to 35 % on employment income. This guide predates Amendment Law No. 1395 of 2025; the current applicable rates are not detailed here.

The capital gains regime for individuals under Ethiopian law is not detailed here.

Dividends, interest, royalties and capital gains

The EIC guide from August 2017 indicates that land is made available for lease, for a maximum of 80 years depending on the location and sector of activity. It also mentions, among the benefits granted to investors, the right to own real estate as needed for the investment. It does not detail the conditions applicable to an individual purchasing a property. Ethiopian taxes on rental income, acquisition, and ownership of real estate are not specified here.

Real estate: land for rent

The cited sources do not describe inheritance or gift taxes in Ethiopia. The list of conventions in the French Official Tax Bulletin (BOFiP) (BOI-ANNX-000306, version of April 29, 2026) classifies the Franco-Ethiopian convention under income tax treaties and makes no mention of inheritance or wealth tax. The EIC's undated FAQ page indicates that expatriates benefit from a two-year income tax exemption from the date the business license is issued. It does not specify which businesses are covered or the conditions.

Inheritance, gifts and special regimes

The agreement was signed in Paris on June 15, 2006, approved by Law No. 2008-130 of February 13, 2008, and published by Decree No. 2008-747 of July 28, 2008. It entered into force on July 17, 2008. According to Article 30, withholding taxes apply to income received from August 1, 2008. Details can be found on our page. France-Ethiopia tax treaty.

For an employee of one State working in the other, Article 15, paragraph 2, reserves taxation to the State of residence if three conditions are met: a stay not exceeding 183 days in total over any twelve-month period, an employer who is not a resident of the other State, and remuneration not borne by a permanent establishment or fixed base situated in that State. For France, Article 23, paragraph 2, provides for a tax credit against French tax when the French resident is subject to Ethiopian tax on this income; its amount depends on the nature of the income. The text of the convention designates Ethiopian tax by Proclamation No. 286/2002, which predates Proclamation No. 979/2016.

Coordination with the 2006 Franco-Ethiopian Convention

It does not detail the threshold for days of tax residency for individuals, the current tax rates for employment income, the effective date of Amendment Law No. 1395, the tax on rental income, the current rates on dividends, interest and capital gains, the tax on real estate transfers, inheritance tax, social security contributions, or residence permits. Balmont Conseil is not a law firm or a local tax advisor: local tax matters must be verified with a professional based in Ethiopia. French matters, particularly the departure declaration and the accounts to be declared, are addressed in our pages on tax residency and exit tax.

What this page does not cover

It does not detail the threshold for days of tax residency for individuals, the rate of the second income tax bracket, the tax brackets for rental income exceeding 24,000 birr, the current rates on dividends, interest, and capital gains, the tax on real estate transfers, social security contributions, or residency permits. Balmont Conseil is neither a law firm nor a local tax advisor: local tax matters must be verified with a professional based in Ethiopia. French matters, particularly the departure declaration and the accounts to be declared, are addressed in our pages on tax residency and exit tax.

What changes depending on your situation

• Your number of days of presence in Ethiopia, taking into account the rules for counting fractions of a day and transit.
• The nature of your income: salary, rent, dividends, interest, royalties, capital gains.
• The amount of your remuneration in relation to the applicable scale published by the Ministry of Finance.
• Your residency situation in France and Ethiopia, year by year.

The rule depends on your situation. No results are guaranteed.