← Taxation Fundamentals for Ethiopian Businesses: Tax Awareness and Compliance Essentials

Employment Taxes

Module 05 / 6 · 65 min

Run a compliant payroll: what counts as taxable pay, the PAYE table in force from 8 July 2025, 7% and 11% pension contributions, a full employee calculation and the employer's monthly duties.

In this module you will learn to

Identify taxable and exempt employment income
Compute monthly employment income tax with the current PAYE table
Compute employee and employer pension contributions on the right salary base
Prepare a payslip and a payroll summary and meet the employer's payment deadlines

Built on

Erudite Africa training curriculum: Taxation Fundamentals for Ethiopian Businesses, Level 1 Beginner (October 2026)
Income Tax Proclamation No. 979/2016 as amended by Income Tax (Amendment) Proclamation No. 1395/2025: taxpayer categories, PAYE table, Category B gross sales tax, withholding, cash payment limit and repeal of the Turnover Tax Proclamation No. 308/2002 (rates as summarized by PwC, KPMG, EY and Grant Thornton Ethiopia)
VAT Proclamation No. 1341/2024, VAT Regulation No. 570/2025, VAT Registration Directive No. 1104/2025 and Electronic Invoicing System Administration Directive No. 1142/2026
Federal Tax Administration Proclamation No. 983/2016 as amended by Proclamation No. 1434/2026, and the Ministry of Revenues' penalty waiver Directive No. 189/2025
Private Organization Employees' Pension Proclamation No. 1268/2022 and Labour Proclamation No. 1156/2019
Commercial Registration and Business Licensing Proclamation No. 980/2016 as amended by No. 1150/2019, Commercial Code Proclamation No. 1243/2021 and Financial Reporting Proclamation No. 847/2014

Examples and companies are fictional. Tax rates and rules are shown as they stood when the course was written; always check the current proclamations, directives and guidance from the Ministry of Revenues before filing, and take professional advice for your own case.