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

Turnover Tax (TOT) and Category B Taxation

Module 03 / 6 · 55 min

Understand what turnover tax was, why it ended at federal level in 2025, and how small individual businesses are taxed today under the Category B gross sales tax.

In this module you will learn to

Explain what turnover tax was and what Proclamation No. 1395/2025 changed
Identify who pays the Category B gross sales tax and who cannot use it
Apply the Category B rate bands to annual gross sales and budget for the tax
Describe filing, advance payment and record-keeping for Category B taxpayers

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.