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

Value Added Tax (VAT)

Module 04 / 6 · 65 min

Learn who must register for VAT under Proclamation No. 1341/2024 and Directive No. 1104/2025, how to issue proper VAT invoices, and how to compute, file and pay monthly VAT from output and input tax.

In this module you will learn to

  • Explain how VAT works and the difference between standard-rated, zero-rated and exempt supplies
  • Apply the mandatory, voluntary and Directive No. 1104/2025 registration rules
  • Issue VAT invoices with the required details and avoid invoice penalties
  • Compute monthly VAT payable from output VAT and creditable input VAT, and file and pay on time

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.