June 14, 2023
2023-1055 Ethiopia issues Excise Tax (Amendment) Proclamation, 2023 - Ethiopia has amended its Excise Tax Proclamation no. 1186, published in 2020, with a 2023 edition.
- The changes were effective on 27 April 2023, the date of ratification.
- The amendment provides new tax rates for excisable goods and reduce the number of goods exempt from excise tax.
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Executive summary The Federal Democratic Republic of Ethiopia (FDRE) House of Peoples Representative has amended Excise Tax Proclamation number 1186/2020 and issued Excise Tax (Amendment) Proclamation No. 1287/2023. The Excise Tax (Amendment) Proclamation is intended to lower the excise tax rate imposed on imported motor vehicles, among other items. It also seeks to eliminate certain special tax and duty privileges that were granted to some persons and organizations. Further, it imposes excise tax on telecommunication services. Detailed discussion The Amendment to the Proclamation clarifies the distinction between new and used vehicles and provides different rates for excisable goods and services. New definitions The Amendment has now defined the following items: - Ethyl alcohol — means alcohol of purity of 80% or more
- New vehicle — means a vehicle that has not been used since its manufacturing year and includes those imported in semi-knocked down (SKD) or completely knocked down (CKD) form to be assembled locally
- Used vehicle — means a vehicle that is not covered under the definition of new vehicle
Changes to the First Schedule of excisable goods The Amendment has added new items, reduced the excise rate for some items and excluded one item from the First Schedule. Some of the main items are as follows: Newly added item Tariff code | Description | Previous rate | New rate | | | Telecommunication service of mobile and wireless telephone (internet, voice, and SMS) | 0% | 5% |
Reduction in excise tax rate Tariff code | Description | Previous rate | New rate | 15.01 to 15.16 | Edible animal or vegetable fats and oils and their cleave products containing 40g or more saturated fat per 100g, or unable to determine level of saturated fat from label and partially and wholly hydrogenated, with content of 40g or more saturated fat per 100g, or more than 0.5g of trans fat per 100g, or unable to determine level of saturated fat form label | 30% | 30% | 40% | 17.01 | Any type of sugar (in solid or liquid form) excluding molasses, maple sugar and maple syrup | 20% | 10% | 1704.1000 | Chewing gum | 20% | 10% | 1704.90 to 1806.90 | Edible chocolates and sweets | 20% | 10% | 2207.10 and 2208.9090 | Ethyl alcohol | 60% | 10% | 2501.0010 | Salt | 25% | 10% | Chapter 27 | Fuel — super benzene, regular benzene, petrol, gasoline and other motor spirits, jet fuel | 30% | 15% | Chapter 50 — 63 excluding 57 | Textile fabrics, knitted or woven of natural silk, rayon, nylon, wool, partly or wholly made from cotton, which is grey, white, dyed or printed, in pieces of any length or width (except mosquito net and Abugedi) and including blankets, bedsheets, counterpanes, towels, counterpanes, towels, table clothes and similar articles manufactured by industries. | 8% | 5% | Chapter 57 | Carpets | 30% | 15% |
Exclusion from excise tax Tariff code | Description | Previous rate | New rate | 8521.1000 — 8528.7300 | Video recording or reproducing, television broadcasting receivers, apparatus, photo or video camera | 10% | None |
Reduction of exempt excisable items The Amendment has revised the list of excisable items that are exempt from excise tax, including: Exempt excisable goods - Excisable goods for the consumption of passengers or crew of aircraft while aircraft is in international traffic
- Excisable goods by a diplomatic or consular missions in Ethiopia to the extent provided for under the Privileges and Immunities Regulations
- Imported consignments for emergency relief in response to an emergency call issued by the Government
- All goods imported or purchased locally for official use by the Ethiopian Defense force and Federal and State Police Commissions as provided in a Directive
- Excisable goods except vehicles imported by a passenger subject to limitation provided for in the appropriate law
Exempt excisable services - Excisable services supplied in Ethiopia to a diplomat or consul and their family forming part of the diplomat or consul's household in Ethiopia to the extent provided for under the Privileges and Immunities Regulations
Notably, the Amendment has repealed the previous exemption of all goods to be imported or purchased locally by investors in accordance with the Investment Incentives Regulation. Therefore, all goods imported or purchased locally in accordance with Investment Incentives Regulation will still be subject to excise tax. Transitional provisions Excise tax on goods to be imported into Ethiopia free of any tax and duties for which a bank permit has been obtained prior to the enactment of the Amendment and imported within two months from the effective date of the Amendment Proclamation will be assessed and collected in accordance with the Excise Tax Proclamation No. 1186/2020. Next steps Investors should evaluate how the Amendment Proclamation will impact their operations in Ethiopia. ———————————————
For additional information with respect to this Alert, please contact the following: Ernst & Young (Kenya), Nairobi Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor |
