The new regulation is effective as of this month
Borkena
Toronto – The Ministry of Finance on Thursday announced new regulation that imposes compulsory VAT on businesses.
Businesses offering services or products with 2 million birr annual revenue are now required to register for VAT taxes.
The ministry explained the reason for VAT tax regulation (1104/2017) is to make VAT tax equitable out of a necessity to determine the registry of businesses with mixed supply.
If the sum of tax free service or product and taxable provision of service or product is more than 2 million birr, businesses are required to register for VAT.
Yet there seems to be an exception that some businesses with even under 2 million birr annual revenue are required to register.
Professional service providers that are not categorized under category “ለ” (B) are required to register even if their annual revenue is under 2 million Ethiopian birr, the Ministry announced.
Those under category “ሀ” (A) with a duty for accounting report and those doing it voluntarily are required to register for VAT.
The regulation was introduced on Tuesday this week. Businesses are advised to register on the same day. Businesses can add VAT on their prices as of the day of registration for it, it is said.
The Ethiopian government has been unable to collect taxes in the parts of the conflict where there is an active conflict.
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