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- Basic Facts
- Statutory Labor Requirements
- Employee Income Tax In Brazil
- Employee Social Security In Brazil
- Deductible Expenses In Brazil
- Immigration In Brazil
- Value Added Tax (VAT) In Brazil
- Withholding Tax In Brazil
- Terminating Employee In Brazil
- Statutory Employee Benefits In Brazil
- Payroll In Brazil
- Ease Of Doing Business In Brazil
- Business Opportunities In Brazil Section
- Why Use Global Expansion To Hire Your Employees In Brazil
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BASIC COUNTRY FACTS
Federal Democratic Republic of Ethiopia
Addis Ababa
- Amharic
- Afar
- Harari
- Oromo
- Tigrinya
- Sidama
- Somali
109.2 million
Ethiopian birr
.et
+251
Ethiopian birr
STATUTORY LABOR REQUIREMENTS
Probation Period
- A probation period cannot exceed 60 days
Annual Leave
- Workers are entitled to 16 working days of paid annual leave on completion of one year of service plus one working day for every additional year of service.
- For a worker with 5 years of service, the period of paid annual leave is 18 working days (one day extra for every two additional years of service).
Public Holidays
- Orthodox Christmas Day (7th January)
- Timkat (20th January)
- Adwa Victory Day (2nd March)
- Good Friday (Eastern) (17th April)
- Orthodox Easter (19th April)
- Labour Day (1st May)
- Patriots' Victory Day (5th May)
- Eid al-Fitr
- Derg Downfall Day (28th May)
- Eid al-Adha
- Enkutash (11th September)
- Meskel (28th September)
- Prophet's Birthday
Maternity Leave
- In accordance with the Constitution of Ethiopia and Labor Proclamation, female workers are entitled to fully paid maternity leave of 120 working days (30 days antenatal and 90 days postnatal) on the recommendation of a medical doctor.
Paternity Leave
- There is no paternity leave
Sick Leave
- An employee is entitled to a maximum of 6 months of sick leave within 1 year of service.
Work Hours
- A regular working day counts 8 hours and a regular working week counts 48 hours.
Overtime
- Overtime rate is as follows
-
- 150% of normal hourly rate for overtime work between 06 a.m. to 10 p.m.;
- 175% of normal hourly rate for overtime work between 10 p.m. to 06 a.m.;
- 200% of the normal hourly rate for work on a weekly rest day; and
- 250% of the normal hourly rate for work on a public holiday.
Notice Period
- Notice period ranges from one to three months based on the period of service of the worker.
-
- One month in the case of a worker who has completed his probation and has a period of service not exceeding one year,
- Two months in the case of a worker who has a period of service a above one year to nine years,
- Three months in the case of a worker who has a period of service of more than nine years,
- To months in the case of a worker who completed his probation and whose contract of employment is terminated due to reduction of work force.
Severance
- The severance pay shall be:
-
- thirty (30) times the average daily wages of the last week of service for the first year of service; for the service of less than one year, severance pay shall be calculated in proportion to the period of service;
- in the case of a worker who has served for more than one year, payment shall be increased by one-third (1/3) of the said sum, provided that the total amount shall not exceed 12 month's wage of the worker;
- where a contract of employment is terminated in accordance with section 24(4) and 29 of the labor code, the worker shall be paid a sum equal to sixty multiplied by his average daily wage of the last week of service.
13th Month Salary in Brazil
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- Peculiarly Ethiopia does have a 13th month calendar as they follow a different calendar.
- It does not seem that it is customary for employees to receive any bonus payment around the festivities.
INCOME TAX
- Income tax in Ethiopia is based on source and residence.
- Ethiopian residents are subject to tax on worldwide income.
- Nonresidents are subject to tax only on Ethiopian-source income.
- Any income generated is taxable unless it is specifically exempt.
- Employment income (including fringe benefits) is taxable, as is income earned from a business and investments.
- Rental income derived from the leasing of buildings by Ethiopian residents is taxed at rates up to 35%.
|
Employment Income |
|
|
Taxable Income (ETB) |
Rate |
|
0 – 600 |
0% |
|
601 – 1 650 |
10% |
|
1 651 – 3 200 |
15% |
|
3 201 – 5 250 |
20% |
|
5 251 – 7 800 |
25% |
|
7 801 – 10 900 |
30% |
|
Over 10 900 |
35% |
|
Business Income |
|
|
Taxable Income (ETB) |
Rate |
|
0 – 7 200 |
0% |
|
7 201 – 19 400 |
10% |
|
19 401 – 38 400 |
15% |
|
38 401 – 63 600 |
20% |
|
63 601 – 93 600 |
25% |
|
93 601 – 130 800 |
30% |
|
Over 130 800 |
35% |
DEDUCTIBLE EXPENSES
Personal Deductions
- The following income is exempt:
-
- Employment income up to ETB600
- Pension contributions to the extent exempt from tax under the Public Servants Pension Proclamation or the Private Organization Employees’ Pension Proclamation
- Employer contributions to retirement benefits up to a maximum of 15% of an individual’s monthly salary
- Amounts paid by employers to cover the actual costs of medical treatment, hardship and other allowances
- Transport allowances of up to the lower of ETB2 200or 25% of the basic salary per month
- Local per diem (daily subsistence allowance) for field work up to ETB500 or 4% of the basic salary per day, whichever is higher.
Business Deductions
- Various deductions may be taken in determining taxable income, including:
-
- Expenditure necessarily incurred by the taxpayer during the year in deriving, securing and maintaining amounts included in business income
- Cost of trading stock disposed of by the taxpayer during the year
- Total amount by which the depreciable assets and business intangibles of the taxpayer have declined in value during the year from use in deriving business income using the method specified in the annual Income Tax Proclamation
- Losses incurred on the disposal of business assets (other than trading stock) disposed of by the taxpayer during the year
- Any other deductible amounts as specified in the annual Income Tax Proclamation.
|
Deductible Expenses |
|
|
Personal Deductions |
|
|
Business Deductions |
|
IMMIGRATION
- Some of the main visas available in Ethiopia are as follows: -
-
- Tourist visa
- Investment Visa
- Foreign Business Firm Employment Visa – WV
- Ethiopian Private Business Firm Work Visa – PE
- Ethiopian Government Employment Visa – GV
- Tourist Visa: -
-
- Tourist visa is an electronic single-entry visa issued by the Ethiopian Government for visitors who wish to travel to the country for tourism or other non-business related purposes only.
- Copy of the following documents is mandatory.
-
-
- Recent passport-size photo of the applicant.
- Passport of the visa applicant which is valid for at least 6 months from the intended date of entry to Ethiopia.
-
-
- Single entry tourist visa is valid up to 90 days starting from the intended date of arrival in Ethiopia.
- Investment Visa: -
-
- This is a visa issued to foreign Nationals who are engaged in investment activities.
- It can also be issued to potential investors who wish to come and invest in Ethiopia.
- Foreign Business Firm Employment Visa – WV
-
- Foreign Business Firm Employment Visa is issued to foreign nationals who are entering Ethiopia to be employed by business firms owned/operated by foreigners.
- Ethiopian Private Business Firm Work Visa – PE
-
- Private Business Firm Visa is issued to foreign nationals coming for employment or other short term assignments with Ethiopian private business firms.
- Ethiopian Government Employment Visa – GV
-
- Government employment visa issued to foreign nationals to be employed by different Ethiopian Government institutions/ministries.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
90 days |
|
|
Investment Visa |
|
30 days (single entry); 90 days, 6 months, 12 months (multiple entry) |
|
|
Foreign Business Firm Employment Visa – WV |
|
30 days (single entry) |
|
|
Ethiopian Private Business Firm Work Visa – PE |
|
30 days (single entry) |
|
|
Ethiopian Government Employment Visa – GV |
|
30 days (single entry) |
|
VALUE ADDED TAX
- VAT is levied on the supply of goods and services in Ethiopia, and on imports.
- Non-business organizations are exempt from charging VAT on services but are not exempt from paying VAT on services or goods purchased unless exempted by a relevant bilateral agreement.
- The standard VAT rate is 15%. Exports of goods and services are zero-rated.
|
VAT |
|
|
Standard Rate |
15% |
|
Zero Rate |
0% |
WITHHOLDING TAX
The WHT rates on various types of payment are as follows:
|
Payment |
Residents |
Non-residents |
|
Dividends |
10% |
10% |
|
Interest |
5% |
10% |
|
Royalties |
5% |
5% |
|
Technical Service Fees |
2% |
15%/10% |
TERMINATION
The following are sufficient grounds for the termination of a contract of employment with notice
-
- The worker’s manifested loss of capacity to perform the work to which he has been assigned or his lack of skill to continue his work,
- If the worker, for reasons of health or disability, permanently, is unable to carry out his obligations under the contract of employment,
- The worker’s unwillingness to move to a locality to which the undertaking moves,
- When the post of the worker is canceled for good cause and the worker cannot be transferred to another post.
- The notice of termination by the employer shall be handed to the worker in person.
- Where it is not possible to find the worker or he refuses to receive the notice, it shall be affixed on the notice board in the work place of the worker for ten consecutive days
STATUTORY BENEFITS
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
PAYMENTS AND INVOICING
- The tax year runs from 8 July to the following 7 July.
- Each taxpayer must file a return.
- Spouses are not permitted to file joint returns.
- – A Pay-As-You-Earn (PAYE) system is used for employment income, under which the employer withholds tax on the individual’s wages.
- An individual is required to file within the month following the transaction, if he/she derives any other income from employment.
EASE OF DOING BUSINESS
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Ethiopia ranked 159th in the World in 2019 in terms of ease of doing business.
