Frequent question: How is VAT calculated in Ethiopia?

How can I calculate VAT?

Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 117.5, if the VAT rate is 17.5 per cent. (If the rate is different, add 100 to the VAT percentage rate and divide by that number.)

What is the VAT rate in Ethiopia?

VAT is levied on the supply of goods and services in Ethiopia and on imports. NGOs are exempt from charging VAT on services, but are not exempt from paying VAT on services or goods purchased. The standard rate of VAT is 15%.

What is VAT with an example?

VAT is commonly expressed as a percentage of the total cost. For example, if a product costs $100 and there is a 15% VAT, the consumer pays $115 to the merchant. The merchant keeps $100 and remits $15 to the government.

How do I calculate 15 VAT in Ethiopia?

Add Tax

  1. Solution : GST % = 15. Amount = 25000.
  2. Step 1 : GST Price = (25000 * 15 ) / 100. = 3750 Br.
  3. Step 2 : Net Price = 25000 + 3750. = 28750 Br. Hence the VAT Price is 3750 Br and Net Price is 28750 Br.
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How is income tax calculated in Ethiopia?

Here are the formulas on how to calculate personal (employee) income tax, pension, gross and net income in Ethiopia.

  1. Salary Income Tax = (Gross Salary * Tax Rate) – Deduction.
  2. Employee Pension – Gross Salary x 7%
  3. Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable)

How is tax calculated on salary?

The year during which your income tax is calculated for the previous financial year is called the assessment year.

Components for calculating the income tax.

Income Slab Tax Rate
2.5 lakhs – 5 lakhs 10% of exceeding amount
5 lakhs – 10 lakhs 20% of the exceeding amount
Above 10 lakhs 30% of the exceeding amount

How is business tax calculated in Ethiopia?

As per income tax proclamation no 979/2016, here are the business profit tax rates in Ethiopia.

Schedule “C”

Taxable Business Income Tax rate Deductible Amount
0 – 7,200 ETB Exempt threshold 0%
7,201 – 19,400 10% 720
19,401 – 38,400 15% 1,710
38,401 – 63,600 20% 3,630

How do you calculate VAT exclusive?

VAT-exclusive prices

To work out a price excluding the standard rate of VAT (20%) divide the price including VAT by 1.2. To work out a price excluding the reduced rate of VAT (5%) divide the price including VAT by 1.05.

What is VAT value?

The standard rate of VAT in the UK is currently 20% and this is the rate charged on most purchases. However, there are other VAT rates which you need to be aware of as a business. Reduced rate VAT is charged on sanitary products, energy saving measures and children’s car seats and is charged at 5%.

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How does VAT work for a business?

In the UK VAT, or Value Added Tax, is a business tax levied by the government on sales of goods and services. … It’s an indirect tax, meaning that businesses collect it on behalf of the government: companies add a VAT charge on their goods and services, then paying the VAT collected on to HMRC.

How do you add 15 VAT?

Adding VAT to net amount:

Simply multiply the net amount by 1 + VAT percentage (i.e. multiply by 1.15 if VAT is 15%) and you’ll get the gross amount.

What is VAT refund in Ethiopia?

When at least 25% of the value of the registered person’s taxable transaction is taxed at zero rate, the amount of VAT charged as a credit in excess of the amount of VAT charged for export of goods and services will be refunded.

What is the basis for VAT registration in Ethiopia?

In Ethiopia, VAT is applied to all firms with a turnover of more than 500000 Birr. For firms with less than the turnover threshold of 500000 Birr, a much lower 2% flat rate is applied. The law requires any firm with high enough turnover to register for VAT. Turnover tax is levied on services rendered locally.