All incomes from employment shall be taxed based on this schedule . The proclamation has made it clear that only incomes of employees shall be taxed based on this schedule. Incomes of persons getting their economic benefits from activities akin to employment will be taxed based on other schedules. For instance a person working as an independent contractor will be taxed based on schedule C .(Arts.10-11 of the income tax proclamation)
2.Schedule B Income
All incomes from rental of buildings shall be taxed using this schedule(arts.14-16 of the proc.). In case of buildings the proclamation has not made a distinction among buildings made of different materials . In practice all buildings made of any kind of material are subject to the payment of the tax so long as the owner gets an income from the building.
This schedule makes a distinction between an income from rental of building by physical persons and bodies corporate . Accordingly all incomes by physical persons shall be taxed using this rate :
Schedule ‘B’
Taxable Income from Rental (per year) | Income Tax Payable | |
Over Birr | to Birr |
|
0 | 1800 | exempt threshold |
1,801 | 7,801 | 10 |
7,801 | 16,800 | 15 |
16,801 | 28,000 | 20 |
28,201 | 42,600 | 25 |
42,601 | 60,000 | 30 |
Over 60,000 |
| 35 |
Schedule C
Incomes from business shall be taxed based schedule C . Business according to the law is any
industrial, commercial professional or vocational activity or any other activity recognized as trade by the Commercial Code of Ethiopia and carried on by any person for profit . According to the definition any industrial ,commercial or vocational activity can be considered as a business and be subject to the payment of the tax so long as the person is carrying out this activity for profit.
This schedule also makes a distinction between the income derived by physical and juridical persons . Consequently incomes of physical persons shall be taxed using a schedule similar to the above one . Whereas incomes from bodies corporate shall be taxed at a flat rate of 30 %.
Schedule D
All incomes which cannot be subject to either schedule A,B or C shall be subject to this schedule . This scheule was intended to be used in order to impose a tax on incomes which cannot be subject to one of the sceduk