1. What is Rental Income Tax in Ethiopia?

Rental income tax in Ethiopia is a direct tax levied on income generated from renting out property. Residents are taxed at a flat rate of 15%, while non-residents are subject to progressive tax rates.

2. How Does the Calculator Work?

The calculator uses different formulas based on residency status:

Progressive Rates for Non-Residents:

• Up to 600 ETB: 15%
• 601 - 1,650 ETB: 90 ETB + 20% of excess over 600 ETB
• 1,651 - 3,200 ETB: 300 ETB + 25% of excess over 1,650 ETB
• 3,201 - 5,250 ETB: 687.5 ETB + 30% of excess over 3,200 ETB
• 5,251 - 7,800 ETB: 1,302.5 ETB + 35% of excess over 5,250 ETB
• Above 7,800 ETB: 2,195 ETB + 38% of excess over 7,800 ETB

3. Importance of Rental Income Tax

Details: Rental income tax is a significant source of government revenue and ensures property owners contribute their fair share to public services and infrastructure.

4. Using the Calculator

Tips: Enter your total gross rental income in ETB and select your residency status. The calculator will compute the tax amount and effective tax rate.

5. Frequently Asked Questions (FAQ)

Q1: Who is considered a resident for tax purposes?
A: Individuals who reside in Ethiopia for 183 days or more in a 12-month period are considered residents.

Q2: Are there any deductions allowed?
A: Residents can deduct 15% of gross rental income as maintenance allowance before calculating tax.

Q3: When is rental income tax due?
A: Rental income tax is typically paid in advance in two installments (June and December) based on estimated income.

Q4: What about rental income from multiple properties?
A: All rental income from properties in Ethiopia must be aggregated when calculating tax liability.

Q5: Are there penalties for late payment?
A: Yes, late payments incur interest charges of 1.5% per month on the unpaid tax amount.