Income Tax (Amendment) Proclamation No. 1395-2025

The Income Tax (Amendment) Proclamation No. 1395/2025 is a legislative document issued by the Federal Democratic Republic of Ethiopia to modernize the nation’s fiscal policy and enhance revenue mobilization. Structurally, the text amends the previous 2016 proclamation by introducing new categories of taxpayers based on turnover thresholds and defining modern revenue streams, such as income from digital content creation and digital services. A major theme of the document is the pursuit of tax fairness and efficiency, evidenced by updated employment and rental tax rates and the implementation of a Minimum Alternative Tax to ensure corporations contribute at least 2.5% of their turnover. Ultimately, the law aims to align the tax system with current economic realities by broadening the tax base, discouraging aggressive tax avoidance, and restricting large cash transactions to improve administrative transparency.