Ethiomonitor -Addis Ababa
November 11, 2025
The Ethiopian Ministry of Revenues has published final guidelines on the implementation of the amended Income Tax Proclamation No. 1395/2025, detailing the calculation of the Alternative Minimum Tax (AMT) applicable to commercial agents and wholesalers.
This update follows prior guidance from the Ministry of Finance concerning the AMT framework for taxpayers engaged in product distribution.
Under the new ruling, commercial agents who sell goods on behalf of other traders will be liable for AMT exclusively on the commission income received, rather than on the total sales value. These commissions must be substantiated through invoices issued in the name of the principal trader, in accordance with Commercial Registration and Licensing Proclamation No. 980/2001 and the Commercial Code.
Wholesalers and distributors will continue to be subject to AMT on their total annual gross income, unless a legally binding contract or regulation stipulates a fixed wholesale selling price and a defined margin. In such cases, AMT will be calculated solely on the approved margin or percentage. Taxpayers utilizing this provision are required to submit the applicable contracts or legal documentation to the authorities.
The Ministry has clarified that agreements among vertical traders to establish minimum retail prices are prohibited under the Trade Competition and Consumer Protection Proclamation No. 813/2006, with exceptions applying only to wholesale pricing and distributor margins, and not to retail prices unless set by legally authorized bodies.
These guidelines provide businesses with a clear framework for calculating their AMT obligations, offering commercial agents a reduced tax base while ensuring that wholesalers and distributors report gross sales unless a valid contract or authorization applies. Authorities have urged businesses to maintain accurate documentation to ensure compliance with the updated regulations.
