A PROCLAMATION TO AMEND THE VALUE ADDED TAX
WHEREAS, it has become necessary to further amend the Value Added Tax Proclamation No.285 /2002 (as amended);NOW, THEREFORE, in accordance with article 55 (1) and (11) of the Constitution, it is hereby proclaimed as follows.
1. Short Title
This proclamation may be cited as the “Value Added Tax (amendment) Proclamation No.1157/2019.”
The Value Added Tax Proclamation No.285/2002 (as amended) is hereby further amended as follows:
1/ Article 2 (1) is deleted and replaced by the following new sub-article (1).
1/ “Accounting period” shall means:
a) In the case of taxpayers whose turnover in any 12 months is birr 70,000,000 (birr seventy million) and over, every month;
b) In the case of taxpayers whose turnover in any 12 months is less than birr 70,000,000 (birr seventy million) every three months, wherein the month of Nehasse and Pagumen shall be aggregated and treated as one calendar month.”
2/ article 2 (4) is deleted and replaced by the following new sub-article (4). “4. “authority” means the Ministry of Revenue.”
3/ new sub-article (27) is added following article 2 (26) of the Proclamation. “27/ “capital good ” means an asset with a life time of more than one year, used directly or indirectly in the manufacture of goods and in the rendition of services and includes building, vehicle, machinery, equipment, and other similar tangible assets .”
4/ article 7(5) is deleted and replaced by the following new sub-article (5): “5/ in the case of transactions to which sub-article 1 (a) of this article is applicable.
a) the tax shall be withheld and paid to the authority by the buyer in accordance with the directive to be issued by the Minister of Finance;
b) the tax withheld in accordance with this article shall be 50 percent of the tax payable by the buyer and the balance shall be paid to the seller.
5/ Article 21 (6) is deleted and replaced by the following new sub-article (6).
6/ a) a person who registers or has to register for vat shall be entitled to credit under this article in the first accounting period in which the person is registered or has to register for vat, on the amount paid on goods at hand on the date of registration and that are used or to be used for the taxable transaction, but only to the extent that the purchase or import of the goods occurred not more than six months before the date of registration.
b) a person whose 12 months taxable transaction exceeds birr 100,000,000 (birr 0ne hundred million) shall be entitled to credit under this article in the accounting period after the date of registration on the amount of value added tax paid on capital goods at hand or purchased after the date of registration that is used or to be used for taxable transaction .
6/ the following new sub-articles (7) and (8) are added following article 27 (6). 7/ notwithstanding the provision of article 21 (6) (b) of this proclamation, the authority shall refund the remaining amount of vat paid on capital goods in excess of the amount credited in the accounting period within the coming one month.
8/ the authority shall implement risk based refund system for refund to be paid in accordance with this article.
3. Effective Date
This proclamation shall enter into force on the date of its publication on the negarit gazette. Done at addis ababa this 13th day of August, 2019
PRESIDENT OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA