Tax on Investment Income in Eritrea

Investment income in Eritrea is subject to various tax treatments depending on the type of income and the taxpayer's status. This guide covers the taxation of dividends, interest, rental income, and other investment returns.

Dividend Income

Individual Taxation

Dividends received by individual residents are subject to a final withholding tax of 10%. This withholding is the final tax liability, meaning dividends are not included in the progressive personal income tax return. Non-residents are subject to the same 10% rate.

Corporate Taxation

Dividends received by a resident company from another resident company may be exempt under certain conditions. Foreign-source dividends are taxable at the standard CIT rate of 30%, with a foreign tax credit available.

Interest Income

Individual Taxation

Interest income earned by individuals is subject to a final withholding tax of 5% on most interest payments.

Corporate Taxation

Interest income received by corporations is included in taxable income and taxed at the standard CIT rate of 30%. Interest expense is generally deductible.

Rental Income

Rental income from immovable property is taxed as follows:

Landlords may deduct expenses including maintenance, property management fees, insurance, interest on mortgages, and depreciation.

Capital Gains

Capital gains on investments are subject to:

Foreign Investment Income

Eritrea taxes residents on their worldwide income. Foreign investment income is generally taxable in Eritrea, with a foreign tax credit available for taxes paid abroad.

Reporting Requirements

Investment income subject to final withholding tax (dividends, interest) generally does not need to be reported in the annual tax return if the withholding tax is the final liability.