Ethiopia Capital Gains Tax Guide 2026

Overview — Capital Gains Tax in Ethiopia

Capital gains tax in Ethiopia is governed by the Income Tax Proclamation No. 979/2016 and administered by the Ministry of Revenues (MoR). Capital gains are treated differently depending on the type of asset and the taxpayer. For individuals, capital gains on shares and property are taxed at a flat 15% rate. For companies, capital gains are included in ordinary income and taxed at the corporate tax rate (30% standard, or the applicable reduced rate).

CGT on Shares and Securities — 15%

Gains from the disposal of shares, stocks, bonds, and other securities are subject to CGT at a flat rate of 15%. The gain is calculated as the difference between the sale proceeds and the acquisition cost, adjusted for any capital contributions or returns of capital. For shares acquired before the introduction of the CGT regime, the acquisition cost may be estimated based on market value at the date of introduction. Losses on share disposals may be offset against gains on other share disposals within the same tax year.

CGT on Property — 15%

Gains from the transfer of real property are subject to CGT at 15% for individuals. The gain is calculated as the difference between the transfer price (or market value) and the acquisition cost, plus any capital improvements. For property held for more than 5 years, the gain may be adjusted for inflation using official indices. Primary residences may qualify for partial exemption under certain conditions. Property transfers also attract registration fees and stamp duty (see property tax guide).

ESX Listing Exemption

To encourage capital market development, gains from the disposal of shares listed on the Ethiopian Securities Exchange (ESX) may qualify for certain exemptions or reduced rates. The specific exemption provisions are designed to attract listing and trading on the exchange. Taxpayers should consult the latest regulations from the Ethiopian Capital Market Authority and the MoR to confirm the current scope of the ESX exemption.

Calculation and Reporting

Capital gains are calculated on a disposal-by-disposal basis. The acquisition cost includes the purchase price plus incidental costs of acquisition (legal fees, registration, transfer taxes). The sale proceeds are reduced by incidental costs of disposal. For non-arm's length transactions, the MoR may substitute the market value. Capital gains must be reported in the annual tax return, and the tax is due at the time of filing for individuals or as part of the corporate return for companies.

CGT for Non-Residents

Non-residents are subject to CGT on gains from the disposal of Ethiopian-situs assets, including shares in Ethiopian companies and real property located in Ethiopia. The same 15% rate applies. Under Ethiopia's double tax treaties, the taxing rights over capital gains may be allocated to the residence country or shared between the two countries. Most DTTs follow the OECD Model, which generally provides the residence country with exclusive taxing rights over share gains unless the shares derive their value from real property.

FAQs

What is the CGT rate on shares?

Capital gains on shares and securities are taxed at a flat rate of 15% for individuals. Companies include gains in ordinary income taxed at the corporate rate.

Is there an exemption for ESX-listed shares?

Yes, gains from disposals of shares listed on the ESX may qualify for exemptions or reduced rates to encourage capital market participation.

Can capital losses be offset?

Capital losses on shares may be offset against capital gains on other shares within the same tax year. Unused losses may be carried forward.

Are non-residents subject to CGT?

Yes, non-residents are subject to CGT on gains from Ethiopian-situs assets at the same rates as residents, subject to any applicable DTT relief.

Disclaimer

This guide provides general information about Ethiopian capital gains tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Ethiopian tax advisor or the Ministry of Revenues for advice specific to your situation. InvestmentKit does not provide tax advice.