# How is payroll in Ethiopia?

## How is payroll in Ethiopia?

Here are the formulas on how to calculate personal (employee) income tax, pension, gross and net income in Ethiopia.

1. Salary Income Tax = (Gross Salary * Tax Rate) – Deduction.
2. Employee Pension – Gross Salary x 7%
3. Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable)

## What is payroll tax in Ethiopia?

3. Income tax on employment income

Employment income per month (Birr) Rate of income tax (%) Deduction (Birr)
1,651-3,200 15% 142.50
3,201-5,250 20% 302.50
5,251-7,800 25% 565.00
7,801-10,900 30% 955.00

What is the formula for payroll?

This is determined by multiplying the number of hours worked in a pay period by the hourly rate. For example, if an employee works 40 hours in a pay period and earns \$15 an hour, you would multiply 40 times \$15 to get a gross pay of \$600.

### How is severance calculated in Ethiopia?

The amount of severance pay depends on the length of service and is payable at the following rates: – 30 days’ wages for one year (as well as first year) of service (severance pay for workers with less than 1 year of service is calculated in proportion to the period of service);

### How much is income tax in Ethiopia?

Ethiopia Taxes Last Previous
Corporate Tax Rate 30.00 30.00
Personal Income Tax Rate 35.00 35.00
Sales Tax Rate 15.00 15.00

How do I calculate 15 VAT in Ethiopia?

Add Tax

1. Solution : GST % = 15. Amount = 25000.
2. Step 1 : GST Price = (25000 * 15 ) / 100. = 3750 Br.
3. Step 2 : Net Price = 25000 + 3750. = 28750 Br. Hence the VAT Price is 3750 Br and Net Price is 28750 Br.

#### How do I calculate my payroll?

To determine a salaried worker’s pay per pay period, divide the annual salary into the total yearly pay periods. For instance, say she earns \$64,000, paid semimonthly. Calculation: \$64,000 / 24 semimonthly pay periods = \$2,666.67 (semimonthly salary).

#### How the severance pay is calculated?

Severance pay is equivalent to one week’s pay for each year of your employment with the dismissing employer to a maximum of 26 weeks. For example, if you earned \$1,000 per week and were terminated after 7 years and 6 months of employment you would be entitled to \$7,500 severance pay (\$1,000 x 7.5 years = \$7,500).

How do you calculate service pay?

Service pay is normally calculated based on the employee’s earnings and the period worked. The standard calculation is 15 days salary for every year worked and in your case it is for three years.

## Are taxes high in Ethiopia?

Personal Income Tax Rate in Ethiopia is expected to reach 35.00 percent by the end of 2020, according to Trading Economics global macro models and analysts expectations. In the long-term, the Ethiopia Personal Income Tax Rate is projected to trend around 35.00 percent in 2021, according to our econometric models.

## What is the retirement age in Ethiopia?

Age 60
Old-age pension (Retirement Pension): Age 60 with at least 10 years of contributions. The qualifying conditions may be reduced for persons working under certain hazardous or arduous conditions.

How to use HRM and Payroll Software in Ethiopia?

Our HRM and Payroll software can be extended to print payroll, income tax and pension on documents which are compatible with the manual templates of Ethiopian Revenues and Customs authority (ERCA). Our HRM and Payroll software can import employees from existing excel data.

### How is salary income tax calculated in Ethiopia?

Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable) Employee Pension – 7% Company Pension – 11%

### Can a loan be deducted from payroll in Ethiopia?

Allowances can be configured to be taxable or non taxable depending on your company’s policy and Ethiopian law. Request and approval system for employee loan that can be deducted from PF or salary. The system can automatically deduct loan from payroll or PF.

What kind of allowances can you get in Ethiopia?

Easily add or remove different types allowances for employees such as acting allowance, hardship allowance, bonus, position allowance, and more. Allowances can be configured to be taxable or non taxable depending on your company’s policy and Ethiopian law. Request and approval system for employee loan that can be deducted from PF or salary.

20/03/2019