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Sample Calculation

The document outlines how to calculate salary income tax, pension contributions, gross income, and net income in Ethiopia. It provides the tax rates and deduction amounts for different salary ranges. An example calculation is shown for an employee with a 2,000 birr salary to demonstrate how to determine their income tax amount, pension, gross income, and net income.

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950 views1 page

Sample Calculation

The document outlines how to calculate salary income tax, pension contributions, gross income, and net income in Ethiopia. It provides the tax rates and deduction amounts for different salary ranges. An example calculation is shown for an employee with a 2,000 birr salary to demonstrate how to determine their income tax amount, pension, gross income, and net income.

Uploaded by

zsam602
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SALARY INCOME TAX CALCULATION IN ETHIOPIA, PENSION,

GROSS SALARY AND NET SALARY CALCULATOR WITH


EXAMPLES
Mar 19, 2018 | Blog |
Here are the formulas on how to calculate personal (employee) income tax, pension, gross and net income in Ethiopia. For comparison
purpose, we have also added the old net salary, pension and income tax caluculation methods.

Salary Income Tax = (Gross Salary * Tax Rate) – Deduction


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

No. Salary Range (ETB) Tax Rate Deduction (ETB)

1. 0 – 600 Birr Non-Taxable –

2. 601-1,650 Birr 10% 60 Birr

3. 1,651 – 3,200 Birr 15% 142.50 Birr

4. 3,201 – 5,250 Birr 20% 302.50 Birr

5. 5,251 – 7,800 Birr 25% 565 Birr

6. 7,801 – 10,900 Birr 30% 955 Birr

7. Over 10,900 Birr 35% 1,500 Birr

SAMPLE CALCULATION
If the salary of an employee is 2,000 Birr.

By referring to the above table, we can see that 2,000 birr falls in the No. 4 row. So, Tax Rate = 15% and deduction = 142.50

Income Tax = (2,000 Birr x 15%) – 142.50 Birr

Income Tax = 300 Birr – 142.50 = 157.50 Birr

Employee Pension = 2,000 Birr x 7% = 140 Birr

Employee Net Income = 2,000 Birr – 157.50 – 140 = 1702.50 Birr

Net Income = 1,702.50 Birr

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