Quick answer
Since 7 August 2025, Ethiopia taxes gains on shares, bonds and buildings at a flat 15%, replacing the old 15% / 30% split. The gain formula now includes a 30% inflation adjustment. A building held and wholly used as your home for 2 years before the sale is exempt. Non-residents pay too, even on some offshore sales.
Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad
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Find my savings →You hold shares in an Ethiopian bank, own a flat in Addis Ababa, or plan to sell a stake in a local company. The 2025 reform halved the tax on share gains and changed how the gain is computed. This guide gives you the 2026 rate, the exemptions, the resident and non-resident rules, and the points the law leaves unclear.
Ethiopia capital gains tax in 2026: the key figures
| Item | 2026 rule | Legal basis |
|---|---|---|
| Taxable assets | Shares, bonds and buildings | Art. 61(7) Income Tax Proclamation No. 979/2016, as amended by No. 1395/2025 |
| Rate | 15% of the gain | Art. 61(2), as amended |
| Gain formula | Consideration, cost and a 30% inflation adjustment | Art. 61(3), as amended |
| Home exemption | Building held and wholly used as private residence for 2 years before disposal | Art. 61(7), as amended |
| Start date of the new rules | Schedule D income collected from 7 August 2025 | Art. 4(2) Proclamation No. 1395/2025 |
| Offshore indirect transfers | Taxable above 20% Ethiopian value in prior 365 days; full gain above 50% | New art. 62, Proclamation No. 1395/2025 |
| Losses | Set against gains of the same class; unused losses carried forward | Art. 59(4) Proclamation No. 979/2016, renumbered art. 61(4) (not amended) |
| Dividends / interest (residents) | 15% / 10% of gross | Arts 57(1) and 58(1), as amended |
What changed for 2026
- One rate for all taxable assets. Proclamation No. 1395/2025 replaced the old two-class system. Buildings (class A) were taxed at 15% and shares and bonds (class B) at 30%. All three now pay 15%.
- A 30% inflation adjustment enters the gain formula in art. 61(3).
- Offshore indirect transfers are now caught by a new art. 62.
- Timing. Under art. 4(2), tax on Schedule D income applies from 7 August 2025. Disposals in calendar 2026 fall fully under the new rules.
Is this guide for you?
Read on if you…
- own shares in an Ethiopian company, such as a private bank or insurer, and plan to sell;
- own a building in Ethiopia that is not, or not only, your home;
- hold a foreign company whose value comes largely from Ethiopian assets.
Probably not your case if you…
- sell equipment from your Ethiopian business – that is business income, see business expenses in Ethiopia;
- only trade crypto – see cryptocurrency taxes in Ethiopia.
Which assets are taxed in Ethiopia, and at what rate?
Ethiopia does not tax every gain. Capital gains tax sits in Schedule D of the Federal Income Tax Proclamation No. 979/2016 (የፌደራል ገቢ ግብር አዋጅ). The amended art. 61(7) defines a taxable asset as shares, bonds and buildings. That closed list is the whole regime.
| Asset | Treatment in 2026 |
|---|---|
| Shares in companies | 15% of the gain |
| Bonds | 15% of the gain |
| Buildings | 15% of the gain, unless the home exemption applies |
| Your private residence held 2 years | Outside the definition, so no tax |
| Cars, furniture, art, personal items | Not on the list |
| Crypto-assets | Not on the list; see our crypto guide |
| Business assets sold by a business | Taxed as business income, not under art. 61 |
The home exemption
A building "held for and wholly used as a private residence" for 2 years before disposal is not a taxable asset. Both words matter. "Wholly" means no part rented out or used as an office. "Prior to the disposal" means the 2 years immediately before you sell.
Good news: the exemption is not limited to one home or to Ethiopian citizens. Here's the catch: it is all or nothing. Renting one floor can cost you the whole exemption.
How do you calculate the gain under the 2025 formula?
The amended art. 61(3) gives a formula with three elements:
- A – the consideration for the disposal (your sale price);
- B – a 30% inflation adjustment;
- C – the cost of the asset.
The gazette prints the formula as "C − (A + B) = gain". Read literally, that produces a negative number for any profitable sale. The evident intent is that you deduct your cost and the inflation adjustment from the price.
Honestly? The text does not say what the 30% is applied to. The most natural reading is 30% of your cost, which raises your cost basis by 30%. That is the reading used in our example below. Ask the MoR to confirm before you file a large disposal.
Steps to follow
- Take your sale price (A).
- Gather proof of cost (C): purchase contract, transfer costs, improvement invoices.
- Apply the 30% inflation adjustment (B) as the tax office applies it.
- Subtract cost and adjustment from the price to get the gain.
- Multiply by 15%.
There is no holding-period discount. A share held for one month and one held for ten years pay the same rate.
What about losses?
Art. 59(4) of the original proclamation (now art. 61(4)) was not amended. A loss on a taxable asset is set against gains on assets of the same class in the same tax year. Unused losses carry forward without time limit within that class. Losses on sales to related persons are not recognised, and you must be able to prove the loss to the authority.
The 2025 amendment removed the class definitions from art. 61(7) but left this loss rule untouched. Whether a share loss can now offset a building gain is not settled. Keep both sales documented.
How are residents and non-residents taxed?
| Situation | Ethiopian position |
|---|---|
| Resident sells Ethiopian shares, bonds or a building | 15% on the gain |
| Non-resident sells Ethiopian shares, bonds or a building | 15% on the gain; your home country may also tax it |
| Anyone sells a foreign entity deriving over 20% of its value from Ethiopia | Taxable under art. 62, deemed Ethiopian-source |
| Resident sells foreign shares | Taxable; the original proclamation allows a credit for foreign tax on such gains |
Not sure which side you are on? The tests are in tax residency in Ethiopia.
Offshore indirect transfers
The new art. 62 targets holding structures. Look at the 365 days before the sale. If more than 20% of the shares' value came from property in Ethiopia at any time, the gain is taxable there.
- Above 50% Ethiopian value: the full gain is taxable.
- Between 20% and 50%: only the share A × B/C is taxable, where B/C is the Ethiopian part of total value.
The Ethiopian company that owns the property must notify the authority. If the seller is non-resident, the Ethiopian party is treated as its agent and becomes liable for the tax.
Treaties and double taxation
Ethiopia has a limited treaty network. PwC (secondary) lists partners including France, the United Kingdom, Italy, the Netherlands, India, South Africa and Turkey. Treaties usually let the country where a building sits tax the gain. For shares, check the specific treaty. If no treaty applies, your country of residence decides whether it gives a credit.
Is there an exit tax?
We found no deemed-disposal rule for individuals leaving Ethiopia. Your Ethiopian shares and buildings still fall under art. 61 when you sell them later as a non-resident. Plan the sequence with the practical guide to ceasing your tax residency in Ethiopia.
How can you pay less, legally?
- Qualify for the home exemption. Live in the building, and only live in it, for 2 full years before the sale.
- Prove your cost. Without contracts and invoices, you lose cost and inflation adjustment in one go.
- Match losses to gains. Realise a loss in the same tax year as a gain of the same class.
- Avoid related-party sales at a loss. Those losses are disregarded.
- Model indirect transfers early. Below 20% Ethiopian value, art. 62 does not bite.
Example – Hana, 41, engineer of Ethiopian origin living abroad
In 2019 Hana bought shares in an Ethiopian private bank for ETB 1,000,000. In March 2026 she sells them for ETB 3,500,000. With the 30% inflation adjustment read as 30% of cost, her deductible base is ETB 1,300,000. Her gain is ETB 2,200,000, and 15% tax is ETB 330,000. Without the adjustment, the tax would be ETB 375,000. Under the old 30% class B rate on the unadjusted gain, she would have paid ETB 750,000. As a non-resident, she also checks whether her country of residence taxes the gain and credits the Ethiopian ETB 330,000.
Hana's sale hinged on one ambiguous formula and two countries. Yours probably does too.
Get a personalised review of your Ethiopian assets, your residence and the best timing for your sale.
Find my savings →Common mistakes (and what they cost)
- Assuming non-residents are exempt → the Ethiopian party to the deal becomes liable as your agent, and the tax is collected anyway.
- Renting part of your home before selling → the building is no longer "wholly used" as a residence, so the whole gain is taxed at 15%.
- Selling at 23 months → the 2-year test fails and the full gain is taxable.
- Losing purchase documents → you cannot prove cost (C), so your taxable gain grows; a loss you cannot substantiate is not recognised at all.
- Selling to a relative at a loss → the loss is not recognised and cannot shelter later gains.
Frequently asked questions
What is the capital gains tax rate in Ethiopia in 2026?
The rate is 15% on gains from shares, bonds and buildings, under art. 61(2) of Income Tax Proclamation No. 979/2016 as amended by Proclamation No. 1395/2025. It applies from 7 August 2025. Before that, buildings paid 15% and shares and bonds paid 30%.
Is selling my house in Ethiopia taxable?
Not if you held the building and used it wholly as your private residence for the 2 years before the sale. Such a building is not a taxable asset. If you rented part of it, used it for business, or sold sooner, the gain is taxed at 15%.
What is the 30% inflation adjustment in Ethiopia's capital gains tax?
Proclamation No. 1395/2025 added a 30% inflation adjustment to the gain formula in art. 61(3). The printed formula is garbled and does not state the base. The common reading is that it increases your cost by 30%, which lowers the taxable gain. Confirm the method with the Ministry of Revenues.
Are non-residents taxed on capital gains in Ethiopia?
Yes. Non-residents pay 15% on gains from Ethiopian shares, bonds and buildings. They are also taxed on selling a foreign entity that drew over 20% of its value from Ethiopian property in the prior 365 days. The Ethiopian party can be liable as their agent.
How are dividends and interest taxed in Ethiopia?
Resident individuals pay a final 15% on the gross dividend and 10% on gross interest, under the amended articles 57 and 58. Non-residents suffer the same rates as withholding under art. 52(2), unless a tax treaty reduces them. Dividends are not capital gains, so the inflation adjustment does not apply.
Related guides
- Tax residency in Ethiopia: who counts as resident
- How to cease your tax residency in Ethiopia
- Cryptocurrency taxes in Ethiopia
- Specific taxes in Ethiopia: VAT, withholding and stamp duty
- Ethiopia tax landscape overview
- Capital gains tax in Morocco
- Capital gains tax in Mauritius
- All country tax guides
Sources
- Tax laws: income tax proclamations in force – Ministry of Revenues of Ethiopia
- Income Tax (Amendment) Proclamation No. 1395/2025, Federal Negarit Gazette No. 64 (PDF) – Ministry of Revenues of Ethiopia
- Federal Income Tax Proclamation No. 979/2016, Amharic text (PDF) – Ministry of Revenues of Ethiopia
- Ethiopia, Individual – Foreign tax relief and tax treaties – PwC Worldwide Tax Summaries (secondary)
- Ethiopia, Individual – Income determination – PwC Worldwide Tax Summaries (secondary)
This guide is general information, not personalised tax advice. See how we research and review.
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