Verified Facts
The tax rates in Eritrea range from 2% to 30% for personal income tax, with a corporate tax rate of 30% and a value-added tax (VAT) rate of 5%.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Eritrea has a territorial taxation system, where tax is levied on income earned within the country, regardless of the taxpayer's residence. However, residents are also subject to tax on their worldwide income, with credits available for taxes paid abroad. To be considered a tax resident in Eritrea, an individual must have a permanent home in the country or have been present in the country for at least 183 days in a calendar year.
The tax system in Eritrea is governed by the Income Tax Proclamation No. 62/1991 and the Value Added Tax Proclamation No. 69/1993. These laws provide the framework for taxation in the country, including the types of income subject to tax, the tax rates, and the filing requirements. The tax authorities in Eritrea are responsible for administering the tax laws and ensuring compliance with tax regulations.
Personal Income Tax
| Income Bracket (ERN) | Tax Rate |
|---|---|
| 0 - 10,000 | 2% |
| 10,001 - 20,000 | 5% |
| 20,001 - 50,000 | 10% |
| 50,001 - 100,000 | 20% |
| 100,001 and above | 30% |
| Personal income tax in Eritrea is levied on an individual's taxable income, which includes employment income, business income, and investment income. Taxpayers are entitled to deductions and allowances, such as a personal allowance and a deduction for mortgage interest. Tax returns must be filed annually, and tax payments are due by the end of the tax year. Taxpayers who fail to file or pay their taxes on time may be subject to penalties and interest. |
Corporate & Business Tax
- The corporate tax rate in Eritrea is 30%, applicable to all companies registered in the country.
- Small businesses with an annual turnover of less than ERN 500,000 are exempt from corporate tax.
- The Eritrea Free Zone Authority offers tax incentives and exemptions to companies operating in the free zones.
- Companies must register with the Ministry of Trade and Industry and obtain a tax identification number to operate in the country.
- The tax year for corporate tax purposes is the same as the calendar year, with tax returns due by the end of the following year.
VAT / Sales Tax
- The standard VAT rate in Eritrea is 5%, applicable to most goods and services.
- A reduced VAT rate of 2% applies to essential items such as food, medicine, and education services.
- Exemptions from VAT are available for certain goods and services, such as healthcare and financial services.
- Tourists are eligible for a VAT refund on certain purchases, such as hotel accommodations and tourist services.
For Expats & Foreign Workers
- Expatriates working in Eritrea are subject to tax on their employment income, regardless of their nationality.
- Tax residency rules apply to expatriates who have been present in the country for at least 183 days in a calendar year.
- Eritrea has double taxation treaties with several countries, including Italy, the United Kingdom, and the United States.
- Expatriates are required to register with the tax authorities and obtain a tax identification number.
- Social security contributions are mandatory for all employees, including expatriates, at a rate of 10% of gross salary.
- Remittances from Eritrea are subject to a 2% tax, applicable to all foreign currency transfers.
Crypto & Investment Income
- Investment income, including dividends and interest, is subject to tax at the individual's tax rate.
- Capital gains tax is included in the individual's income tax, at a rate of up to 30%.
- Cryptocurrency transactions are subject to tax, with gains taxable as income.
- Taxpayers are required to declare their investment income and cryptocurrency transactions on their tax returns.