Examining the Income Tax Jurisdiction Rules of the Federal Income Tax Law of Ethiopia vis-a-vis the Doctrines of Income Taxation Power of States

Abstract

Although there are no restrictions under international law on how countries do exercise their taxation power, they do not, however, assume tax power over a certain income arbitrarily. States, rather, design their tax jurisdiction rules in consideration of different doctrines of taxation. These doctrines of taxation are ideals or indexes of a good income tax system. Thus, examining the Ethiopian income tax laws in light of these doctrines of taxation is important to know the current position of the country’s income tax system. Accordingly, the aim of the Article is to evaluate whether the Ethiopian income tax law has been designed in consideration of the doctrines of taxation. To this end, following a qualitative research approach the relevant provisions of Ethiopia’s Federal Income Tax Proclamation no.979/2016, and pertinent literature have been analyzed and synthesized. Finally, the paper concludes that, in principle, the Ethiopian income tax proclamation has largely designed tax jurisdiction rules in consideration of the sovereignty, and economic allegiance theories. And, as can be understood from the withholding schemes of the law, the jurisdiction rules of the Ethiopian income tax law have also considered the realistic doctrine.