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A Directive to Provide the Amount of Electricity and Water Consumption for Domestic Use Exempt from Value Added Tax (Directive No. 1021/2024)

Ministry of Finance1021/2024

Summary

This directive specifies the monthly electricity and water consumption amounts for domestic use that are exempt from Value Added Tax (VAT). It exempts up to 200 kWh of electricity and up to 15 cubic meters of water per month. However, electricity suppliers involved in generation and transmission must still collect and remit VAT on wholesale electricity supplies.

Who's affected

Households consuming electricity and water, and electricity generation and transmission suppliers.

Action required

Households should be aware of the VAT-exempt consumption limits for electricity and water. Electricity generation and transmission suppliers must continue to collect and remit VAT on wholesale electricity.

Key points

4
  • VAT exemption for domestic electricity consumption up to 200 kWh/month.
  • VAT exemption for domestic water consumption up to 15 m³/month.
  • Exclusion of bottled water from VAT exemption.
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    • Obligation for electricity suppliers to collect and remit VAT on wholesale electricity.

Requirements

3
  • Monthly electricity consumption up to 200 kWh for domestic use is exempt from VAT.
  • Monthly water consumption up to 15 cubic meters (excluding bottled water) for domestic use is exempt from VAT.
  • Suppliers involved in electricity generation and transmission must collect VAT on wholesale electricity supplies and remit it to the tax authority.

Rights and permissions

2
  • Right to VAT exemption on domestic electricity consumption up to 200 kWh per month.
  • Right to VAT exemption on domestic water consumption up to 15 cubic meters per month.

Restrictions

2
  • VAT exemption does not apply to bottled water.
  • Electricity generation and transmission suppliers are restricted from exempting VAT on wholesale electricity supplies.

Objectives

2
  • To determine the amount of electricity and water consumption for domestic use that is exempt from Value Added Tax.
  • To clarify the VAT obligations for electricity generation and transmission suppliers regarding wholesale electricity.

Organizations

3
  • Ministry of Finance
  • Ministry of Justice
  • Tax Authority

Legal references

1
  • Value Added Tax Proclamation No. 1341/2024, Annex 2, Article 1(m)
Original sourcehttps://justice.gov.et/en/directives/a-directive-to-provide-the-amount-of-electrcity-and-water-consumption-for-domestic-use-exempt-from-value-added-tax-directive-no-1021-2024/
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