POLICY AND LEGAL FRAMEWORKS OF DOUBLE TAXATION AVOIDANCE TREATIES IN ETHIOPIA: FLAWS IN THE MAKING

Abstract

Countries enter into bilateral agreements for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital. Such agreements are commonly referred to as Double Taxation Treaties (DTTs). The history of double taxation treaties in Ethiopia can be traced back to 1971 when Ethiopia entered into a double taxation avoidance treaty with Italy for income from commercial air transport. Since then, Ethiopia has entered into various tax treaties with many developed, developing and even least developed countries (LDCs). The present article is devoted to analyse the policy and legal framework of double taxation avoidance treaties to which Ethiopia is a party. It employs a qualitative research methodology in identifying the policy and legal framework of Ethiopia’s double taxation treaties. The article argues that the existing general policy and legal framework are limited in scope and is not well organized as is the case with the Ethiopian tax system in general. Hence, the need to have a comprehensive, stand-alone and well-organized policy and legal framework for double taxation issues.