Ethiopia

Ethiopia's stance on cryptocurrency is restrictive: all cryptocurrency transactions are explicitly banned by the National Bank of Ethiopia (NBE), which considers the Birr as the country's sole legal tender. This means holding or trading crypto is illegal in practice, though tax authorities classify cryptocurrencies as intangible assets, similar to stocks, for tax purposes. This creates a complex and often contradictory landscape. The Ministry of Revenues (MoR) is responsible for tax collection, operating under general tax laws such as the Income Tax Proclamation and VAT Proclamation. Despite the NBE's ban on transactions, the MoR has frameworks for taxing crypto-related activities if they occur. For individuals, gains from the sale of cryptocurrencies are subject to a flat 15% capital gains tax, with no distinction made between short-term and long-term holdings. Other crypto income, such as from mining, is taxed under progressive personal income tax brackets ranging from 0% to 35%. For businesses, the standard corporate tax rate is 30%, however, crypto mining businesses are taxed at a progressive rate of 5% to 30% depending on their size. A Value Added Tax (VAT) of 15% applies to cryptocurrencies used in barter transactions for goods or services. Although technically taxable as disposal events, both crypto-to-fiat and crypto-to-crypto exchanges are deemed illegal by the NBE. Regarding specific crypto activities, staking is unclear and likely banned due to the general prohibition on crypto transactions. Mining, however, is paradoxically treated as business income and taxed at 5% to 30%, with hardware and electricity costs potentially deductible, despite the overarching ban on crypto transactions. Decentralized Finance (DeFi) is also unclear and likely banned, as it involves transactions. Non-fungible tokens (NFTs) lack specific classification, if treated as assets, any gains from their sale could be subject to the 15% capital gains tax. In June 2024, the Council of Ministers approved a draft proclamation for a Central Bank Digital Currency (CBDC) framework, which is currently awaiting parliamentary approval. While this signals a potential shift in Ethiopia's digital currency strategy, it does not currently alter the existing ban on private cryptocurrencies.