Er Income Tax

---
name: er-income-tax
description: "Personal income tax for employees, landlords and sole traders under Income Tax Proclamation 62/1994 as amended, plus the 2% tax on Eritreans abroad, with the bands, exemptions, deadlines and penalties. Covers tax year 2026 in Eritrea from the gazette text. Use for questions such as: how much income tax on a salary in Eritrea, Eritrea rent tax, sole trader tax in Asmara, the 2% diaspora tax."
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/er-income-tax"
  jurisdiction: "ER"
  tax_year: "2026"
  last_updated: "2026-11-01"
---

# Eritrea Personal Income Tax

> **General reference only.** This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Tax year 2026. The newest income tax text we could open is Legal Notice 119/2012 and the newest sales tax text is Proclamation 117/2001. The Ministry of Justice list dated 2023 shows no later amendment to either. Nothing dated 2023 to 2026 could be opened, so check with the Inland Revenue Department that no later change exists.

## Who this applies to

Any person with income that has its origin in Eritrea, wherever paid (Proc 62/1994 arts 2(8), 5). Employment, rent, business and commercial farming income are computed separately (art 6). Sales tax is in [VAT or GST](er-vat-gst.md), companies in [Corporate income tax](er-corporate-income-tax.md).

## Rates, bands and thresholds

| Item | Figure | Conditions | Source |
|---|---|---|---|
| Employment band 1 | 2% | Monthly taxable income up to 200 Nakfa | Proc 116/2001 art 2, https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-116-2001/eritrean-proc-116-2001.pdf |
| Employment band 2 | 10% | 201 to 1,200 | same |
| Employment band 3 | 20% | 1,201 to 2,500 | same |
| Employment band 4 | 25% | 2,501 to 3,500 | same |
| Employment band 5 | 30% | Over 3,500 | same |
| Annual band 1 | 2% | Up to 2,400 Nakfa | Proc 116/2001 art 3 (rent), art 4 (business), https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-116-2001/eritrean-proc-116-2001.pdf |
| Annual band 2 | 10% | 2,401 to 14,400 | same |
| Annual band 3 | 20% | 14,401 to 30,000 | same |
| Annual band 4 | 25% | 30,001 to 42,000 | same |
| Annual band 5 | 30% | Over 42,000 | same |
| Commercial farming | 2%, 5%, 10%, 15%, 20% | Up to 1,000; to 10,000; to 20,000; to 35,000; above | Proc 62/1994 Schedule D, https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-62-1994/eritrean-proc-62-1994.pdf |
| Lottery or tombola, bingo, royalty | 10% of gross | Lottery or tombola over 500 and bingo over 400 only; below that exempt | Proc 62/1994 art 22(4), Schedule C-3, https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-62-1994/eritrean-proc-62-1994.pdf |
| Tax on Eritreans abroad | 2% of net income | Eritrean citizen living abroad with income from work, rent or business; paid monthly or annually | Proc 67/1995 art 2, UK translation, https://assets.publishing.service.gov.uk/media/5a7f32ff40f0b6230268e0c6/Eritrea-Appendix-I-II-III-V-Dec-2015.pdf |

## The base

Employment income covers salaries, wages, allowances, pension contributions, directors' fees and benefits in kind (arts 7, 9, 10). A payment covering more than a month is prorated over the months (art 8(1)).

Rent: gross includes cash and benefits in kind and furniture rent. Deduct non-income taxes on the house and one quarter of gross for repairs, maintenance and depreciation (art 18). Rent paid for over a year falls in the year of payment, with tax computed by prorating (Legal Notice 20/1995 art 14).

Business: deduct expenses wholly, necessarily and exclusively paid for the activity (art 24). Interest is deductible only on loans from approved credit institutions (art 25). Losses carry forward 5 years, earliest first (art 25A, added by Proc 116/2001).

Exempt (art 31): rural self-employed craft workers with no employees; casual day labourers, who become taxable if they work over 15 days in a month for one employer (Legal Notice 20/1995 art 7); pay from abroad for a foreign representative present under 183 days in a year, with the whole period taxable once that is passed (art 8 of the Notice); bank interest; dividends from Eritrean bodies; diplomats on reciprocity; income exempted by law, treaty or ministerial agreement.

## Deadlines and filing

Employer: declare, withhold and pay within one month from the end of the month (arts 13, 14). An employer who fails is personally liable. A person with two employers in a month, or a non-exempt embassy employee, declares and pays personally within one month of the next month (arts 11, 12).

Rent: within one month from the end of the fiscal year (art 19).

Business (art 26): 4 months after year end if balance sheet and profit and loss are required, 2 months if only a daily income and expense summary, 1 month if no books are required. Regulations category test (Legal Notice 119/2012): A is any body, or a person with gross income over 1,000,000 Nakfa. B is a person over 200,000 up to 1,000,000, a professional over 30,000, or an importer, exporter, wholesaler or distributor up to 1,000,000. C is a person up to 200,000, or a professional up to 30,000. Category A keeps a journal, pre-numbered invoices, stock cards, and cost and depreciation records; B a daily book and the same documents (Legal Notice 20/1995 art 16). Receipts must be issued without being asked (Legal Notice 81/2003).

Steps: fill the declaration, deliver it with payment to the Inland Revenue Department office, keep the receipt. An assessment can be appealed to the Tax Appeal Commission within 30 days with a cash deposit (art 55). A business pays the lesser of 75% of the tax assessed and 75% of the tax finally assessed for the last preceding year; on a first assessment it pays 30%; in all other cases 50%; further appeal to the High Court on law within 30 days (art 58).

## Penalties and interest

| Failure | Penalty | Source |
|---|---|---|
| Not declaring and paying on time | 20% of tax finally assessed | Proc 62/1994 art 63 |
| Late payment | 5% a month, up to 50% | art 64 |
| No acceptable books | 20% of tax finally assessed | art 65 |
| No receipt issued | 125% of the amount, at least 500 Nakfa, licence suspension possible above 8,000 | Proc 138/2003 art 2 |

Penalties count as tax and can be waived by the Department (art 66).

## Cross-border points

Income is taxed on Eritrean origin, not worldwide residence (art 2(8)). Income from services by persons abroad is under the 10% rate, withheld by the payer (art 26(2)(b)). For citizens abroad the 2% tax is collected by embassies and consular offices (Proc 67/1995 art 3).

## Two worked examples that recompute

**Case 1: salary of 5,000 Nakfa a month.** 4 + 100 + 260 + 250 + 450 = 1,064 Nakfa.

```oa-check
name: Monthly pay 5000 Nakfa
inputs:
  pay: 5000
steps:
  - band_1: min(pay, 200) * 0.02
  - band_2: (min(pay, 1200) - min(pay, 200)) * 0.10
  - band_3: (min(pay, 2500) - min(pay, 1200)) * 0.20
  - band_4: (min(pay, 3500) - min(pay, 2500)) * 0.25
  - band_5: (pay - min(pay, 3500)) * 0.30
  - tax: band_1 + band_2 + band_3 + band_4 + band_5
expected:
  tax: 1064.00
```

**Case 2, a decision: should a landlord take furnished rent of 60,000 a year as one payment for one year or two?** One year, income after the 25% allowance is 45,000.

```oa-check
name: Rent income 45000 after allowance
inputs:
  income: 45000
steps:
  - band_1: min(income, 2400) * 0.02
  - band_2: (min(income, 14400) - min(income, 2400)) * 0.10
  - band_3: (min(income, 30000) - min(income, 14400)) * 0.20
  - band_4: (min(income, 42000) - min(income, 30000)) * 0.25
  - band_5: (income - min(income, 42000)) * 0.30
  - tax: band_1 + band_2 + band_3 + band_4 + band_5
expected:
  tax: 8268.00
```

Tax is 8,268 Nakfa. If the same sum covers two years, it is prorated (Notice art 14), so each year is taxed on 22,500 and falls in lower bands.

## Ask the client first

- Citizen, and living in Eritrea or abroad?
- Income type: employment, rent, business, farming?
- One employer or several in the month?
- Annual gross income and occupation (sets the category)?
- Fiscal year used, if approved as different?

## Sources

| Source | URL | Read on |
|---|---|---|
| Income Tax Proclamation 62/1994, read in full (scan, OCR) | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-62-1994/eritrean-proc-62-1994.pdf | 2026-11-01 |
| Proclamation 116/2001, read in full | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-116-2001/eritrean-proc-116-2001.pdf | 2026-11-01 |
| Proclamation 138/2003, read in full | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-proc-138-2003/eritrean-proc-138-2003.pdf | 2026-11-01 |
| Income Tax Regulations, Legal Notice 20/1995, arts 7 to 20 and penalties read | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-notice-20-1995/eritrean-notice-20-1995.pdf | 2026-11-01 |
| Legal Notice 81/2003, read in full | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-notice-81-2003/eritrean-notice-81-2003.pdf | 2026-11-01 |
| Legal Notice 119/2012, read in full | https://tile.loc.gov/storage-services/service/ll/lleritrea/eritrean-notice-119-2012/eritrean-notice-119-2012.pdf | 2026-11-01 |
| UK Government translation of Proclamations 17/1991 and 67/1995, annexes 1 and 2 read | https://assets.publishing.service.gov.uk/media/5a7f32ff40f0b6230268e0c6/Eritrea-Appendix-I-II-III-V-Dec-2015.pdf | 2026-11-01 |
| Ministry of Justice, thematic list of domestic legislations, section 16 read | https://mojeritrea.net/wp-content/uploads/2023/05/Thematic-Categorization-of-Domestic-Legislations-of-the-State-of-Eritrea.pdf | 2026-11-01 |

Scans were read by OCR and the key rate pages checked by eye. The Library of Congress item pages show a security check, which we did not pass; the PDFs came straight from its public file host. Scanned gazettes use "Birr" in 1994 and "Nakfa" in later amendments.

Not yet confirmed: Old guide items dropped as unsupported: an 800 Nakfa tax-free band and bands of 5%, 10%, 15%, 20% (the law has 2% to 30% as above), and the citation "Proclamation 24/2011", which is on no official list. Whether the 2% rehabilitation tax on domestic salaries survives Proc 66/1994 (Tigrinya, partly repeals Proc 17/1991) was not read. Proc 67/1995 was read only in UK translation, and its base was not confirmed as worldwide income. Fiscal year dates; a day-count residence test (none found in the law); whether an annual reconciliation exists (none found). No published 2026 amendment, circular or form could be opened; the Ministry of Finance site did not connect. No official portal or online filing page could be opened either.

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-11-01. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `er-income-tax` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/er-income-tax. If neither is available, confirm every figure against the official source pages cited above before relying on it.