Council of Ministers Approves Draft Amendment to the Federal Value Added Tax Regulation on 28 September 2026 E.C

In its 59th regular session, held on 18 Meskerem 2019 E.C., the Council of Ministers approved a draft regulation to amend the Federal Value Added Tax Regulation No. 570/2017 E.C. The Council’s decision records that it examined the draft amendment and determined that revising the existing VAT regulation was necessary in light of the country’s economic circumstances. Acting pursuant to the authority granted under the Value Added Tax Proclamation, the Council approved the draft for issuance. The draft is not yet the final promulgated regulation, and it remains subject to publication in the Federal Negarit Gazette in accordance with its effective date provision. If published in its current form, the amendment would introduce new registration triggers, restrict input tax recovery for certain cash payments, add targeted exemptions, and renumber substantial parts of the existing regulation. This is not a routine technical amendment. It is a regulatory development with direct consequences for registration, documentation, input tax claims, and sectoral exemptions.

The draft amendment seeks to modify the Federal Value Added Tax Regulation No. 570/2017 E.C. It adds a new registration provision, inserts a new provision on cash payments above the limit permitted under the Income Tax Proclamation, renumbers existing provisions, and expands the annex on exempt items. It also repeals the previous directive on VAT registration. The amendment therefore touches registration, input tax credits, refunds, exemptions, and the structural numbering of the regulation. The breadth of the changes means that taxpayers, tax advisers, and compliance officers should review their registration status, payment practices, and exemption claims if the draft is promulgated. The renumbering alone will require updates to contracts, internal policies, tax manuals, and correspondence that refer to specific provisions of the existing regulation. Please read the full details in the attachment.