Eritrea VAT
Calculator 2026

Eritrea does not operate a traditional value-added tax (VAT) system. Instead, the country applies a sales tax at a rate of 5% on the sale of goods and certain services. This is one of the lowest indirect tax rates in Africa. Eritrea's tax system also includes a service tax of 5% applied to specified services including hotel accommodation, restaurant meals, and other hospitality services. The sales tax is a single-stage tax applied at the point of sale, unlike a multi-stage VAT which is collected at each stage of the supply chain. There is no input tax credit mechanism as with a VAT system. Certain essential goods are exempt from sales tax, including basic food staples, medical supplies, and educational materials. The Inland Revenue Department under the Ministry of Finance administers tax collection. Businesses engaged in taxable activities must register with the tax authority. Eritrea's relatively simple tax structure reflects the country's small and centrally managed economy. The government has periodically considered transitioning to a full VAT system, which would provide more efficient revenue collection and enable input tax credits, but no firm timeline has been established. Tax returns are filed periodically as prescribed by the tax authority.