Taxation of Incomes from illegal Sources in Ethiopia

In some countries courts permit taxation of incomes from illegal activities, this issue is a well established tax principle in countries like USA, Canada, UK, Australia, New Zealand and Ireland

The Ethiopian income tax law defines income as 'every sort of economic benefit including nonrecurring           gains in cash or in kind, from whatever source derived and in whatever form paid credited or received'. And according to article 4 of the proclamation every person having an income as defined above is required to pay income to the government.

According to the above definition of income for a particular thing in order to be considered as an income the source and manner of payment is irrelevant ,rather the law gives special emphasis only to one element that is the economic benefit from the act. Therefore in as long as the person gets an economic benefit hence anything with economic benefit for the recipient will be considered as an income. Hence subject to the payment of tax.

Then if we follow the above line of interpretation then according to Ethiopian law incomes from illegal sources shall be subject to the payment of the tax.