Eritrea is one of only two countries in the world (with the United States) that taxes on the basis of citizenship rather than residence alone. Eritrea operates a self-assessment system for corporate tax under the Income Tax Proclamation No. 103/1994, with the domestic tax authority conducting post-filing review.
The Eritrean tax year is the calendar year.
Reported at 30% (TaxAtlas) to 33% (other secondary sources) - confirm current rate directly given limited independent verification available for this jurisdiction.
Progressive, 2% to 30-33% depending on source; a separate 2% 'diaspora tax' applies to Eritrean nationals living abroad on worldwide income.
No formal VAT; a sales tax applies at approximately 4% on goods and 10% on services.
An individual is resident if they have their habitual abode in Eritrea, generally applied in practice as presence for more than 183 days in a 12-month period. Non-resident foreign workers are taxed only on Eritrea-source income.
Distinctive feature - the diaspora tax: Eritrean nationals living abroad are subject to a 2% "rehabilitation and recovery" tax on worldwide income. This is a citizenship-linked obligation distinct from ordinary residency-based taxation and applies regardless of where the citizen actually lives or whether they meet Eritrea's own residency test.
A non-Eritrean entity has an Eritrea permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Eritrea on the entity's behalf, assessed under Eritrean domestic law.
No CFC-style attribution provision was found in Eritrea's Income Tax Proclamation (No. 103/1994, with corporate provisions restated under a later 2011 update). Eritrea's more distinctive anti-erosion mechanism runs in the opposite direction from a typical CFC regime: Proclamation No. 67/1995, "A Proclamation to Provide for the Payment of Income Tax by the Eritrean Citizens Living Abroad," imposes a rare citizenship-based diaspora tax (commonly cited at 2% of income) directly on Eritrean citizens residing outside Eritrea, regardless of where they live or whether they hold any Eritrean company - this is a well-documented and controversial feature of Eritrean tax law, but it is a personal citizenship-based levy, not a corporate CFC attribution mechanism, and does not depend on ownership of a foreign entity.
No statutory thin capitalization ratio is identified in available sources for Eritrea specifically.
Eritrea does not use an elective check-the-box classification system. Eritrea does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Eritrea does not provide a broad participation exemption for foreign dividends in the general European sense.
Eritrea's foreign tax credit position is a genuinely narrow and technical area given the country's limited treaty network; confirm current provisions directly for any specific cross-border position, particularly given Eritrea's unusual citizenship-based diaspora tax (see Tax System above) which interacts with foreign tax paid in the country of actual residence.
Eritrea has very limited treaty coverage. A comprehensive named-partner list is not available in accessible current sources.