Taxes in Somalia: what people and businesses pay

The short version

Somalia passed a new Income Tax Act, which came into force on 11 May 2025. Its regulations were signed on 15 May 2025. It replaced the Direct Taxation Law of 1966 (Ministry of Finance, Income Tax Manual, November 2025). The figures below come from the Finance Ministry's own guide to the law. The manual says that where it differs from the Act and the regulations, the law prevails.

Tax on salaries

Your employer takes the tax from your pay each month and must pay it to the Inland Revenue Department by the 15th of the next month. No costs can be deducted from a salary (Income Tax Manual).

• Non-residents pay a flat 18 percent.
• Residents under 18 years old pay a flat 20 percent.

Worked example, using the bands above: on a salary of $1,000 a month, the first $100 is tax-free, the next $400 is taxed at 6 percent ($24) and the last $500 at 12 percent ($60). The tax is $84 a month.

You count as a resident if you have a permanent home in Somalia, are a citizen without a permanent home abroad, or are in Somalia for 183 days or more in 12 months (Income Tax Manual).

Tax on a business you run yourself

Individuals pay tax on their profit, not their sales, using yearly bands: 0 percent up to $1,200, 6 percent to $6,000, 12 percent to $18,000 and 18 percent above. Every business must register on form TR1, pay in four instalments (by 31 March, 30 June, 30 September and 31 December) and file a return by 31 March of the next year. Even a business making a loss pays a minimum tax on 5 percent of its income (Income Tax Manual).

Tax on companies

For resident companies the guide lists (Income Tax Manual):

• sales under $10,000: a fixed $150;
• sales of $10,000 to $50,000: 1.5 percent;
• sales over $50,000: 15 percent of taxable profit.

Non-resident companies pay a flat 18 percent. Partnerships do not pay tax themselves; each partner pays on their share.

Taxes taken at the point of payment

Source: Income Tax Manual. The first $100,000 of gain on selling your own main home is not taxed.

The tax office's ETAS system also takes 5 percent from businesses that receive payments into merchant mobile money accounts (Revenue Directorate, Annual Revenue Performance 2025). See Mobile money in Somalia.

What each tax raised

Federal domestic revenue, in millions of US dollars (Revenue Directorate, Annual Revenue Performance 2025, Table 1.1):

All domestic revenue was about 3.1 percent of GDP in 2025; income tax alone was 0.3 percent (same source). Customs fell in 2025, which the report puts down to weaker trade and the Red Sea disruption. Sales tax grew 31 percent, helped by digital collection in Mogadishu markets and taxes on airline tickets, phone services and hotels. Its listed sources in 2025 included a $3.3 million "signature bonus" and $3.98 million of urban road user taxes (Revenue Directorate). In 2025 the office registered 1,700 new medium and large taxpayers and 31,000 rented properties (same source). Implementation of the new income tax law was delayed into 2026. Running the revenue office cost about $437,000 in salaries and bonuses in 2025, plus about $500,000 for computer systems and operations (Revenue Directorate). For the full budget, see Somalia's federal budget and taxes.

Somaliland

Somaliland sets its own taxes. Its Finance Ministry lists a 6 percent tax on salaries, a 5 percent goods and services tax, and 12.5 percent withholding on payments to non-residents (Somaliland Ministry of Finance Development, tax types). Member states such as Puntland also run their own taxes. See How the federal member states raise and spend money.

Sources disagree

• The 2025 revenue report gives income tax as $44.8 million in its table but "roughly $38 million" in its text (Revenue Directorate). In the same table, the separate taxes add up to $14 million to $17 million more each year than the "tax revenue" total.
• The Income Tax Manual's table gives 15 percent on gains from selling property, but one of its own worked examples uses 10 percent (Income Tax Manual).
• In the Income Tax Manual's own first example, a shop worker earning $1,000 a month has $120 withheld. Using the manual's monthly bands, the tax on $1,000 is $84 (Income Tax Manual).
• Somaliland's tax page gives rental income tax as 12.3 percent, but its own example uses 10 percent (Somaliland Ministry of Finance Development).

Data file

Federal revenue by type of tax for 2022 to 2025, in US dollars, is in federal-domestic-revenue-by-tax-2022-2025.csv. Source: Revenue Directorate, Annual Revenue Performance 2025, Table 1.1.