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Trade & Investment

Discover the many opportunities for your business in Ethiopia
 

With a stable and democratic government, improving infrastructure and one of the fastest growing economies in the world, Ethiopia is fast-becoming a prime investment destination for businesses across the globe. Strategically located at the cross-roads between Africa, the Middle East and Asia, Ethiopia is the second most populous country in Africa and offers untapped resources, a vast domestic market and a large, young workforce. Recent government reforms and incentives are unlocking investment and business opportunities in a variety of export-oriented sectors including manufacturing, agriculture and agro-processing and industrial zones development, amongst others. If you are interested in exploring investment opportunities in Ethiopia, get in touch with us today by booking an appointment below.

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Incentives

Ethiopia offers investors a comprehensive set of fiscal and non-fiscal incentives to encourage investment in strategic sectors, including:
 

Customs duty payment exemption on capital goods and construction materials, and on spare parts whose value is not greater than 15% of the imported capital goods’ total value Income tax exemption from two to seven years for manufacturing or agro-processing and agricultural investments Carry forward of losses for half of the tax holiday period Several export incentives, including the Duty Draw-Back, Voucher, Bonded Factory and Manufacturing Warehouse, and Export Credit Guarantee schemes Government guarantees the remittance of profit, dividends, principals and interest payments on external loans, and The provision of land at competitive lease prices

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Licensing and Registering a Business

Ethiopia’s new Business Licensing and Registration process is straightforward and can be completed in a few simple steps:

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Collect information:

from Information and Investment Promotion Directorate at Ministry of Trade

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Collect application form:

from Ethiopia Investment Commission Information Desk

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Submit application form:

with current passport and visa to Licensing and Registration Department

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Collect Letter to open a Bank Account:

submit company documents to National Bank of Ethiopia

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Open a Bank Account:

deposit minimum capital requirement at National Bank of Ethiopia

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Collect Bank Letter:

confirming opening of bank account and depositing of minimum capital

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Obtain an Investment Permit Certificate:

from Licensing and Registration Department

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Taxation

The Ethiopian tax system comprises direct and indirect taxes. Direct taxes include personal income tax, rental tax, withholding tax and corporation tax, among others. The main types of indirect taxes are value added tax (VAT), customs duty, excise and turnover taxes.

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Tax rate

  
Corporate income tax30%
Turn over tax2% and 10%
Excise tax10% up to 100%
Customs duties0% up to 35%
Income tax from employment0% up to 35%
Withholding tax2%
VAT15%
Export tax0% (with exception of hides and skins -150%)
Royalty tax5%
Dividend tax10%

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business income tax

Business income tax is charged on all income of an entity having a permanent establishment in Ethiopia.

Income tax applies to residents with respect to their worldwide income, and non-residents with respect to their Ethiopian-sourced income.

In the case of a corporate person, the latter is considered a resident when any of the three conditions below are present:

  • If the principal office is located in Ethiopia;
  • If the effective management of the company is in Ethiopia; or
  • If the company is registered by the Ministry of Trade and Industry
Employment monthly income (Birr)Tax rate (%)
The first 150Exempt
151 – 65010
651 – 1,40015
1,401 – 2,35020
2,351 – 3,55025
3,551 – 5,00030
Over 5,00035

Both foreigners working in Ethiopia and Ethiopian citizens are subject to personal income tax. Income tax is levied on any income derived from employment, including any payments or gains in cash or in kind.

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Table business income tax

Taxable business income/BirrTax Rate (%)
0 – 1,800Exempt
1,801 – 7,80010
7,801 – 16,80015
16,801 – 28,20020
28,201 – 42,60025
42,601 – 60,00030
Over 60,00035

For further information on taxation in Ethiopia, please visit Investment Commission Website.

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Investor Resources

Ethiopia’s new Business Licensing and Registration process is straightforward and can be completed in a few simple steps: