Income Tax Incentives

 

Ethiopian Investment Incentive Inventory
Incentive Name Brief Description Legal Reference Name Law Section/Article Sectors

Eligebility Criteria

(Description)

Awarding Authority Implementing Authority
Business Income Tax exemption in the manufacturing sector (up to six years) Business Income Tax exemption with differentiation based on sub-sector and location of investment (exemption reduced by up to two years if investment is in Addis Ababa and Special Zone of Oromia Surrounding Addis Ababa). Exemption up to six years for: manufacturing food, textile, leather, chemical, metal, machinery and vehicles. Less than six years for other industries.   Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended)  Article 5 (1) Manufacturing sectors listed under the Investment Regulation

1) Eligible sector/Sub-sector of investment

2) Holding of investment permit...................................   

3) Holding of business license

4) Investment to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the Investment Proclamation

Ethiopian Investment Commission, Regional Investment Offices (for domestic investors) Ethiopian Revenue and Customs Authority, Regional Revenue Offices  
Business Income Tax exemption in the agriculture sector (up to ten years) Business Income Tax with differentiation based on sub-sector and location of investment (exemption reduced by up to three years if investment is in Addis Ababa and Special Zone of Oromia surrounding Addis Ababa). Up to six years for crop production; up to four years for animal production and mixed farming; up to nine years for investment in forestry; and  up to ten years for horticulture development in special cluster zones identified by the government with atleast 80% export.

1) Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended)

2) Investment Board Decision, 15 June 2017

Article 5 (1) Agricultural sectors listed under the Investment Regulation: Crop production, Animal production, Mixed crop and animal farming, and Forestry

1) Eligible sector/Sub-sector of investment

2) Holding of investment permit

3) Holding of business license

4) Investment to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the Investment Proclamation

Ethiopian Investment Commission, Regional Investment Offices (for domestic investors) Ethiopian Revenue and Customs Authority, Regional Revenue Offices
Business Income Tax exemption in Information and Communication Technology (ICT) development (up to  five years) Business Income Tax exemption reduced by one year if investment is in Addis Ababa and Special Zone of Oromia  surrounding Addis Ababa Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended) Article 5 (1) ICT Development

1) Eligible sector/Sub-sector of investment

2) Holding of investment permit

3) Holding of business license

4) Investment to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the Investment Proclamation

Ethiopian Investment Commission, Regional Investment Offices (for domestic investor) Ethiopian Revenue and Customs Authority, Regional Revenue Offices
Business Income Tax exemption in Electricity generation, transmission and distribution (up to five years) Business Income Tax exemption reduced by one year if investment is in Addis Ababa and Special Zone of Oromia surrounding Addis Ababa Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended) Article 5 (1) Electricity generation, transmission and distribution (transimission and distribution is reserved for government only)

1) Eligible sector/sub-sector of investment

2) Holding of investment permit

3) Holding of business license

4) Investment to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the Investment Proclamation

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority
Business Income Tax exemption for hotel and tour service providers in non-traditional tourism destinations (up to five years) The list of non-traditional tourism destinations is defined through Investment Board Decision including: Bale and Simien Mountains; Ertale, Gerehalta mountains; rift valley lakes (Abaya, Shala, Chamo and Abiyata); and Wanchi mountain (lake and afro-alpine).  Investment Board Decision, 7 January 2016  N/A Hotel and Tour operations in non-traditional tourist destinations

1) Eligible sector/sub-sector of investment

2) Minimum investment capital of USD 1 million

3) Holding of Investment permit

4) Holding of business license

5) Investment to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the investment proclamation

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority
Business Income Tax exemption for industrial parks development /developers (ten-fifteen years) Ten years if the park is in Addis Ababa and Special Zone of Oromia Surrounding Addis Ababa; fifteen years for industrial parks in other areas Investment Incentives and Investment Areas Reserved for Domestic Investors Amendment Regulation No. 312/2014  Article 2 Investment in the development of industrial parks 

1) Holding of investment permit for industrial park development

2) Holding of business license  

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority
Export-linked business income tax exemption (additional two years for at least 60% export or supply to exporter) Available for exporters Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended)  Article 7 Manufacturing, Agriculture, ICT Development, Electricity generation, transmission and distribution (investment sectors listed under the Investment Regulation)

1) Eligible sector/Sub-sector of investment

2) Holding of investment permit

3) Holding of business license

4) Direct export or supply to an exporter of at least 60% of own products or services

Ethiopian Investment Commission, Regional Investment Offices  (for domestic investors) Ethiopian Revenue and Customs Authority, Regional Revenue Offices
Business Income Tax exemption in industrial parks (additional two-four years for industrial park enterprises with 100% export plan and achive at least 80% export) Differentiation based on location of industrial park (two years if the park is in Addis Ababa and Special Zone of Oromia Surrounding Addis Ababa; four years for parks in other areas) Investment Incentives and Investment Areas Reserved for Domestic Investors Amendment Regulation No. 312/2014 Article 2 (3) Manufacturing

1) Manufacturing company investing within an Industrial Park

2) Holding of investment permit

3) Holding of business license

4) Direct export or supply as production input to a producer exporter of at least 80% of own products

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority
Business Income Tax exemption for pharmaceutical sector in industrial parks

1) Investment in Active Pharmaceutical Ingredients: 12-14 years (eight-ten years base depending on location of park + two years for 30% export + two years for 60 % export)

2) Investment in Final medicine/Formulation 10-12 years (six-eight years base depending on location of park +  two years for 30% export + two years for 60 % export)

3) Investment in  Pharmaceutical Packaging 7-8 years (three-four years base depending on location of park + two years for 30% export + two years for 60 % export)

Investment Board Decision, 15 June 2017  N/A  Pharmaceutical

1) Eligible sector/Sub-sector of investment

2) Holding of investment permit

3) Holding of business license

4) Investment in an industrial park to establish a new enterprise (Greenfield) or for expansion or upgrading of an existing enterprise as defined under the Investment Proclamation

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority
Loss carry forward for up to five years Loss incurred during the income tax exemption period can be carried forward for half of the exemption period after expiry, the maximum limit being five income tax period Investment Incentives and Investment Areas Reserved for Domestic Investors Regulation No. 270/2012 (as amended)  Article 11 Manufacturing, Agriculture, ICT Development, Electricity generation, transmission and distribution (investment sectors listed under the Investment Regulation)

1) Eligibility  for Business Income Tax exemption

2) Submission of annual financial statements

Ethiopian Revenue and Customs Authority, Regional Revenue Offices (for domestic investors) Ethiopian Revenue and Customs Authority, Regional Revenue Offices 
Personal Income Tax (PIT) exemption for expatriate employees Up to five years for expatriate employees of sourcing companies located in industrial parks Investment Board Decision, June 2017  N/A Manufacturing in industrial parks

1) The employer company has to be in its first five years of operation

2) The expertise offered by the expatriate  has to be unavailable in the local market

Ethiopian Investment Commission Ethiopian Revenue and Customs Authority