Incentives, Taxation, and Other Procedures

 

Incentives

Ethiopia offers a comprehensive set of fiscal and non-fiscal incentives to encourage investment into priority areas, including:

  • Customs duty exemptions of up to 100% on imports of capital goods for eligible areas of investment;
  • Income tax exemptions for a period ranging between 1 and 9 years, depending on the specific activity and the location of the investor;
  • Loss carry forward for business that suffer losses during the income tax exemption period for half of the tax exemption period;
  • With the exception of a few products, no export tax is levied on Ethiopian export products;
  • Duty Drawback Scheme, Voucher Scheme and Bonded Factory and Manufacturing Warehouse Schemes
  • Various non-fiscal incentives for exporters
  • Guaranteed remittance of capital for foreign investors

For further details on incentives available in Ethiopia, download the following document (PDF).

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 VAT, customs duty, excise and turn over taxes. Main taxes are summarized in the table below.

Main Taxes in Ethiopia:

  Type of Taxes Rate
1 Corporate Income Tax 30%
2 Turn Over Tax 2% and 10%
3 Excise Tax 10% up to 100%
4 Customs Duties 0% up to 35%
5 Income Tax from Employment 0% up to 35%
6 Withholding Tax 2%
7 Value Added Tax (VAT) 15%
8 Export Tax Nil (with exception of hides and skins-150%)
9 Royalty Tax 5%
10 Dividend Tax 10%

Land Allocation

All land in Ethiopia is considered public property. Individuals, companies and other organizations can, however, acquire the right to use land. There are two broad classifications of land for rent or lease purposes: rural land, mainly used for agricultural purposes, and urban land, mainly used for industrial purposes or other activities. Land lease or rental rates differ from location to location. Please download the Factor Cost publication for further details.