Incentives for investors

1. What are the incentives available for investors?

A) Income Tax

  • Any Investor who invests to establish a new enterprise is entitled to an income tax exemption depending on factors like investment sub-sectors, the export quantity and investment are.
  • Any Investor who invests in eligible areas of the Country (i.e. Gambella, Benishangul / Gumz, Guji and Borena Zones and etc.) as specified in Regulation No 270/2012 is entitled for income tax deduction of 30% for three consecutive years after the general income tax deduction expired,
  • An investor who expands or upgrade his enterprise and increase in volume at least by 50% of its attainable production or service rendering capacity or a new production or service rendering line at least by 100% of an existing enterprise is entitled to the income tax exemption for additional income generated by the expansion or upgrading,
  • An investor who invest within industrial parks shall be entitled to an exemption of 2 years if the investment is made in Addis Ababa or special zone of Oromia, or to 4 years’ income exemption period if the investment is made in industrial parks located in other areas,
  • An investor who exports or supplies to an exporter as production or service input, at least 60% of his products or services shall be eligible for additional two years’ income tax exemption, if the investment is made in Addis Ababa or special zone of Oromia surrounding Addis Ababa; 4 years’ income tax deduction if the investment is made in other areas,
  • An investor who manufacture with industrial parks, and export or supply to exporter his/her produces is eligible for two years of income exemption if the investment is made in Addis Ababa or special zone of Oromia surrounding Addis Ababa and 4 years in other areas.

B) Custom Duty Exemption

  • An investor shall be entitled to import duty free capital goods and construction materials for the establishment of a new enterprise or expansion or upgrading of an existing enterprise,
    • An investor who invest in manufacturing or agriculture sector who has invested at least 200,000 USD or equivalent Ethiopian birr at a prevailing rate of exchange and has created permanent employment opportunity for at least 50 Ethiopian nationals shall be entitled to import, duty free capital goods at any time,
    • An investor who invest in another area of investment and who has invested at least 200,000 USD or equivalent Ethiopian birr at a prevailing rate of exchange and has created permanent employment opportunity for at least 50 Ethiopian nationals shall be entitled to import, duty free capital goods up to 5 years,

C) Loss Carry Forward

An investor who has incurred loss within the period of income tax exemption shall be allowed to carry forward such loss for half the income tax exemption period after the expiry of such period.

D) Export Incentives

  • With the exception of hide and skins (export tax rate of 150%), no export tax is levied on export,
  • An investor who exports or supplies to an exporter as production or service input, at least 60% of his products or services shall be eligible for two years’ income tax deduction, if the investment is made in Addis Ababa or special zone of Oromia surrounding Addis Ababa; 4 years’ income tax deduction if the investment is made in other areas.
  • An investor who manufacture with an industrial park, and export or supply to exporter his/her produces is eligible for two years of income exemption if the investment is made in Addis Ababa or special zone of Oromia surrounding Addis Ababa and 4 years in other areas.
  • Duty free importation of vehicles based on vehicles directive,