Business Startup in Ethiopia: Information and

Frequently Asked Questions

Written by Administrator
Published on 27 March 2009
Category: Starting A Business
What do you need to start a business in Ethiopia? Let's assume you have garnered enough
capital to start some kind of business in Ethiopia and you do not know where to start. We
believe that any potential businessperson who wants to start business in Ethiopia should be
well informed of the existing regulations, procedures, incentives, potential partners. This
way errors and potential losses can be minimized.

2Merkato can serve as a launch pad to start a business in Ethiopia because by attempts to
answer frequently asked questions to start a business in Ethiopia.

 Do I need to register and obtain license to do business in Ethiopia?

 Do I need to have a Trade Name and Trade Mark?
 What are the main business forms/ types in Ethiopia?
 What do I need to invest in Ethiopia, to register as an investor in Ethiopia?
 Who can be regarded as a domestic investor, a foreign investor?
 Is there an incentive for investors in Ethiopia?
 As a businessperson, do I need to be registered as a taxpayer, what are the tax regulations
andprocedures in Ethiopia?
 How do I file and pay my tax in Ethiopia?
 Who can be my potential business partners in Ethiopia?
 Can I engage in import/ export business in Ethiopia?
 How can I get information on tenders/ bids in Ethiopia? How can I participate in a tender/bid
in Ethiopia?
 Can I engage in import/ export business in Ethiopia?
 What are the existing regulations and procedures in import, export, shipping,
and customs in Ethiopia?

Do I need to register and obtain license to do business in Ethiopia?

Yes. It is prohibited to engage in any commercial activity unless registered in a Commercial
register; and according to the Council of Ministers Regulation No.14/1997 or 14/1989 on
Addis Ababa Dire Dawa Administration Commercial Registration and Licensing, any person
engaged in a commercial activity, the capital of which is more than Birr 5,000, is to obtain a
business license by applying to the appropriate authority. Capital includes fixed assets and
working capital put at the disposal of the business, but excludes the business premises
unless the businessperson chooses otherwise.
For a detailed answer please check our business licensing and registration page.
Do I need to have a Trade Name and Trade Mark?
Not necessarily. Although a trade name is one of the entries of a principal registration as
provided for under Article 105 of the Commercial Code, principal registration shall be made
without waiting for the registration of a trade name under Proclamation No. 67/1997. If
there is no name registered, the business is referred by name of the owner in Sole
Proprietorship business form or the name of the Private Limited Company or the Share
Company.

For a detailed answer please check our business licensing and registration page and Trade
Mark page.

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What are the main business forms/ types in Ethiopia?
Some of the main types and more common business forms/ types in Ethiopia:

1. A sole business person: the business is owned by one person. Some of the advantages
are: it's easier to start and close.
2. Private Limited Company: Can be formed by a minimum of 2 and a maximum of 50
persons. It is advantageous for high profit making businesses and it can be managed in
a structured way, but it's difficult to close the business.
3. Share Company: Can be formed by a minimum of 5 persons. A minimum capital of Br.
50,000 is needed to set up a Share Company. The minimum price a single share can
have is Br. 10.

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Who can be regarded as a domestic investor, a foreign investor?
According to investment Proclamation, a Domestic investor is an Ethiopian or a foreign
national permanently residing in Ethiopia having made an investment, and includes the
Government, public enterprises as well as a foreign national, Ethiopian by birth and
preferring treatment as a domestic investor. A Foreign investor is a foreigner or an
enterprise owned by foreign nationals, having invested foreign capital in Ethiopia, and
includes an Ethiopian permanently residing abroad and preferring treatment as a foreign
investor. Currently issuane of domestic status for foreign investors in on hold.
Is there an incentive for investors in Ethiopia?

Yes. There are two: exemption from Customs duty and exemption from income tax. For a
detailed answer, please check the investment incentives page.
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As a businessperson (or entity), do I need to be registered as a taxpayer, what are
the tax regulations and procedures in Ethiopia?
Yes, every business person or entity should be registered to pay tax and must obtain a
taxpayer's identification number(TIN). However, each person or entity will have only one
TIN. For a detailed analysis check our tax page.

Who can be my potential business partners in Ethiopia?

We have a list of more than 5000 businesses in Ethiopia assembled and sorted in
categories, sub categories etc. Please check our business directory.
How to find information on tenders/bids in Ethiopia? How to participate in a
tender/ bid in Ethiopia?
You can find information on tenders/ bids in Ethiopia on our tender page. The guidelines to
participate in a tender/bid in Ethiopia are found here.

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Can I engage in import/ export business in Ethiopia?
Yes and no. That depends on the type of import/ export business you want to engage in and
whether you're a domestic investor or a foreign one. Please check
our import, export and investment pages.
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