Ethiopian Investment Incentive Inventory

Incentive Name Brief Description Legal Law Sectors Eligebility Criteria Awarding Implementing
Reference Section/Article Authority Authority
(Description)
Name
Business Income Tax Business Income Tax exemption with differentiation based on sub-sector Investment Article 5 (1) Manufacturing 1) Eligible sector/Sub-sector Ethiopian Ethiopian
exemption in the and location of investment (exemption reduced by up to two years if Incentives and sectors listed under of investment Investment Revenue and
manufacturing sector (up investment is in Addis Ababa and Special Zone of Oromia Surrounding Investment Areas the Investment Commission, Customs
to six years) Addis Ababa). Exemption up to six years for: manufacturing food, textile, Reserved for Regulation 2) Holding of investment Regional Authority,
leather, chemical, metal, machinery and vehicles. Less than six years for Domestic Investors permit................................... Investment Regional
other industries. Regulation No. 3) Holding of business Offices (for Revenue Offices
270/2012 (as license domestic
amended) investors)
4) Investment to establish a
new enterprise (Greenfield)
or for expansion or upgrading
of an existing enterprise as
defined under the Investment
Proclamation

Business Income Tax Business Income Tax with differentiation based on sub-sector and location 1) Investment Article 5 (1) Agricultural sectors 1) Eligible sector/Sub-sector Ethiopian Ethiopian
exemption in the of investment (exemption reduced by up to three years if investment is in Incentives and listed under the of investment Investment Revenue and
agriculture sector (up to Addis Ababa and Special Zone of Oromia surrounding Addis Ababa). Up to Investment Areas Investment Commission, Customs
ten years) six years for crop production; up to four years for animal production and Reserved for Regulation: Crop 2) Holding of investment Regional Authority,
mixed farming; up to nine years for investment in forestry; and up to ten Domestic Investors production, Animal permit Investment Regional
years for horticulture development in special cluster zones identified by the Regulation No. production, Mixed 3) Holding of business Offices (for Revenue Offices
government with atleast 80% export. 270/2012 (as crop and animal license domestic
amended) farming, and Forestry investors)
4) Investment to establish a
2) Investment new enterprise (Greenfield)
Board Decision, 15 or for expansion or upgrading
June 2017 of an existing enterprise as
defined under the Investment
Proclamation

Business Income Tax Business Income Tax exemption reduced by one year if investment is in Investment Article 5 (1) ICT Development 1) Eligible sector/Sub-sector Ethiopian Ethiopian
exemption in Information Addis Ababa and Special Zone of Oromia surrounding Addis Ababa Incentives and of investment Investment Revenue and
and Communication Investment Areas Commission, Customs
Technology (ICT) Reserved for 2) Holding of investment Regional Authority,
development (up to five Domestic Investors permit Investment Regional
years) Regulation No. 3) Holding of business Offices (for Revenue Offices
270/2012 (as license domestic
amended) investor)
4) Investment to establish a
new enterprise (Greenfield)
or for expansion or upgrading
of an existing enterprise as
defined under the Investment
Proclamation

Business Income Tax Business Income Tax exemption reduced by one year if investment is in Investment Article 5 (1) Electricity generation, 1) Eligible sector/sub-sector Ethiopian Ethiopian
exemption in Electricity Addis Ababa and Special Zone of Oromia surrounding Addis Ababa Incentives and transmission and of investment Investment Revenue and
generation, transmission Investment Areas distribution Commission Customs
and distribution (up to five Reserved for (transimission and 2) Holding of investment Authority
years) Domestic Investors distribution is permit
Regulation No. reserved for 3) Holding of business
270/2012 (as government only) license
amended)
4) Investment to establish a
new enterprise (Greenfield)
or for expansion or upgrading
of an existing enterprise as
defined under the Investment
Proclamation

Business Income Tax The list of non-traditional tourism destinations is defined through Investment Board N/A Hotel and Tour 1) Eligible sector/sub-sector Ethiopian Ethiopian
exemption for hotel and Investment Board Decision including: Bale and Simien Mountains; Ertale, Decision, 7 operations in non- of investment Investment Revenue and
tour service providers in Gerehalta mountains; rift valley lakes (Abaya, Shala, Chamo and Abiyata); January 2016 traditional tourist Commission Customs
non-traditional tourism destinations 2) Minimum investment Authority
and Wanchi mountain (lake and afro-alpine).
destinations (up to five capital of USD 1 million
years) 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

Business Income Tax Ten years if the park is in Addis Ababa and Special Zone of Oromia Investment Article 2 Investment in the 1) Holding of investment Ethiopian Ethiopian
exemption for industrial Surrounding Addis Ababa; fifteen years for industrial parks in other areas Incentives and development of permit for industrial park Investment Revenue and
parks development Investment Areas industrial parks development Commission Customs
/developers (ten-fifteen Reserved for Authority
years) Domestic Investors 2) Holding of business
Amendment license
Regulation No.
312/2014
 Incentive Name Brief Description Legal Law Sectors Eligebility Criteria Awarding Implementing
Reference Section/Article Authority Authority
(Description)
Name
Export-linked business Available for exporters Investment Article 7 Manufacturing, 1) Eligible sector/Sub-sector Ethiopian Ethiopian
income tax exemption Incentives and Agriculture, ICT of investment Investment Revenue and
(additional two years for Investment Areas Development, Commission, Customs
at least 60% export or Reserved for Electricity generation, 2) Holding of investment Regional Authority,
supply to exporter) Domestic Investors transmission and permit Investment Regional
Regulation No. distribution 3) Holding of business Offices (for Revenue Offices
270/2012 (as (investment sectors license domestic
amended) listed under the investors)
Investment 4) Direct export or supply to
Regulation) an exporter of at least 60% of
own products or services

Business Income Tax Differentiation based on location of industrial park (two years if the park is Investment Article 2 (3) Manufacturing 1) Manufacturing company Ethiopian Ethiopian
exemption in industrial in Addis Ababa and Special Zone of Oromia Surrounding Addis Ababa; Incentives and investing within an Industrial Investment Revenue and
parks (additional two-four four years for parks in other areas) Investment Areas Park Commission Customs
years for industrial park Reserved for Authority
enterprises with 100% Domestic Investors 2) Holding of investment
export plan and achive at Amendment permit
least 80% export) Regulation No. 3) Holding of business
312/2014 license

4) Direct export or supply as

production input to a
producer exporter of at least
80% of own products

Business Income Tax 1) Investment in Active Pharmaceutical Ingredients: 12-14 years (eight-ten Investment Board N/A Pharmaceutical 1) Eligible sector/Sub-sector Ethiopian Ethiopian
exemption for years base depending on location of park + two years for 30% export + two Decision, 15 June of investment Investment Revenue and
pharmaceutical sector in years for 60 % export) 2017 Commission Customs
industrial parks 2) Holding of investment Authority
2) Investment in Final medicine/Formulation 10-12 years (six-eight years permit
base depending on location of park + two years for 30% export + two
years for 60 % export) 3) Holding of business
license
3) Investment in Pharmaceutical Packaging 7-8 years (three-four years
base depending on location of park + two years for 30% export + two years 4) Investment in an industrial
for 60 % export) park to establish a new
enterprise (Greenfield) or for
expansion or upgrading of an
existing enterprise as defined
under the Investment
Proclamation

Loss carry forward for up Loss incurred during the income tax exemption period can be carried Investment Article 11 Manufacturing, 1) Eligibility for Business Ethiopian Ethiopian
to five years forward for half of the exemption period after expiry, the maximum limit Incentives and Agriculture, ICT Income Tax exemption Revenue Revenue and
being five income tax period Investment Areas Development, and Customs
Reserved for Electricity generation, 2) Submission of annual Customs Authority,
Domestic Investors transmission and financial statements Authority, Regional
Regulation No. distribution Regional Revenue
270/2012 (as (investment sectors Revenue Offices
amended) listed under the Offices (for
Investment domestic
Regulation) investors)
Personal Income Tax Up to five years for expatriate employees of sourcing companies located in Investment Board N/A Manufacturing in 1) The employer company Ethiopian Ethiopian
(PIT) exemption for industrial parks Decision, June industrial parks has to be in its first five years Investment Revenue and
expatriate employees 2017 of operation Commission Customs
Authority
2) The expertise offered by
the expatriate has to be
unavailable in the local
market