Information for Investors

Investment Incentives

Fiscal

The Council of Ministries Regulations No.270/2012 specifies the areas of investment eligible for investment incentives.

a) Customs Duty

To encourage private investment and promote the in-flow of foreign capital and technology into Ethiopia, the following customs duty exemptions are provided for investors (both domestic and foreign) engaged in eligible new enterprises or expansion projects such as manufacturing, agriculture, agro-industries, generation, transmission and supply of electrical energy, Information and Communication Technology Development (ICT) tourism, construction contracting, education and training, star designated hotel, specialized restaurant, architectural and engineering consultancy works, technical testing and analysis, capital goods leasing and importation of LPG and bitumen.

  • 100% exemption from the payment of customs duties and other taxes levied on imports is granted to all capital goods, such as plant, machinery and equipment and construction materials;
  • Spare parts worth up to 15% of the total value of the imported investment capital goods, provided that the goods are also exempt, from the payment of customs duties;
  • An investor granted with a customs duty exemption will be allowed to import capital goods duty free indefinitely if his investment is in manufacturing and agriculture, and for five years if his investment is in other eligible areas;
  • An investor entitled to a duty-free privilege buys capital goods or construction materials from local manufacturing industries shall be refunded the customs duty paid for raw materials or components used as inputs for the production of such goods; and
  • Investment capital goods imported without the payment of custom duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges.

b) Income Tax Exemption

If an investor engaged in new manufacturing agro-processing; the agricultural products; generation, transmission and supply of electrical energy; and Information and Communication Technology Development he shall be entitled to income tax exemption as specified as follows:

Any investor who establishes a new enterprise in Gambella; Benshangul/Gumuz; Afar (except in areas within 15 kms right and left of the Awash River); Somali; Guji and Borena Zones (in Oromia); or South Omo Zone, Segen (Derashe, Amaro, Konso and Burji) Area Peoples Zone, Ben-Maji Zone, Sheka Zone, Dawro Zone, Keffa Zone, Konta nd aBasketo Special Woredas (in Southern Nations, Nationalities and Peoples Region) shall be entitled to an income tax deduction of 30% for three consecutive years after the expiry of the income tax exemption period.

  • An investor who expands or upgrades his existing enterprise and increases in volume at least by 50 percent of its attainable production or service rending capacity or introducing a new production or service rendering line at least by 100 percent of an existing enterprise is entitled to the income tax exemption period;
  • Exports at least 60 percent his products or services, or supplies the same to an exporter as production of service input will be exempted from the payment of income tax for additional 2 years.

Non-fiscal

The non-fiscal incentives given to all exporters investors who invest to produce export products will be allowed to import machinery and equipment necessary for their investment projects through suppliers credit.

Loss carry forward

Business enterprises that suffer losses during the income tax exemption period can carry forward such losses, following the expiry of the income tax exemption period, for half of the tax exemption period. For the purpose of calculating a period of loss incurred carry forward, a half year period shall be considered as a full income tax period. Any loss incurred during income tax exemption period is not allowed to carry forward such loss for more than five income tax period.