Investment incentives in Ethiopia

Income tax exemption for new investment in Ethiopia

Any investor who invests to establish a new business shall be entitled to income tax exemption as provided for in the schedule attached in the investment incentive regulation.

Investment incentive regulation 517-20022

An investor who invests in areas far from the center and/or with very low infrastructure development that are listed in the investment incentive regulation shall:

1. be entitled to an income tax of 30% for three deduction consecutive years after the expiry of the income tax exemption period specified in the schedule
2. be entitled for a five year income tax exemption if invests in new, a typical and selected tourist destination areas in hotels, lodges and resorts with a rank of a star.

An investor who provides employment opportunities outside of Ethiopia to Ethiopians who have qualification institution certificate obtained from a recognized for providing training to persons who are to be placed in a foreign country shall:

a) be entitled for one year’s income tax exemption if provides employment opportunity for 101- 300 Ethiopians,,

b) be entitled for two years income tax exemption if provides employment opportunity for 301- 500 Ethiopians,

c) be entitled for three years income exemption if provides employment opportunity for over 501 Ethiopians;

Commencement of Period of income tax Exemption

• The period of exemption from income tax shall begin from the date the investor obtained at business license or from the date the investor obtained expansion permit;
• For the purpose of the above sub-article implementation the appropriate organ shall notify the Ministry of Revenue the date on which the business license or the expansion permit is issued to investor;

Reference:  Article 4 of Investment Incentive Regulation number 517/2022