To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, and pursuant to the investment objectives enlisted in article 5 of the investment proclamation, the council of ministers issued a list of investment areas eligible for investment incentives.
(please note that there is a difference between the list of investment areas open for foreign investors and the list of investment areas eligible for investment incentives)
This page contains details of the incentives as laid out by the Council of Ministers Regulation No. 270/2012. Exemption from Payment of Customs Import Duty
One hundred per cent exemption from the payment of import customs duties and other taxes levied on imports is granted to an investor to import all investment capital goods, such as plant machinery and equipment, construction materials necessary for the establishment of a new enterprise or the expansion or upgrading of an existing enterprise. However, the benefiting investor shall submit the list of capital goods and construction materials and get an approval in advance. Investment capital goods imported without the payment of import customs duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges. Exemption from Payment of Income Tax.
Ethiopian products and services destined for export are exempted from the payment of any export tax and other taxes levied on exports. Income Tax Holiday
Any income derived from an approved new investment projects shall be exempted from the payment of income tax for the periods ranging from 1-5 years depending upon the area of investment, and the location in which the investment is undertaken. Furthermore, investment projects in the State of Gambela Peoples,the State of Benshangull Gumuz, ) the State of Afar (except in areas within 15 kilo meters right and left of the Awash River), the State of Somali, Guji and Borena Zones of the State of Oromia; or South Omo Zone, Segen (Derashe, Amaro, Konso and Burji) Area Peoples Zone, Bench-Maji Zone, Sheka Zone, Dawro Zone, Kaffa Zone or Konta and Basketo Special Woredas of the State of Southern Nations, Nationalities and Peoples; shall be entitled to an income tax deduction of 30% for three consecutive years after the expiry of the income tax exemption period specified . Loss Carried Forward
Business enterprises that suffer losses during the tax holiday period can carry forward such losses for half of the income tax exemption period following the expiry of the exemption period . However, an investor who has incurred loss during the income tax exemption period may not be allowed to carry forward such loss for more than five income tax period.