| To
encourage investment, the Ethiopian Government has
developed a range of incentives for investors engaged
in new enterprises and expansion across a range
of sectors. These incentives include |
| Customs
Import Duty |
A
100 percent exemption from the payment of import
customs duties and other taxes levied on imports
is granted to all investment capital goods, such
as, plant machinery and equipment, as well as spare
parts worth up to 15 percent of the value of the
imported investment capital goods, provided that
the goods are not produced or available locally
in comparable quantity, quality and price.
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.
Exemptions from customs duties or other taxes levied on imports are granted
for raw-materials necessary for the production of export goods. Taxes
and duties paid on raw materials are drawn back at the time of Export
of finished products. The duty draw back scheme applies to all taxes at
the time of import and to those paid on local purchases. Except coffee,
all other goods and services destined for export is 100% exempted from
any export tax and other taxes levied on exports. |
| Income tax holiday
|
Any income derived
from an approved new investment is exempted from
income tax for periods ranging from one to five
years, depending upon the priority of investment
activity and the location in which the investment
is undertaken.
Income derived from an expansion is exempted from income tax for a period
of two years for pioneer activities and one year for promoted activities.
|
| Research and Development
Incentives |
| An
investor is entitled to deduct expenditure on research
improvement studies or training from taxable income. |
| Remittance of Capital
|
Foreign
investors are entitled to make the following remittances
exempted from the payment of tax:
- Profits and dividends
- Principal and interest
payments on external loan.
- Payments related to a technology
agreement;
- Proceeds from the sale
or liquidation of an enterprises
- Proceeds from partial sales
of shares to domestic investors
- Expatriate employees may
remit salaries and other payments accruing from
their employment in hard currency after personal
income is deducted.
|
| Losses Carried Forward
|
| Business Enterprises
that suffer losses during the tax holiday period
can carry forward such losses following the expiry
of the exemption period from 3 to 5 years depending
upon the investment location and priority area of
investment activities. |
| Depreciation |
| The investor may
choose for a straight- line or an accelerated method
for the depreciation of assets based on book value. |
| Other Incentives
|
| The government
gives foreign investors priority in obtaining utilities
communication facilities, etc. |
|
