The Economy

The Ethiopian economy is predominantly agricultural and the production in such sector constitutes a major part of the country’s economy, contributing about 45 per cent for the country’s gross domestic product (GDP) and about 62 per cent for total exports. It accounts for 85 per cent of total employment. Coffee, a major cash crop, is of high quality and contributes about 62 per cent of total agricultural exports. So, it is a major source of foreign-currency earnings.

Since 1992, the Government has successfully implemented a series of reform programmes in order to transform the economy from command to market economy, speed up the integration of the economy into the world economy and encourage the wider participation of the private sector in the development of the national economy.

To encourage private investment and promote the inflow of foreign capital and technology into Ethiopia, the following incentives are granted to both domestic and foreign investors engaged in areas eligible for investment incentives:

Moreover, the Council of Ministers may also award profit tax holiday for greater than seven years. However, the Board may issue a directive to deny income tax exemption right granted to investors producing only for local market, as may be necessary. The period of exemption from profit tax begins from the date of the commencement of production or provision of services, as the case may be.Loss Carried Forward

The principal taxes currently in place are profit tax, turn over tax (TOT), value-added tax (VAT), excise tax, customs duty and income tax from employment. VAT has replaced sales tax. TOT and withholding taxes have been introduced recently. Other taxes include corporate tax, dividend income tax, royalties and stamp duties. The Government has recently been introducing a series of measures to reform the tax system with a view to encouraging investment and foreign trade. On the whole, the reform process is to reduce the rates but broaden the base. Corporate Income Tax

The following conditions are also set in the Ethiopian Proclamation No. 67/1997 on Commercial Registration and Business Licensing with respect to registration in the Commercial Register: · No person shall engage in any commercial activity unless registered in a commercial register; · Any person shall principally register only once even though he carries on different commercial activities in different regions; · Although a trade name is one of the entries of a principal registration as provided for under Article 105 of the Commercial Code, principal registration shall be made without waiting for the registration of a trade name under Proclamation No. 67/1997.

• A copy of the applicant’s ID
• If represented by someone else, a copy of the power of attorney of the person
• The applicant’s/representative’s recent passport size photo
• If it is a business organization, a copy of memorandum and articles of association
• If it is a share company,
• Proof of bank deposit of 25% of the total share value· Proof of contribution in kind if any· Sample of share type
• If it is a governmental development organization, article of establishment and a letter from the general manager