Council of Ministers Regulations N0.84/2003 council of Ministers regulations on Investment Incentives........

1. Exemption from Income Tax

Investment Activities Eligible for Income Tax Exemption

1. Where an investor engaged in manufacturing or agro-industrial activities or the production of agricultural products to be determined by directives to be issued by the Board;
   • exports at least 50%(fifty per cent) of his products, or
   • supplies at least 75% (seventy five per cent) of his product to an exporter as a production input; he shall be eligible for income tax exemption for 5 years.
2. Notwithstanding the provisions of Sub Articles (1) of this Article the Board may, under special circumstances, grant income tax exemption for a period not longer than 7 years. However, the granting of income tax exemption for a period longer than 7 years requires the decision of the Council of Ministers.
3. An investor engaged in activities mentioned under sub Article(1) of this Article who exports less than 50%(fifty percent) of his products or supplies his products only to the domestic market shall be eligible for income tax exemption for 2 years.
4. Not withstanding the provision of sub article (3) of this Article, the Board may, under special circumstances, grant income tax exemption for a period not longer than 5 years.
5. Notwithstanding the provision of Sub Articles (3) of this Article, directives issued by the board may prohibit exemption from income tax with respect to an investor who supplies his products only to the domestic market.
6. Notwithstanding the provision of Sub Articles(1) and (3) of this Article, an investor who exports and hides and skins after processing up to crust level may not be entitled to incentives provided therewith.
7. Notwithstanding the foregoing provisions of this Article, where the investment is in relatively under developed Regions such as Gambella, Benshangul and Gumuz, South Omo, in Afar Zones to be determined by the Board, Somali and other Regions to be determined by the Board, the investor shall be eligible for income tax exemption for an additional 1year period.
8. The income tax exemption provided under the provisions of Article 4 of these Regulations shall be effective when the investor provides the information for the relevant revenue collecting institution and its validity is ascertained for each income tax period.

2. Income Tax Exemption for Expansion or Upgrading of an Existing Enterprise.

1. An investor engaged in activities mentioned under Sub Article (1) of Article 4 who exports at least 50% ( fifty percent) of his products and increases, in value, his production by 25% shall be eligible for income tax exemption for 2 years.
2. Commencement of period of Exemption form Income Tax-The period of exemption from income tax shall begin from the date of commencement of production or the date of provision of services, as the case may be.
3. Carry Forward of Losses-An investor who has incurred loss within the period of income tax exemption shall be allowed to carry forward his loss for half of the income tax exemption period, after the expiry of such period.

3. Exemption form the Payment of Customs Day

1. An investor shall be allowed to import duty-free capital goods and construction materials necessary for the establishment of a new enterprise or for the expansion or upgrading of an existing enterprise.
2. In addition, an investor granted with a customs duty exemption privilege shall be allowed to import duty free capital goods necessary for his enterprise.
3. Notwithstanding the provisions of Sub Articles (1) and (2) of this Article the board may, by its directives, bar the duty-free importation of capital goods and construction materials where it finds that they are locally produced with competitive price, quality and quantity.
4. An investor eligible for duty-free importation of capital goods pursuant to these Regulations shall be given the same privilege for spare parts whose value is not greater then 15% ( fifteen percent) of the total value of the capital good to be imported.

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