Promote your Business on AACCSA’s WEBSITE

The Addis Ababa Chamber of Commerce & Sectoral Associations provides you WEB SITE SERVICES at a reasonable price. This service will help you to promote and increase your company’s visibility in the international market. The website services we provide are:

*      Static web design

*      Dynamic web design

*      Website to be published under AACCSA’s official website

*      Web hosting

*      Web link to AACCSA’s official  website

*      Front page animated logo on AACCSA’s official website

Note that location of advertisements is determined on first come first serve basis.

For further information, please call, fax or e-mail us:

Tel: 011-550-0934/551-8055ext 226

Fax: 011-551-1479

E-mail: Genet.Ayalew@addischamber.com

Tax advisory English and Amharic

AACCSA is offering various services to its members and potential members. The chamber has started recently a tax advisory service which focuses on the country’s different tax proclamations, regulations and directives. The advisory service targets the business community on developing their capacity regarding tax issues.

The tax related advisory service includes:-

  1. Income Tax

Under the custodian of EFDR people’s representative parliament, the Income tax proclamation No. 286/2002 has been declared and also the regulation no. 78/2002 is issued pursuant to the income tax proclamation. The advisory service regarding the income tax focuses on issues

  • Employment Income tax
  • Rental Income tax
  • Business Profit tax
  • Other Income
  • Income from Rendering of Technical Services
  • Income from Games of Chance
  • Income from Rental of Property
  • Interest Income on Deposits
  1. Value Added Tax (VAT)

Value Added Tax has been declared on the proclamation no 285/2002 and the regulation no. 79/2002 that is issued pursuant to the proclamation. Ethiopian Revenues and Customs Authority has issued different directives according to the power rendered by the VAT regulation 79/2002 Art. 39. The Tax Advisory service that relates to VAT includes

  • Obligatory Registration to the tax
  • Voluntary registration to the tax
  • Registration Procedure
  • Mixed Supplies
  • Taxable activity
  • Reverse Taxation (VAT withholding )
  • Tax Imposition
  • Exempt Transactions
  • Place, Time and Value of Supplies
  • Adjustment of the Value of Taxable Transaction
  • Time and Value of Imports
  • Tax Payable for Tax Period
  • Filling of Tax Return and Payment of VAT
  • Tax Refund
  • Etc
  1. Turn Over Tax (TOT)

Turn over Tax has been declared under the proclamation No. 308/2002 and the chamber is providing the tax advisory service regarding to this tax

  • Rate of the tax
  • Base of Computation of the tax
  • Obligation to collect and transfer the tax
  • Exemptions from the tax
  • Records
  • Filling of the tax return and payment
  • Assessment of the tax
  • etc
  1. Excise Tax

Under the Proclamation No. 307/2002 Excise Tax has come in to operation. The tax advisory service of the chamber also includes issues related to Excise tax

  • Scope of the tax
  • Rate of the tax
  • Base of computation of the tax
  • Payment of the tax
  • In respect of goods produced locally, by the producer
  • In respect of goods imported, by the importer
  • Time of payment
  • Assessment of the tax
  • etc

 

የታክስ ምክር አገልግሎት

የአዲስ  አበባ ንግድና የዘርፍ ማኅበራት ምክር ቤት  ኢትዮጵያው ውስጥ እየተሰራባቸው ባሉት የግብር እና የታክስ ህጎች ላይ የንግዱ ማኅበረሰብ በቂ የሆነ ዕውቀት እንዲኖረውና ስለሚከፍለው ግብር እና ታክስ ምንነት ግንዛቤ እንዲያገኝ  የታክስ እና የግብር ማማከር አገልግሎት እየሰጠ ይገኛል፡፡  ንግድ ም/ቤቱ እየሰጠ የሚገኘው የግብር እና ታክስ ማማከር አገልግሎት የሚያካትታቸው  የሚከተሉት ናቸዉ፡፡

  1. በገቢ ግብር ዙሪያ

በገቢ ግብር አዋጅ 286/1994፣ ይህን አዋጅ ለማስፈፀም በወጣው ደንብ ቁጥር 78/1994 እንዲሁም ከገቢ ግብር ጋር በተያያዘ በወጡ የተለያዩ ደንቦች ላይ ሲሆን

  • ከመቀጠር ጋር በተያያዘ ከሚገኝ ገቢ ላይ ስለሚከፈል ግብር
  • ከቤት/ህንጻ በማከራየት በሚገኝ ገቢ ላይ ስለሚከፈል ግብር
  • ከንግድ እንቅስቃሴ ከሚገኝ ገቢ (ትርፍ) ላይ ስለሚከፈል ግብር እንዲሁም
  • ከሌሎች ገቢዎች ላይ ስለሚከፈል ግብር
  • የፈጠራ መብትን ከማከራየት የሚገኝ ገቢ
  • የቴክኒክ አገልግሎት በመስጠት የሚገኝ ገቢ
  • ከዕድል ሙከራ የሚገኝ ገቢ
  • የአክሲዮን ትርፍ ድርሻ
  • ከንብረት ኪራይ የሚገኝ ገቢ
  • በተቀማጭ ገንዘብ ላይ የሚከፈል ወለድ ገቢ
  1. በተጨማሪ እሴት ታክስ ዙሪያ

የተጨማሪ እሴት ታክስ አዋጅ 285/1994 ፣ ይህንን አዋጅ ለማስፈፀም የወጣው ደንብ ቁጥር 79/1994 እንዲሁም በኢትዮጵያ ገቢዎችና ጉምሩክ ባለሥልጣን የወጡ የተለያዩ መመሪያዎች ሲሆኑ፤ የማማከር አገልግሎቱ ከተ/እ/ታክስስ ጋር በተያያዘ ከአዋጁ፣ ከደንቡ እና ከመመሪያዎች ላይ አስፈላጊና ወሳኝ ናቸው የተባሉትን ከዚህ በታች የተመለከቱትንና ሌሎች ነጥቦች በማውጣት አገልግሎቱን ይሰጣል፡፡

  •  የመመዝገብ ግዴታ
  • በፈቃደኝነት ስለመመዝገብ
  • የምዝገባ ሥርዓት
  • ምዝገባን ስለመሰረዝ
  •  ቅይጥ አቅርቦት
  •  ታክስ የሚከፈልበት የንግድ  ሥራ እንቅስቃሴ
  •  በገዢው ስለሚሰበሰብ ታክስ
  • ታክስ ስለመጣል
  • ከታክስ ነፃ የሆኑ ግብይቶች
  • ታክስ የሚከፈልባቸው አቅርቦቶች የሚከናወኑበት ቦታ፣ ጊዜ እና ዋጋ
  • ታክስ የሚከፈልበትን ግብይት ዋጋ ስለማስተካከል
  • ወደ ሃገር ውስጥ የሚገቡ ዕቃዎች እሴት እና የገቡበት ጊዜ
  • በአንድ የታክስ ዘመን መከፈል ያለበት ታክስ
  • ታክስ ስለማስታወቅና ስለመክፈል
  • ታክስ ተመላሽ ስለማድረግ
  • ወዘተ

 

  1. የተርን ኦቨር ታክስ
  • የተርን ኦቨር ታክስ ተመን
  • የታክሱ የስሌት መሠረት
  • ታክሱን የመሰብሰብና ገቢ የማድረግ ኃላፊነት
  • ከታክሱ ነጻ የሆኑ ግብይቶች
  • የሂሳብ መዝገብ ስለመያዝ
  • የተርን ኦቨር ታክስ ማስታወቂያ ስለማቅረብ እና ታክሱን ስለመክፈል
  • የታክሱ አወሳሰን
  • ወዘተ

 

  1. የኤክሳይስ ታክስ 307/1995
  • የተፈፃሚነት ወሰን
  • የማስከፈያ ልክ
  • የታክሱ የስሌት መሠረት
  •  የታክሱ አከፋፈል
  • በሃገር ውስጥ በሚመረቱ
  • ወደ ሃገር በሚገቡ ዕቃዎች
  • የክፍያ ጊዜ
  • የታክስ አወሳሰን ናቸው፡፡

 

በገቢ ግብር አዋጅ 286/1994 መሰረት የተዘጋጀዉ የገቢ ግብርን አሰራረን  የሚያመላክት  ሰነድ  እዚህ ይጫኑ፡፡

 

ETHIOPIA AND SUDAN PREFERENTIAL FREE TRADE AGREEMENT (PTA)

Ethiopia and Sudan signed Preferential Trade Agreement (PTA) and entered into force in February 6, 2003. The provision of the preferential treatment is applicable to all industrial and agricultural products originating from both countries.

The objectives of agreement

1. Promote the expansion of trade and the economic development of the two countries,

2. Foster the advancement of economic activity in the two countries,

3. Increase productivity and financial stability of the two countries hence, it Improves the

living and employment conditions of the people of the two countries and

4. Provide fair conditions of competition for trade between the two countries.

Tariff Rate

The zero tariff rates are applied to all industrial and agricultural products originated from both countries.

Rules of Origin Protocol

The two nations reach an agreement that, the COMESA Rule of Origin Protocol will be the origin rule governing the trade in to Ethio-Sudan preferential trade agreement. Therefore, goods traded between the two nations must fulfill COMESA Rules of Origin Protocol which contains the following three governing rules:

  • Origin criteria
  • Direct consignment
  • Documentary evidence

Rules of Origin / Origin Criteria

  1. The goods should be wholly produced or obtained in Ethiopia/Sudan. These are minerals extracted from the ground, vegetable products and harvested, live animals born and raised, products obtained by hunting or fishing, products obtained from sea or river….in Ethiopia or Sudan.
  2. The goods should be produced in Ethiopia/Sudan and the C.I.F value of any foreign materials should not exceed 60% of the total cost of all materials used in their production:

 

Import material content =             CIF value of imported materials

                                    Cost of local materials + CIF value of imported materials

The goods should be produced in Ethiopia/Sudan and attain a value added of at least  35% of the ex-factory cost of the goods:

Value added=                      Ex- factory cost–CIF value of imported material                       

                                                   CIF value of imported materials

3. The goods should be produced in Ethiopia/Sudan and should be classifiable under a tariff heading other than the tariff heading of the non-originating materials used in their production.

4. The goods designated as goods of particular importance to the economic development of Ethiopia/Sudan should not contain less than 25%   value added.

Note

  1. Goods manufactured with inputs from other countries are considered eligible for the preferential tariff treatment if they have undergone sufficiently working or processing,

2. Change in Tariff Heading and Value Added rule are the general rules but there is specific rule for each products. These rules are Products

Specific Rule (PSR). PSR is available if you inquire at the Addis Ababa Chamber of Commerce & Sectoral Association business support  department,

3.  Rules of origin refer to a change in tariff heading in terms of this protocol apply to non-originating materials only and such change in classification  is at the level of the Harmonizes Commodity Description and Coding System by reason of production.

4. Otherwise, minimal operations or processes defined in rule 5 of the COMESA Rules of Origin protocol, if the process fulfill CTH rule with minimal operation products couldn’t be eligible for zero tariff preference.

Processes not conferring origin under minimal production process are

1. Packaging, bottling, placing in flasks, bags, cases and boxes, fixing on cards or boards and all other simple packaging operations,

2. Simple mixing of ingredients and simple assembly of the components and parts imported from outside the two countries,

3. Operation to ensure the preservation of merchandise in good condition during transportation and storage such as ventilation, spreading out, drying,   changes of packing and breaking up of or assembly of consignments,

4. Marking, labeling, or affixing other like distinguishing signs on products or their packages,

5. Simple operations consisting of removal of dust, shifting or screening, sorting, classifying and matching, including the making up of sets of goods, washing, painting and cutting up and

6. Slaughter of animals

Direct Consignment Rule

The goods should be transported directly from Ethiopia to Sudan.

Documentary Evidence

Certificate of origin is issue by Ethiopian/Sudan chamber of commerce confirming that goods satisfied COMESA Rules of Origin.

COMESA (Common Market for Eastern and Southern Africa)

  1. Introduction

Common Market for Eastern and Southern Africa (COMESA) Free Trade Area (FTA) was launched on 31 October 2000 with nine Member States. This was the first FTA in Africa. Now, there are 19 Member States;  14 of them are full FTA Members trading on a full duty free and quota free basis, the remaining 5 countries are at a various stages of joining the FTA. Ethiopia is one of the non-FTA members of COMESA. The FTA has its own contribution to boost intra COMESA trade, it increased by nearly six-fold from USD 3.1 billion to USD 17.4 billion in 2011.

COMESA Member States

These include Angola, Burundi, Comoros, D.R Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, MadagascarMalawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.

Rules of Origin

The COMESA treaty provides that goods shall be accepted eligible for preferential tariff treatment if they originate in the Member States. Goods shall be accepted as originating in a Member State and comply with one of the five conferring criteria lists below:

1. Goods wholly produced in Member State ( that is , no raw material from outside the regions have been used in their manufacture):or

2. Goods satisfying the change of tariff heading resulting from their process of manufacture where some raw material are imported or

3. Goods produced in a Member State and the CIF value of any foreign  (that is non-COMESA) materials used doesn’t not exceed 60% of the total cost

of all materials used in the production: or

4. Goods produced in member States whose value added resulting from the process of production accounts for at least 35% of the ex-factory cost of

the goods: or

5. Goods produced in member States designed in a list by the Council to be of particular importance to the economic development of the Member State and containing not less that 25% value added notwithstanding the provision states in no.3 above

Note: For goods to be admitted into COMESA State as originating in Ethiopia, the importer of the goods concerned must present to the Customs authority of importing country, alongside other documents a certificate of origin duly completed and signed in Ethiopia and certified by designated certifying authority of that Member State and the same goes for import goods as well

COMESA Tariffs

The application of the COMESA Protocol between the Member States is on reciprocal basis.

  1. The following countries have reduced their tariffs to zero rates and fully participating in the Free Trade Area (FTA).
    These are Burundi, Comoros, Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Uganda, Zambia and Zimbabwe

Note:  Eligible goods originating from these countries attract Customs duty at 0% in the Free Trade Area.

The status of tariff reduction for the under listed countries is as detailed below:

  1. Ethiopia 10%
  2. Eritrea 80%

Note: Eligible goods from these countries attract customs duty at the rates of the tariff reduction reached by each country as indicated above.

  1. Some countries have not effected any tariff reduction. These include DR Congo and Seychelles

Note: Goods from these countries shall attract customs duty at their substantive rates appearing in the Customs tariff Book.

  1.  Swaziland under derogation. This means is that imports from  Swaziland will attract customs  duty at 0% while exports to Swaziland will attract customs duty.

What the Exporter should do to obtain a certificate of origin to be benefiting from the preferential market access?

  1. An exporter intending to export goods from Ethiopia to COMESA countries and desiring to have such goods granted preferential tariff treatment in the importing country must obtain a certificate of origin from Ethiopian Chamber of Commerce and Sectoral Association. The certificate, when presented by the importer to Chamber in the importing country will serve as evidence to enable the goods to be accorded the preferential tariff treatment being sought.

2. The exporter/manufacturer must present to Chamber evidence that the goods have been produced in conformity with conditions specified in the Rules of Origin when applying for certificate in respect of goods being exported.

3.  Where the goods have been produced by a company or enterprise that is not exporter seeking the certificate of origin, then, the  exporting company or enterprise must obtain from producer a declaration in the prescribed form. The exporter should ensure that such information is correct.

4.   The exporter must complete the certificate of origin form.

5.  While the exporter is free to decide whom to sign declarations on his behalf, it is highly desirable that the person so authorized be member of the exporting firm. Declarations signed by shipping or forwarding agents are not acceptable.

6. For further consultation you can contact Addis Ababa Chamber of Commerce & Sectoral Association business support department at any  time. additional documents available at AACCSA web site www.addischamber.com

 

MARKET ACCESS UNDER AFRICAN GROWTH OPPORTUNITY ACCESS (AGOA)

SECTION I

1. BACKGROUND

The African Growth Opportunity Act (AGOA) is the United States trade and Development Act of 2000. It provides most liberal trade opportunity for eligible sub-Saharan African countries export products to enter to US market under duty free quota free treatment. The imitative works towards the development of Africa’s trade integration to US market

AGOA was based on the existing US Generalized System of Preferences (GSP), which used in the international trade regime since 1971. While the current “normal” US GSP program contains several limitations in terms of product coverage, AGOA amends the GSP program by providing duty-free treatment for a wider range of products coverage.

A major thrust of AGOA has been to support the ability of African economies to use the textile and apparel sectors as potential engines of economic growth, in much the same way as historically happened in South and South East Asia.

A “special rule” named Third Country Fabric Provision (TCFP) permits lesser developed AGOA beneficiary countries like Ethiopia to utilize fabric manufactured anywhere in the world.

This publication, How to export under African Growth Opportunity Act (AGOA), is intended to provide general information to all ACCSSA members and business communities at large on the trade benefits available under AGOA which is administered by U.S.A. and Ethiopian Customs.

That information is based on “AGOA Implementation Guide” (October 2000)  see http://www.ustr.gov/regions/africa/agoaguides.html.

2. AGOA SUMMARY

A summary of AGOA’s evolution is provided below. It includes key provisions of AGOA since its inception includes:

Date AGOA act Summary
2000 AGOA I Provided beneficiary countries in Sub-Saharan Africa with the most liberal market access (duty free quota free) to the U.S. market available to any country or region with which the U.S. does not have a free trade agreement
2002 AGOA II Botswana/Namibia included as Lesser Developed Countries (LDCs); additional textile provisions
2004 AGOA III Extended AGOA until Sept. 2015 and the Third Country Fabric Provision until Sept. 2007; increased emphasis on U.S. technical assistance in agriculture; Mauritius also included as an LDC
2006 AGOA IV Extended Third Country Fabric Provision until 2012 and adds abundant supply provisions
2012 AGOA V Extended Third Country Fabric Provision until September 2015 and adds South Sudan an eligible country

 

3. COUNTRY ELIGIBILITY AND LIST OF SUB-SAHARAN AFRICAN COUNTRIES

Only Sub-Saharan African countries are considered for eligibility, AGOA beneficiary status have been awarded to approximately 40 countries (this number changes from time to time). Ethiopia is eligible since January 2001.

Countries eligible for AGOA in general and third country fabric provision in particular

Angola

Benin*

Botswana*

Burkina Faso*

Burundi

Cameroon*

Cape Verde*

Chad*

Comoros

Congo (Republic)

Congo (DRC)

Cote de’Ivoire

Djibouti

Ethiopia*

Gabon

Gambia*

Ghana*

Guinea

Republic of Guinea-Bissau**

Kenya*

Lesotho

Malawi*

Mali**

Mauritania

Mauritius*

Mozambique*

Namibia*

Niger*

Nigeria*

Rwanda*

São Tomé and Principe

Senegal*

Seychelles

Sierra Leone*

South Africa

South Sudan

Swaziland*

Tanzania*

Togo

Uganda*

Zambia*

Republic of Madagascar**

NOTE:

All in bold and * are countries eligible for Third Country Apparel Provision (TCAP)

**   Countries declared ineligible

SECTION II

2.1.    PRODUCT ELIGIBILITY

The list of products adds under AGOA on regular GSP products (approximately 4,650) are 1800. Hence, the total duty free products tariff line items available under GSP+ AGOA are more than 6400. The most important items included under AGOA are   footwear, handbags, luggage, textiles and apparel, flat goods, work gloves, leather wearing apparel, semi-manufactured and manufactured glass products, watches, electronic articles and steel articles. All AGOA eligible Ethiopian export products may enter to United States free of import duty if it qualify the origin and related rules.

The list of AGOA eligible products is available for downloading and may be found at http://www.agoa.gov.

2.2.   HOW DOES AN EXPORTED PRODUCT QUALIFY FOR AGOA DUTY FREE TREATMENT?

AGOA product eligibility implies that a product, when produced in Ethiopia, may enter the United States free of import duty, if it complies with the requirements of the basic GSP origin and related rules, AGOA specific additional rules and US customs requirements. The basics GSP + AGOA rules of origin requirements are

  1. The product must be imported into the United States directly from Ethiopia or pass through another country in a sealed container and addressed to a location in the United States,
  2. The product must be the growth, product, or manufacture of Ethiopia, by fulfilling the relevant Rules of Origin requirements for general or apparel items respectively,
  3. If foreign materials are imported into Ethiopia first, to be used in the production of an AGOA-eligible product, the sum of the cost of the materials produced in the Ethiopia, plus the costs of processing, must equal at least 35 percent of the product’s appraisal value when the product is sold for export into the United States,
  4. In the case of clothing/apparel, the 35% rule does not apply directly, instead, the goods need to comply with the respective textiles Rules of Origin requirements;
  5. The cost or value of the materials used that are produced in Ethiopia or more beneficiary sub-Saharan African countries shall be counted towards the 35 percent requirement (cumulation among AGOA-designated countries).

2.3.  WHAT DO CUSTOMS MEAN BY APPRASIED VALUE?

This is taken to mean the Transaction Value which includes;

  • Packing costs incurred by the buyer
  • Selling commission incurred by the buyer
  • Value of any assistance provided to the producer free of charge by the buyer
  • Royalty or license fee that the buyer is required to pay as a condition of the sale
  • Proceeds accruing to the seller of any subsequent resale, disposal, or use of the imported merchandise

The above costs are in addition to the direct cost of processing. These include all costs, whether directly incurred in or those that can be reasonably allocated to the growth, production, manufacture, or assembly of the merchandise in question. These include:

  • Actual labor, fringe benefits, and on-the-job training costs,
  • Engineering, supervisory, quality control, and similar personnel costs,
  • Dies, molds, and tooling costs, as well as depreciation of machinery and equipment and
  • Research, development, design, blue prints and engineering, and inspection and testing costs.

The costs that may NOT be included in the direct costs of processing are those are not “costs” of manufacturing. These include: profit and general expenses and business overhead such as administrative salaries; casualty and liability insurance; advertising; and sales representative’s salaries, commissions or expenses.

In general, shipping and other costs related to transporting the articles from the port of export to the U.S. are included neither in the value of the article nor in the value-added calculation.

2.4.  WHO ADMINISTER AGOA?

The administration of AGOA program can be divided into two distinct areas. AGOA origin rule and other related rules administered by Ethiopian Revenues and Customs Authority. The office perform pre and post export verification, issues GSP certificate of origin and visa for textiles and apparel exports. From US side, the application of duty free treatment is the primary responsibility of the United States Customs Service. Therefore, the two customs co-operate each other to administer the program.

While the trade policy issues of AGOA are theoretically decided by the President of the United States, on the basis of advice provided by the Office of the United States Trade Representative (USTR).

2.5.  WHAT ARE THE PROCEDURES TO GET CERTIFICATE OF ORIGIN?

If an export intends to get duty-free benefit under AGOA eligible goods in U.S, it must get certificate of origin document. The document is issues by ERCA, its procedures are

  • The exporter must apply to ERCA to get certificate of origin for GSP eligible products,
  • Prior to export of goods Customs verify the production process to confirm the satisfaction of the origin rule and other related rules for each product.
  • GSP Form A issues for GSP eligible products and visa for textiles and apparel products if the origin rules satisfied.

2.6.   RECORD KEEPING

After the goods exported the exporters should maintain the followings records for a period of 5 years from the date of export.

  • Records that demonstrate that the article qualifies for duty-free treatment because it is the growth, product or manufacture of Ethiopia, Such as a record of receipt from a  farmer whose crops are grown Ethiopia,
  • If the exporter is claiming that the article is the product of, or the manufacture of, a Ethiopia, the exporter must have records that indicate that the manufacturing or processing operations reflected in or applied to the article meet the country of origin requirements. A properly completed GSP Form A Certificate in the prescribed format is one example of a record that would serve this purpose,
  • Shipping document that show how the article moved from the Ethiopia to the United States. If the exported article was shipped through a country other than Ethiopia and  the invoices and other documents do not show the United States as the final destination, the Exporter also must have documentation that demonstrates that the conditions set forth in the regulations were met,
  • Records that demonstrate the cost or value of the materials produced in Ethiopia and  the direct costs of processing operations incurred that were relied upon by the exporter to determine that the article met the 35 percent value,
  • Establish and implement internal record keeping system that provide for the periodic  review of the accuracy of the records which establish that an article is the growth,  product or manufacture of Ethiopia,
  • The exporter must be prepared to produce the required records within 30 days of a   request from Customs and
  • Be prepared to explain how those records and the internal controls referred to above  justify benefiting duty-free treatment.

SECTION III

3.1.    TEXTILE AND APPAREL PRODUCTS

AGOA provides duty free preferential tariff treatment for imports of certain textile and apparel products from Ethiopia, provided that these products have original visa on commercial invoice to prevent illegal transshipment and the use of counterfeit documents.

3.2.    WHAT ARE TEXTILES AND APPREL VISA REQUIREMENTS UNDER AGOA?

AGOA eligibility does not automatically imply eligibility under the textile and apparel provisions, which require the implementation of an effective visa system and an enforcement mechanism to prevent illegal transshipment.

To claim duty free preferential treatment of textile and apparel products under the Act, a shipment must obtain AGOA visa. The procedures to get visa for textiles and apparel products are

  • Exporter should apply to ERCA by submitting self-declared AGOA certificate of origin, Original invoices, shipping documents and bank documents.
  • Shipment shall be visaed by stamping an original circular visa in blue ink only on the front of the original commercial invoice by ERCA.
  • The original visa shall not be stamped on duplicate copies of the invoice. The original of the invoice with the original visa stamp shall be send to importer in US in order to claim preferential tariff treatment,
  • Duplicates of the invoice and/or visa may not be used for this purpose,
  • Each visa stamp shall include  the visa number, the preferential groupings the apparels qualify for, a country code, and a numerical serial number identifying the shipment;  ERCA officials signature and the quantity of goods being shipped.
  • A visa shall not be accepted and preferential tariff treatment shall not be permitted if the visa number, date of issuance, authorized signature, correct grouping, quantity or the unit of quantity is missing, incorrect or illegible, or has been crossed out or altered in any way.
  • If the visa is not acceptable, a new visa must be obtained before preferential tariff treatment can be claimed. Waivers are not permitted,
  • If the visaed invoice is deemed invalid, the United States Customs Service will not return the original document after entry, but will provide a certified copy of it for use in obtaining a new correct original visaed invoice.

3.3.    WHAT ARE APPAREL PROVISIONS AND RELATED RULES OF ORIGIN?

For the purpose of AGOA textiles and apparel eligibility, product grouped into the following apparel provisions, it determines how product meets the production process requirements to get duty free treatment when it enters to US.

Visa grouping 1-A:

Apparel assembled from U.S. fabrics and/or knit-to-shape components, from U.S. yarns. All fabric must be cut in the United States.

Visa grouping 2-B:

Apparel assembled from U.S. fabrics and/or knit-to-shape components, from U.S. yarns. All fabric must be cut in the United States. After assembly, the apparel is embroidered or subject to stone-washing, enzyme-washing, acid acid washing, perma-pressing, oven-baking, bleaching, garment-dyeing, screen printing, or other similar processes.

Visa grouping 3-C:

Apparel assembled from U.S. fabrics and/or U.S. and/or beneficiary countries knit-to-shape components, from U.S. yarns and sewing thread. The U.S fabric may be cut in beneficiary country, or in beneficiary countries and U.S.

Visa grouping 4-D:

Apparel assembled from beneficiary country fabrics and/or knit-to-shape components, from yarns originated in the U.S. and/or one or more beneficiary countries.

Visa grouping 5-E:

Apparel assembled, or knit-to-shape and wholly assembled, or both, in one or more lesser developed beneficiary  countries regardless of the country of origin of the fabric or the yarn used to make such articles.This preference grouping has limitations on benefits and is currently extended until September 30, 2015.

Visa grouping 6-F:

Kite-to-shape sweaters in chief weight cashmere.

Visa grouping 7-G:

Knit-to-shape sweaters 50 percent or more by weight or wool measuring 21.5 microns in diameter or finer.

· Visa grouping 8-H:

Apparel assembled from fabrics or yarns considered in short supply  in the North Atlantic Free Trade Agreement (NAFTA), or designated as not available in commercial quantities in the US.

·Visa grouping 9-I:

Handloomed fabrics, handmade articles made of handloomed fabrics, or textile folklore articles- as defined in bilateral consultations: Ethnic printed fabric.

Visa grouping O-J:

Textile products of a lesser developed beneficiary country classifiable under chapter 50 through 60, or 63, that are wholly formed in one or more such countries from fibers, yarns, fabrics, fabric components or components knit-to-shape that are also the product of one or more such countries.

3.4.    WHAT DEFINITIONS ARE USED?

For purposes of textiles provisions, Customs use the following definitions:

Apparel articles means goods classifiable in Chapters 61 and 62 and headings 6501, 6502, 6503,and 6504 and subheadings 6406.99 and 6505.90 of the HTSUS.

Assembled in one or more beneficiary countries when used in the context of a textile or apparel article has reference to a joining together of two or more components that occurred in one or more beneficiary countries, whether or not a prior joining operation was performed on the article or any of its components in the United States.

Cut in one or more beneficiary countries when used with reference to apparel articles means that all fabric components used in the assembly of the article were cut from fabric in one or more beneficiary countries.

Knit-to-shape articles means any apparel article of which 50 percent or more of the exterior surface area is formed by major parts that have been knitted or crocheted directly to the shape used in the apparel article, with no consideration being given to patch pockets, appliques, or the like. Minor cutting, trimming, or sewing of those major parts will not affect the determination of whether an apparel article is “knit-to-shape.”

Knit-to-shape components when used with reference to textile components, means components that are knitted or crocheted from a yarn directly to a specific shape containing a self-start edge. Minor cutting or trimming will not affect the determination of whether a component is “knit-to shape.”

Major parts means integral components of an apparel article including Non AGOA produced collars, cuffs, waistbands, plackets, pockets, linings, paddings, trim, accessories, or similar parts or components.

Originating means having the country of origin determined by application of the AGOA textiles and apparel rules of origin

Wholly assembled in. When used with reference to a textile or apparel article in the context of one or more beneficiary countries or one or more lesser developed beneficiary countries, the expression “wholly assembled in” means that all of the components of the textile or apparel article (including thread, decorative embellishments, buttons, zippers, or similar components) were joined together in one or more beneficiary countries or one or more lesser developed beneficiary countries.

Wholly formed fabrics. “Wholly formed, “ when used with reference to fabric(s), means that all of the production processes, starting with polymers, fibers, filaments, textile strips, yarns, twine, cordage, rope, or strips of fabric and ending with a fabric by a weaving, knitting, needling, tufting, felting, entangling or other process, took place in the United States or in one or more beneficiary countries.

Wholly formed on seamless knitting machines. “Wholly formed on seamless knitting machines,” when used to describe apparel articles, has reference to a process that created a knit-to-shape apparel article by feeding yarn(s) into a knitting machine to result in that article. When taken from the knitting machine, an apparel article created by this process either is in its final form or requires only minor cutting or trimming or the addition of minor components or parts such as patch pockets, appliques, capping, or elastic strip.

Wholly formed yarns. “Wholly formed,” when used with reference to yarns, means that all of the production processes, starting with the extrusion of filament, strip, film, or sheet and including slitting a film or sheet into strip, or the spinning of all fibers into yarn, or both, and ending with a yarn or plied yarn, took place in a single country.

3.5.    WHAT SPECIAL RULES APPLY?

Special rules set for purposes of determining the eligibility of articles for preferential treatment. These special rules are as follows;

3.6.     FINDINGS AND TRIMMINGS

As a general rule, an article otherwise eligible for preferential treatment under section 112 will not be ineligible for that treatment because the article contains findings or trimmings of foreign origin, if the value of those foreign findings and trimmings does not exceed 25 percent of the cost of the components of the assembled article. This provision specifies the following as examples of findings and trimmings:

  • sewing thread,
  • hooks and eyes,
  • snaps, buttons,
  • “bow buds,”
  • decorative lace trim,
  • elastic strips (but only if they are each less than 1 inch in width and used in the
  • production of brassieres),
  • zippers (including zipper tapes), and
  • labels.

However, as an exception to the general rule, sewing thread will not be treated as findings or trimmings in the case of an article for which assembly by U.S. thread is a requirement for eligibility for preferential treatment.

3.7. SPECIAL INTERLINGS

This is, a chest type plate, a “hymo” piece, or “sleeve header,” of woven or weft-inserted warp knit construction and of course animal hair or man-made filaments. Under this rule, an article otherwise eligible for preferential treatment under section 112 will not be ineligible for that treatment because the article contains interlinings of foreign origin, if the value of those interlinings (and any findings and trimmings) does not exceed 25 percent of the cost of the components of the assembled article.

3.8.  DE MINIMIS (TOLERANCE)  RULE

There is a de minims rule which provides that an article otherwise eligible for preferential treatment will not be ineligible for that treatment because the article contains fibers or yarns not wholly formed in the United States or one or more beneficiary sub-Saharan African countries if the total weight of all those fibers and yarns is not more than 10 percent of the total weight of the article.

3.9   DIRECT IMPORT REQUIREMENT

As previously stated, in order to claim preferential treatment, the articles must be imported directly into the Customs territory of the United States from a beneficiary sub-Saharan African country.

For purposes of this provision, the words “imported directly” mean:

  • Direct shipment from Ethiopia to the United States without passing through the territory of any non-beneficiary country,
  • If the shipment is from Ethiopia to the United States through the territory of any non-beneficiary country, the articles in the shipment do not enter into the commerce of any non-beneficiary country while en route to the United States and the invoices, bills of lading, and other shipping documents show the United States as the final destination; or
  • If the shipment is Ethiopia to the United States through the territory of any non-beneficiary country, and the invoices and other documents do not show the United States as the final destination, the articles in the shipment upon arrival in the United States are imported directly only if they:
  • Remained under the control of the Customs authority of the intermediate country;
  • Did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the port director is satisfied that the importation results from the original commercial transaction between the importer and the producer or the producer’s sales agent; and
  • Were not subjected to operations other than loading or unloading, and other activities necessary to preserve the articles in good condition.

3.10.   VERIFICATION AND JUSTIFICATION OF CLAIM FOR PREFERNTIAL TREATEMENT

A claim for preferential treatment, including any statements or other information contained on a Certificate of Origin or visa submitted to US Customs, is subject to   verification by US Customs Service.

All records required to be made, kept, and made available to Customs by the exporter are;

  • Documentation and other information in Ethiopia regarding the country of origin of an article and its constituent materials, including, but not limited to, production records, information relating to the place of production, the number and identification of the types of machinery used in production, and the number of workers employed in production; and
  • Evidence or document for the use of U.S. materials in the production of the article in question, such as purchase orders, invoices, bills of lading and other shipping documents, and Customs import and clearance documents.

3.11.   Penalties

If the President determines, based on sufficient evidence, that an exporter has engaged in transshipment with respect to all AGOA eligible products in general and textile and apparel articles in particular, the President shall deny all benefits of  the AGOA to such exporter, any successor of such exporter, and any other entity owned or operated by the principal of the exporter.

 

General Systems of Preferences (GSP)

General Systems of Prefernces(GSP)

The Generalized System of Preferences, or GSP, is a formal, non-reciprocal system of granting tariff exemption by developed countries to developing  countries for the purpose of lowering tariffs for developing countries (without also doing so for developed countries).

The purposes of granting duty free treatment for developing countries are

(a)  to increase their export earnings;

(b)  to promote their industrialization; and

(c)  to accelerate their rates of economic growth

Since the start of the GSP system, preference-giving countries decided to implement their national schemes independently. As pointed out, preferences are granted unilaterally and non-contractually. For that reason donor countries retained the general principle that they were free to decide on the rules of origin which they thought were appropriate after hearing the views of beneficiary countries.

The lists of GSP schemes are

Australia,

Belarus,

Bulgaria,

Canada,

Estonia,

European Union,

Japan,

New Zealand,

Norway,

Russian Federation,

Switzerland,

Turkey and

United States of America.

In general now 13 different GSP schemes are avilable for Ethiopian export product to access global market under prefential tariff rate.

Elements of GSP

Each GSP schemes has its own elements and has miner difference from one scheme to another scheme. These are beneficiary countries, product Coverage, rules of origin, depth of tariff cuts, cumulation, graduation and safeguard.

GSP Certificate of Origin

The GSP Certificate of Origin is sold and approved by the Ethiopian Revenues and Customs Authority

Head Office,Tariff and Valuation Directorate,

Rules of Origin Team

Block A 2nd Floor Room No. 201
Addis Ababa, Ethiopia
Tel: (251) 1 11 6 62 98 28
Fax: (251) 1 11 6 62 98 59
Website: www.erca.gov.org

To approve the Certificate, the following documents must be submitted:

  • GSP Certificate of Origin duly filled
  • Export Invoice
  • Appropriate certified costing for value added requirements
  • Any other document as may be required by the Team

New project profiles

This is updated project profiles prepared by Industrial projects service on May, 2013. To see lists of project profiles For Food and Beverage click here For Chemical 1 here For Chemical 2 here For rubber, plastic and leather here For Non-Metallic Minerals, Wood & Paper here for Textile here For  Metal & Electro Mechanical 1 here For  Metal & Electro Mechanical 2 here. You can find the details of each project profiles at the Documentation center of AACCSA.

Investement Incentives

1. Investment Incentives

The intentions of granting investment incentives under Minister Regulation No. 270/2012 and revised Regulation No. 312/2014 for domestic and foreign investors are to increase and speed up the flow of capital, technology transfer, employment creation and over all development of the country. The major incentives granted on the regulation are

  • 30 % additional income tax exemption for new enterprises invest in low development areas;
  • year base income tax exemption for different investment areas depending on the location of investment,
  • customs duty exemptions on capital goods and construction materials and
  • motor vehicles customs duty exemptions grants for selected investment areas with minimum investment capital of Birr 2 million.

2. Income tax exemption for new enterprise

Any investors establishing new enterprises in the following locations are entitled to an income tax deduction of 30% for three consecutive years after the expiry of the income tax exemption period specified in the Schedule.

  • the State of Gambela People;
  • the state of Benshangul/Gumuz
  • the state of Afar;
  • the State of Somali;
  • Guji and Borena Zones of State of the Oromia; or
  • South Omo Zone, Segen (Derashe, Amaro, Konso and Burji) Area People 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.

3. Motor vehicles exemption from customs duties

Exemption of motor vehicles from Customs duty implements according to investment board directives No. 4/2005. The investment areas are manufacturing, agriculture, construction, star hotels including resorts, motels, lodges and restaurants, information communication technology, tour operating and electric generation, transmission and distribution.

The exemption applies for selected investment areas and specifications of the motor vehicles are;

  • Motor vehicles includes trucks attached with refrigerators or all kinds of garbage disposal,  pickup, station wagon, bus, minibus, delivery van, and motor cycle,
  • Passenger bus
  • number of seats at least not less than 30,
  • Minibus number of seats not greater than 15 and less than 10,
  • Pick up includes 2WD or 4WD, its cylinder capacity not more than 4 for investment location in Addis Ababa and special zone of Oromia region and 6 cylinder  and loading capacity between 500 kg and 1500 kg for other areas,
  • Delivery van loading capacity  is between 3000 up to 5000 kg and covered
  • Truck loading capacity  is more than 5000 kg
  • Special service motor vehicles  are those vehicles uses for special work and not use for public transport

Therefore, Addis Ababa Chamber of Commerce and Sectoral Association business support staffs are advising and providing highlight information on investment areas, procedures, income tax and motor vehicles customs duty exemptions to promote trade and investments.

3. Investment areas, income tax and motor vehicles customs duty exemptions

3.1. Manufacturing

  • Food industry

Food industries of meat, fish, fruit & vegetable, edible oils, dairy products, starch products, pulses, oil seeds and cereals processing excluding flour production and other food products processes are

  • exempt from income tax for 3 years and allows to import 1 pickup 1 delivery van and 2 trucks if the factory is located in Addis Ababa and special zones of Oromia region and its surrounding;
  • exempt from income tax for 5 years and allow to import duty free 1 pickup and 2 delivery van and 2 trucks if the factory located in other areas.
  • Manufacturing of Sugar

Sugar manufacturing exempts from income tax for 5 years if the factory is located in Addis Ababa and Special zones of Oromia region and surrounding and

6 years income tax exemption and 2 pickup, 2 delivery van and 2 trucks allows to import duty free if the location is in other areas.

  • Manufacturing of Sweets

Chocolates, candy, biscuits and other sweets excluding ice crème and cakes are exempt form income tax for 1 year and allows to import I delivery van if the manufacturing location is in Addis Ababa and special zone of Oromia region and surrounding;

2 years income tax exemption and importing of 1 pickup and 1 delivery van allows if the location is in other areas.

  • Manufacturing of Macaroni

Macaroni, pasta and similar products are exempt from income tax for 3 years and allows to import duty free 1 pickup and 1 delivery van  if the factory location is in Addis Ababa and special zone of Oromia and its surrounding and

5 years income tax exemption and allows importing 1 pickup 1 delivery van and 1 truck if it is in other areas.

  • Manufacturing baby food and others

Manufacturing of baby food, roasted and ground coffee, soluble coffee, tea, yeast, vinegar, mayonnaise, artificial honey, iodized salt or similar food products and animal feeds are

  • exempt from income tax for 2 years and allows importing duty free 1 pickup, 1 delivery van  except animal feeds if the factory location is in Addis Ababa and Oromia surroundings and exempt from income tax for 4 years and allows importing duty free 1 pickup , 1 delivery van and 1 truck if it is in other areas.

Animal feeds processing allows to import duty free 1 pickup and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and

1 pickup and 2 trucks allows importing duty free if the investment area located in other areas

3.2 Beverage Industry

  • Manufacturing of alcohol beverage, wine, beer & bear malt, soft drinks, mineral water and other bottled water have 1,3,2, and 1 year income tax exemption respectively, if the factories located in Addis Ababa and special zone of Oromia surroundings and 2,4,3 and 2 years income tax exemption respectively, if the investment location is in other areas.
  • Manufacture of alcohol beverage production allows to import 1 pickup, 1 delivery van and 1 truck if the investment locates in Addis Ababa and special zones of Oromia region and its surrounding and same in other areas as well.
  • Manufacture of wine Production allows importing 1 pickup, 1 delivery van and 1 truck if the investment is in Addis Ababa and special Oromia zones and same in other areas as well.
  • Manufacture of beer and beer malt production allows importing 1 pickup, 1 delivery van and 1 truck if the investment is locates in Addis Ababa and special Oromia zones and surrounding and 1 pickup, 1 delivery van and 2 trucks are allowed in other areas.
  • Manufacture of soft drink, mineral water or other bottled water allows importation 1 pickup, 1 delivery van and 1 truck duty free if the investment is in Addis Ababa and special Oromia zones and the same in other areas.

 

3.3. Textiles and Textiles Products Industry

  • Preparation of spinning of cotton, wool, silk and similar textiles fibers exempted from income tax for 4 years, if the investment is located in Addis Ababa and Oromia special zone & its surroundings and 5 years in other areas,
  • Allows importing 1 pickup, 1 delivery van and 1 truck if the investment locates in Addis Ababa and special Oromia zone and surrounding and 2 pickup, 2 delivery van and 2 truck if the investment is in other areas.
  • Weaving, finishing and printing of textiles have income tax exemption for 5 years if the investment area is in Addis Ababa, special zone of Oromia and surrounding and 6 years if it is in other areas.
  • Allows importing of 1 pickup, 1 delivery van and 1 truck if the investmenet area is in Addis Ababa and special zone of Oromia and surrounding and 2 puck up and 2 delivery van and 2 trucks in other areas.
  • Finishing of fibers, yarn, warp and weft, apparel and other textiles products bleaching, dyeing, shrinking, sanforizing, mercerizing or dressing exempted from income tax for 2 years if the factory located in Addis Ababa and special zone of Oromia & its surrounding and 4 years in other areas.
  • Finishing of fabrics except bleaching, dyeing, shrinking, sanforizing, and mercerizing processes allows importing of 1 pickup, 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 1pick up and 2 delivery van and 2 trucks in other areas.
  • Other textiles finishing activities exempted from income tax for 2 years in Addis Ababa and Oromia special zone and 3 years in other areas.
  • Allows importing of 1 pickup, 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 1pick up and 2 delivery van and 2 trucks in other areas.
  • Manufacturing of knitted & crocheted fibers, made-up textiles articles, except apparel and carpet exempts from income tax for 4 years if it located in Addis Ababa and Oromia special zones and 5 years in other areas.

Allows importing of 1 pickup,  1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 2 pickup and 2 delivery van and 2 trucks in other areas.

  • Manufacturing of wearing apparel, sport wear and accessories for textiles products exempts from income tax for 5 years if it located in Addis Ababa and Oromia special zone and 6 years in other areas.

Allows importing of 1 pickup,  1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 2 pickup and 2 delivery van and 2 trucks in other areas.

3.4. Leather and Leather Products Industry

  • Tanning of hides & skins  up to finished level exempted for 5 years if it is in Addis Ababa & Oromia zones and  6 years in other areas
  • Allows importing of 1 pickup, 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 2 pickup and 2 delivery van and 2 trucks in other areas.
  • Tanning of hides & skins under finished level exempted for 5 years if it is in Addis Ababa & Oromia zones and  6 years in other areas
  • Allows importing of 1 pickup, 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 2 pickup and 2 delivery van and 2 trucks in other areas.
  • Manufacturing of leather products, leather shoes, bags and balls and accessories production  exempts form income tax for 5 years in Addis Ababa and Oromia special zone and 6 years in other areas
  • The above production allows importing of 2 pickup, 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 2 pickup and 2 delivery van and 1 truck in other areas except accessories.
  • Production of leather products related items including accessories  are allows to import duty free1 pickup, 1 delivery van and 1 truck if the investment area is locates in Addis Ababa and special zone of Oromia region and 2 pickup, 1 delivery van and 2 trucks allows if it is in other areas.

3.5. Wood Products Industry

  • Manufacturing of wood products (excluding saw milling, timber making, assembling and semi-finished wood products) exempts from income tax for 2 years and allows importing duty free 1 pickup and 1 truck if the investment is in Addis Ababa and Oromia special zone and 3 years and allows to import duty free 1 pickup and 1 truck in other areas.
  • Allows importing of 1 pickup, 1 truck if the investment area is in Addis Ababa and special zone of Oromia and surrounding and 1 pickup and 1 truck in other areas.

3.6. Paper and paper products industry

  • Manufacturing of pulp & paper products exempt from income tax for 5 years if it is in Addis Ababa and Oromia zones, and 6 years in other areas.
  • Manufacturing of pulp products only allows to import 2 pickups and 2 trucks duty free if the investment area is outside Addis Ababa and special zone of Oromia and its surrounding
  • Manufacturing of other paper products exempts from income tax for 1 year if it is in Addis Ababa and special zones of Oromia zone and 2 years in other areas.
  • Manufacturing of paper only allows to import 2 pickups and 1 delivery van, and 1 truck duty free if the investment area is outside Addis Ababa and special zone of Oromia and its surrounding.
  • Manufacturing of other paper products only allows to import and 1 delivery van duty free if the investment area is in Addis Ababa and special zone of Oromia and surroundings and 1 pickup , 1 delivery van in other areas.
  • Manufacturing of paper packages exempts from income tax for 3 years if it is in Addis Ababa and Oromia special zone and surroundgs and 4 years in other areas.
  • Allows importing duty free 1 pickup and 1 delivery van if the investment area is in Addis Ababa and special zone of Oromia and 1 pickup, 1 delivery van and 1 truck in other areas.

3.7. Printing Industry

  • Allows importing duty free 1 pickup and 1 delivery van and 1 truck if the investment area is in Addis Ababa and special zone of Oromia and 1 pickup, 1 delivery van and 2 truck in other areas.

3.8. Chemical and chemical products industry

  • Manufacturing of basic chemicals, ethanol, fertilizers and nitrogen compounds exempts from income tax for 5 years in Addis Ababa and special zone of Oromia  and 6 years in other areas.
  • Basic chemicals production allows importing duty free 1 pickup, 1 delivery van if the investment is in Addis Ababa and special zone of Oromia and surroundings and 2 pickups,  1 delivery van and 1 truck in other areas.
  • Fertilizers and nitrogen compounds production allows importing duty free 1 pickup, 1 delivery van if the investment is in Addis Ababa and special zone of Oromia and surroundings and 2 pickups,  1 delivery van and 1 truck in other areas.
  •  Manufacturing of plastics, synthetic rubber in primary forms, pesticides, herbicides and fungicides exempts from income tax for 3 years if it is located in Addis Ababa and special zone of Oromia region and 5 years in other areas.
  • Manufacturing of paints, varnishes or similar coatings; printing, writing and  painting inks and  mastics, soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations exempts from income tax for 2 year if it is in Addis Ababa and Oromia special zones and 4 years in others areas.
  • Manufacturing of man-made fiber exempts from income tax for 5 years in Addis Ababa and Oromia special zones and exemption from income tax for 6 years.
  • Manufacturing of other chemical products (propellant powders, explosives, photographic films and similar products) exempts from income tax for 2 years in Addis Ababa and Oromia special zones and 3 years in other areas

3.8. Basic pharmaceutical products and pharmaceutical preparation industry

  • Manufacturing of inputs of basic pharmaceutical products and pharmaceutical preparations exempts from income tax for 5 years in Addis Ababa and special zone of Oromia and 3 years in other areas.
  • Manufacturing of formulation of pharmaceuticals exempts from income tax for 4 years in Addis Ababa and special zone of Oromia region and 3 years in other areas.

3.9. Rubber and Plastics Industry  

  • Manufacturing of rubber products exempts from income tax for 3 years in Addis Ababa and special zone of Oromia regions and 5 years in other areas.
  • Manufacturing of plastic products used as inputs for construction of buildings, vehicles or other industrial inputs; plastic pipes, tubes fittings used for irrigation and drinking water supply and sewerage system exempts for 4 years in Addis Ababa and Oromia special zones and 2 years in other areas.
  • Manufacturing of plastic products except shopping bags exempts from income tax for 1 year in Addis Ababa and special zone of Oromia region and 2 years in other areas.

4. Non-metallic mineral products industry

  • Manufacturing of glass and glass products and ceramic products exempts from income tax for 4 years in Addis Ababa and special zone of Oromia region and 5 years in other areas.
  • Manufacture of cement exempts from income tax for 4 years if the factory is in other areas.
  • Manufacturing of cutting, shaping and finishing of marble and limestone (excluding quarrying) exempts from income tax for 1 year in Addis Ababa and Oromia
  • Manufacturing of lime, gypsum and similar coating exempts from income tax for 2 years if the factory located it other area
  • Manufacturing of millstone, glass paper or sound-absorbing or heat-insulating materials exempt from income tax for 1 year if the factory located in Addis Ababa and Oromia special zone and 2 years in other areas

5. Basic Metals Industry (Excluding mining of the mineral)

  • Manufacturing of basic iron and steel exempt from income tax for 5 years in Addis Ababa and Oromia special zones and 6 years in other areas.
  • Manufacturing of basic precious and other non-ferrous metals exempt 3 years in Addis Ababa and Oromia special zone and 4 years in other areas
  • Casting of iron and steel exempt from income tax for 4 years in Addis Ababa and Oromia special zone and 5 years in other areas.

6. Fabricated Metal Products Industry (Excluding Machinery and Equipment)

  • Manufacturing of structural metal products, tanks, reservoirs and containers or steam generators
  • Manufacturing of fabricated metal products except corrugated metal sheets for roofing and nails exempt from income tax for 1 year in Addis Ababa and Oromia special zones and 2 years in other areas

7. Computer, electronic and optical products industry

  • Manufacturing of electronic components and boards exempt from income tax for 4 years in Addis Ababa and Oromia special zone and 5 years in other areas
  • Manufacturing of computers, peripheral, communication equipment, television, DVD, radio and similar equipment exempt from income tax for 3 years in Addis Ababa and Oromia special zones and 4 years in other areas.
  • Manufacturing of measuring, testing, navigating, control equipment or watching, clocks, medical equipment, irradiation, electro-medical or electrotherapeutic equipment exempt from income tax for 3 years if it is in Addis Ababa and Oromia special zones and 4 years in other areas
  • Manufacturing of optical instruments or photographic equipment magnetic and optical media exempt from income tax for 2 years in Addis Ababa and special zone of Oromia region and exempt from income tax for 3 years in other areas.

8.  Electrical Products Industry

  • Manufacturing of electric motors, generators, transformers or electricity distribution or control apparatus exempt from income tax for 4 years in Addis Ababa and special zone of Oromia region exempt from 5 years in other areas.
  • Manufacture of accumulators or batteries, electrical wires or cables, fiber optics & related products, electric lighting equipment, domestic electrical appliances and other electrical equipment exempt from income tax for 2 years in Addis Ababa and special zone of Oromia and 4 years in other areas

9. Machinery/equipment

  • Manufacture of general-purpose machinery (motor, lifting and handling equipment, pumps and similar), special-purpose machinery (for agriculture, food processing, beverage, textile and mining production and similar activities)

10. Vehicles, Trailers and semi-trailers industry

  • Manufacture of motor vehicles exempt from income tax for 2 years in Addis Ababa and special zone of Oromia and 3 years in other areas.
  • Manufacture of bodies, components for motor vehicles, trainers and /or semi-trainers and accessories for motor vehicles exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Manufacture of railway locomotives and rolling stock exempt from income tax for 2 years in Addis Ababa and special zone of Oromia zone and 6 years in other areas
  • Manufacturing of other transport equipment (boats, bicycles, motor bicycles and similar equipment)  exempt from income tax for 2 years in Addis Ababa and special zone of Oromia region and 3 years in other areas
  • Manufacture of office and household furniture excluding those made of ceramics  jewelry and related articles, musical instruments, sports equipment, games and toys and similar products exempt from income tax for 4 years in Addis Ababa and special zone of Oromia region and 5 years in other areas
  • Integrated manufacturing with Agriculture exempt from income tax for 1 year in Addis Ababa and special zone of Oromia and 5 years in other areas

11. Agriculture

  • Growing of cereals, leguminous crops and/or oil seeds and rice exempt from income tax for 3 years if the investment is outside Addis Ababa and Oromia special zones
  • Growing of vegetables and herbs exempt for 3 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Growing of fiber crops exempt from income tax for 5 years if the investment is  other areas
  • Growing of other annual crops( animal feed, medicinal crops, aromatic spices and similar crops) exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 3 years in other areas
  • Production of certified seed exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 4 years I other areas

12. Growing Medium Term Crops

  • Growing flowers, medium term fruits exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Growing of medium term spices, aromatic and/or medicinal crops (hulu, curmuma, black pepe and similar crops) exempt from income tax for 4 years in other region
  • Growing of perennial fruits(mango, avocado, banana, ornage, papaya, grapes, passion fruits and similar crops) exempt from income tax for 5 years in other areas
  • Growing of other perennial crops (rubber tree, palm, jatropha and similar crops) exempt from income tax for 6 years

13. Animal Production

  • Farming of domestic animals and production of milk, eggs, raw wool and similar products exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Farming of wild animals and production of milk, eggs and similar products exempt from income tax for 3 years in other areas
  • Farming of bees / production of honey exempt from income tax for 2 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Production of silk, fish farming in artificial aquaculture exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region  and 4 years in other areas
  • Mixed (crop and animal ) farming exempt from income tax for 3 years in Addis Ababa and special zone of Oromia region and 4 years in other areas
  • Forestry exempt from income tax for 8 years in Addis Ababa and special zone of Oromia region and 9 years in other areas

14. Information and Communication Technology

  • Development areas to be determined by directives issued by Ministry of Communication and Information Technology
  • The areas exempt from income tax for 4 years in Addis Ababa and special zone of Oromia and 5 years in other areas
  • Electricity generation, transmission and distribution exempt from income tax for 4 years in Addis Ababa and special zone of Oromia region and 5 other areas

Commencement of Period of Income Tax Exemption

  • The period of exemption from income tax shall begin from the commencement date of production or provision of service by the investor;

Loss Carry Forward

  • An investor who has incurred loss within the period of income tax exemption shall be allowed to carry forward such loss for half  of the income tax exemption period after the expiry of such period;
  • For the purpose of calculating the period of loss carry forward, a half-year period shall be considered as full income tax period;
  • 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

Income tax exemption for expansion or upgrading of existing enterprise

Any investor expanding or upgrading his existing enterprise pursuant to

Exemption from Customs Duty

Exemption of capital goods and construction materials from Customs duty

  • Any investor engaged in one of the area of investment except real estate development, publishing, export and wholesale of petroleum and its byproducts trade;
  • The investor shall submit, in advance, the list of capital goods and construction materials to be imported duty free and get approval of same from the appropriate investment organ;
  • If an investor entitled to a duty free incentive buys capital goods or construction materials from local manufacturing industries, he shall be refunded with the customs duty paid for the raw materials or components used as inputs for the production of such goods;
  • An investor eligible to duty free incentives shall be allowed to import spare parts the value of which is not greater than 15% of the total value of the capital goods within five years from the date of commissioning of his project.

 

Investment Proclamation and Regulation

1. Investment in Ethiopia

The highlights of investment proclamation and guideline bellows are compiled from investment proclamation no. 769/2012 and amended proclamation No. 849/2014 A reader should refer the document for a comprehensive understanding of the investment regime of Ethiopia.

Before planning to invest in Ethiopia and begin the investment procedure, it is advisable to consider the following:

•     familiarize with the  investment laws and regulation

•     decide on the areas of investment interest;

•     calculate the investment capital required;

•     have an idea of labor requirement;

  • have an idea of investment incentives and customs procedures;
  • have an idea of environmental situation;
  • have an idea of markets to focus on.

2. Investment areas exclusively reserved for the government

  • Transmission and distribution of electrical energy through the integrated national grid system;
  • Postal services with the exception of courier services;
  • Air transport services using aircraft with a seating capacity of more than fifty passengers.

3. Investment areas reserved to invest jointly with the government

  • Manufacturing of weapons and ammunition;
  • Telecommunication service;
  • Any private investor intending to invest jointly with the government shall submit its proposals to Privatization and Public Enterprise Supervising Agency and Ministry of Industry for approval.

4. Investment areas reserved for domestic investors

  • banking, insurance and micro credit and saving services;
  • packing, forwarding and shipping agency services;
  • broadcasting services;
  • mass media services;
  • attorney and legal consultancy services;
  • preparation of indigenous traditional medicines;
  • advertisement, promotion and translation works;
  • air transport services using aircraft with a seating capacity of up to 50 passengers.

5. Investment areas allowed for foreign investors

  • A foreign investor shall be allowed to invest in areas of investment specified in the Schedule attached hereto, except those areas provided for in number 1.3.3, 1.4.2, 1.7, 1.11.3, 1.11.4, 5.3, 6.2, 8.2, 9.2, 9.3 and 12 of the Schedule;

6. Forms of Investments

The investment may be carried out the following forms

  • Sole proprietorship;
  • Business organization incorporated in Ethiopia or abroad;
  • Public enterprise established in accordance with the relevant law;
  • Cooperative society established in accordance with the relevant law;
  • Any investment made in the forms of above shall be registered in accordance with commercial code or any relevant law;

Any investment made in the above forms should be register in accordance with the Commercial Code of the other applicable law.

7. Minimum Capital Requirement for Foreign Investors

  • Any foreign investor to be allowed to invest according to the proclamation, is required to allocate a minimum of US Dollar 200,000 for a single investment project;
  • The minimum capital requirement for a foreign investor investing jointly with domestic investors shall be US Dollar 150,000;
  • The minimum capital required of a foreign investor investing in architecture or engineering works or related technical consultancy services, technical testing and analysis or in publishing shall be
  • USD 100,000 if the investment is made on his own
  • USD 50,000 if the investment is made jointly with a domestic investor
  • A foreign investor re- investing his profit or dividends generated from his existing enterprise may not be required to allocate a minimum capital;
  • A foreign investor having brought investment capital into country should registered the capital & obtain a capital registration certificate;
  • The certificate shall be send to National Bank of Ethiopia by the Investment Agency

8. Remittance of funds

Any foreign investor shall have the right, in respect of his approved investment, to make the following remittances out of Ethiopia in convertible foreign currency at the prevailing rate of exchange on the date of remittance;

  • Profits and dividends accruing from the investment;
  • Principal and interest payments on external loans;
  • Payment related to technology transfer agreement;
  • Payment related to a collaboration agreement related to export oriented non-equity based foreign enterprise collaboration agreement;
  • Proceeds from the transfer of shares of parties ownership of the enterprise to domestic investor;
  • Proceeds from the sale or liquidation of the enterprise; and
  • Compensation payment

9. Investment Permit Application Procedure

A foreign investor, domestic investor or a partnership of foreign and domestic investor plans to invest in Ethiopia are expected to follow the investment procedures to obtain investment permit in Ethiopia

The following investors are required to obtain investment permit

  • domestic investors
  • foreign investors;
  • domestic and foreign investors investing in partnership;
  • foreign nationals not Ethiopian treated as domestic investors;
  • domestic investors investing in areas eligible for incentives and who are seeking to be beneficiaries of such incentives.

10. Application for Investment Permit by a Domestic Investor

An application for investement permit by a domestic investor shall be made in a form designed for such purpose and submitted to the appropriate investment organ together with the following document in one copy.

  • Every investor has a tax obligation and is required to obtain a tax payer identification number

(TIN) from Ethiopian Revenues and Customs Authority;

  • Where the application is signed by an agent a photocopy of his power of attorney;
  • Where the investement is to be made by an individual person, a photocopy of his identity card or  identifying his domestic investor status and  his recent two passport size photographs;
  • Where the investement is to be made by a business organization, a photocopy of its memeorandoum of articles of association;
  • Where the business organization is to be newly established, it shall submit a photocopy of the sharholders identity cards or a photocopy of identity cards evidencing their domestic investor status;
  • Where the investement is to be made by a public enterprise, a photocopy of the regulation under

Which it is established or a photocopy of its memeorandoum and articles of association;

  • Where the investement is to be made by a cooperative socitety, a photocopy of its articles of association and

11. Application for Investment Permit by a Foreign Investor

 

Application for investement permit by a foreign investor shall be made in a form designed for such purpose and submitted to the Agency together with the following document in one copy

  • Every investor has a tax obligation and is required to obtain a tax payer identification number

(TIN) from Ethiopian Revenues and Customs Authority;

  • Where the application is signed by an agent, a photocopy of his power of attorney;
  • Where the investement is to be made by an individual person, a photocopy of the relevant pages of a valid passport showing his identity and his recent two passport size photographs;
  • An Ethiopian permanently residing abroad, prefering tretement as a foreign investor, a  photocopy of a document evidencing that he is residing abroad;
  • Where the investement is to be made by a business organization incorporated in Ethiopia;
  • A photocopy of its memorandum and articles of association or where it is to be made established;
  • It shall submit a photocopy of the relevant pages of a valid passport of each sharholders showing his identity and recent two passport size photographs of the general managers;
  • Where there is a foreign national treated as a domestic investor in the business organization, a photocopy of the identity card evidencing the domestic investor status;
  • Where there is a juridical person or a branch of a foreign juridical person in the business organization, a photocopy of its memorandum of association and articles of association or similar documents of the parent company.

 

 

  • Where the investment is to be made by an Ethiopian branch of a foreign business organization incorporated abroad;
  • a photocopy of its memorandum and articles of associations or  a similar document of the parent company ;
  • a photocopy of a document attesting  the appointment of the branch manager, a photocopy of his valid passport, his two recent passport size photographs and commercial registration certificate of the business organization;
  • a photocopy of the minutes of resolution of the authorizing organ of the parent company authorizing the establishment of a branch company in Ethiopia;
  • Where it is a joint investment by domestic and foreign investors, in addition to the documents provided under bullet there above, photocopies of identity cards or photocopies evidencing the domestic investor’s statues, as the case may be;
  • A document evidencing the financial position or, identity or profile of the investor, as deemed appropriate by the Agency.
  • If all documents source are outside Ethiopia, it shall be authenticated by a foreign and domestic notary;
  • Where the permit is required by a person whose permit was cancelled sue to deliance of project, the Agency shall ascertain that the causes of the deliance and cancellation are rectified.
  • The Ethiopian Investment Agency (EIA) approves the submitted documents and issues an investment permit in 2-3 hours’ time if the above documents are received in full.

12. Application for Investment Permit for Expansion or Upgrading

An application for investement permit to expand on upgrade an existing enterprise shall be made in a form designed for such purpose and  submitted to the Agency together with the following documents in one copy;

  • Where the applicationis signed by an agent a photocopy of his power of attorney;
  • Where the investement is made by a sole propriete, a photocopy of the relevant identity or pass port copy, his domestic status and two passport size photograph;
  • Where the investement is made by a business organization, a photocopy of the company’s articles of association and two passport size photocopy of the general manager;
  • A photocopy of a valid business licence of the existing enterprise;
  • A photocopy of project feasibility study.

 

13. Issuance of Investment Permit

  • The appropriate investment organ shall  after examining the investment activity issue investment permit upon receipt of the appropriate fee, where the application if found acceptable; or
  • Notify the investor of its decision and the reason thereof in writing, where the application if found unacceptable;
  • Notify the investor of its decision and the reason thereof in writing, where the application is found unacceptable;
  • An investor may not be required to obtain a business license until the commencement of production or rendering of service upon completion of his project;
  • No investor may, at any time, be allowed to invest by holding both a domestic and a foreign permit.

14. Renewal of Investment Permit

  • An investment permit shall be renewed every year until the investor commences the marketing of his products or services;
  • An application shall be submitted and renewed with in one month
  • The appropriate investment organ shall renew the investment permit, where satisfied, as to the existence of sufficient cause for the delay in the commencement of completion of his project implementation;
  • Any investor, who has not commenced implementing his project within two years since the issuance of the investment permit, shall have his permit cancelled without any precondition.

15. Transfer of an investment project under implementation phase

Any investor wishing to transfer his project, which is under implementation phase and for which a business license is not yet issued, to another investor shall submit his request, by filling an application form together with the following documents

  • A photocopy of renewed investment permit;
  • A photocopy of the sales agreement authenticated by a notary;
  • A photocopy of land lease agreement transferred to the buyer as the case may be

 

16. Suspension of investment permit

 

If the investor violates the provisions of proclamation and regulation or directives issued to implement the proclamation, appropriate investment organ may suspend the investment permit until the investor takes due corrective measure

17. Revocation of the investment permit

The appropriate investment organ may revoke an investment permit where it ascertains that;

  • if the permit obtain with fraudulently or by submitting false information or statement;
  • misuse or illegal transfer of investment inventive;
  • failed to renew the investment permit without good cause;
  • failed to submit progress report of his project for two consecutive periods;
  • if the project cannot commence operation with in the period and the Agency believes the project will not be operational.

Upon revocation of an investment permit, the investor shall immediately lose entitlement to all benefits and required to return his incentives to concerned government organs.

18. Duty to report and cooperate

Any investor with investment permit shall submit progress reports on implementation of his project to the appropriate investment organ at the end of every three months and provide information about his investment activities whenever it required by appropriate investment organ.

19. Residence Permit

Head quarter of Department for Immigration and Nationality Affairs in Addis Ababa issues a residence permit to a foreign investor based on submission of;

  • investment permit,
  • passport;
  • a foreign investor, a shareholder of a company or a branch company and an expatriate staff who has a work permit, are also entitled to a residence permit.

20. Land Acquisition

  • In Ethiopia, land is public property. Individuals, companies and other organizations have only use right of land.
  • There are two broad classifications of land for rent or lease purposes for rural land and urban lands.
  • Application for land acquisition can be made during a field visit of an investor and after taking out an investment license.
  • The Ethiopian Investment Agency (EIA) has the mandate to facilitate the allocation of land for FDI projects throughout the country.
  • Urban land for other activities is available on an auction basis. The auction prices vary, depending on demand.
  • The lease and rental prices of urban and rural land vary according to location, type of investment and class of land. The land cannot be mortgaged or sold,
  • The lease or rental value of land and the fixed assets thereon may be mortgaged or transferred to a third party.

21. Urban land Acquisition

 

  • The regional administrative units are in charge of allocating urban land for investors;
  • Urban land is divided into land for industrial use and land for other activities.

22. Rural land Acquisition

  • Rural land is rented mainly for agriculture. The Ministry of Agriculture and Rural Development allocates farm land to foreign investors;
  • The ministry provides supports ranges from providing information, technical support, and facilitation of other public services to private investors investing in agriculture and
  • The rental price of rural land is generally low. There is strong commitment from the government to avail the country’s fertile land for investment.

23. Industrial land Acquisition

 

  • A number of industrial zones with the necessary infrastructural facilities (roads, electricity, water, telephone) are established in the major cities and towns in order to support the country’s drive for rapid industrialization.
  • Industrial land in industrial zones is allocated to investors at fixed prices. Land for export-oriented industries is generally available at concessionary rate.