Export Incentives

1. Investment Incentives

The intentions of granting investment incentives under Minister Regulation No. 270/2012 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 beveragewinebeer & bear maltsoft 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 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 years if it is in Addis Ababa & Oromia zones and  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 years if it is in Addis Ababa & Oromia zones and  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 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 years and allows importing duty free 1 pickup and 1 truck if the investment is in Addis Ababa and Oromia special zone and 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.
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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.
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  • 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 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 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

3.9. 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.

3.10. 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 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

15. 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;

16. 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.

 

 

 

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