Doing Business in Ethiopia Overview

Doing Business in Ethiopia: Overview
Practical Law Country Q&A w-016-1313
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Doing Business in Ethiopia: Overview, Practical Law Country Q&A w-016-1313
Doing Business in Ethiopia: Overview

by Dr Dadimos Haile, Bisrat Teklu, Binyam Nibret and Habtamu Hailemeskel, Tadesse & Dadimos Legal Services
LLP
Country Q&A | Law stated as at 01-Feb-2022 | Ethiopia
A Q&A guide to doing business in Ethiopia.
This Q&A gives an overview of key recent developments affecting doing business in Ethiopia as well as an
introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives;
and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating
employment relationships, including redundancies and mass layoffs, and provides short overviews on competition
law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation
and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.
Overview
Legal System
Foreign investment
Business Vehicles
Environment
Employment
Laws, Contracts and Permits
Termination and Redundancy
Tax
Taxes on Employment
Business vehicles
Business Income Tax

Interest Income
Royalty Tax
Capital Gains Tax
Repatriated Profit
Other Income
State or Local Taxes
Value Added Tax (VAT)
Dividends, Interest and IP Royalties
Groups, Affiliates and Related Parties
Customs Duties
© 2024 Thomson Reuters. All rights reserved. 1

Import of Services
Taxes on Exports
Double Tax Treaties

Competition
Anti-Bribery and Corruption
Intellectual Property
Marketing Agreements
E-commerce
Advertising
Data Protection
Product Liability
Regulatory Authorities
Contributor Profiles
Dr Dadimos Haile, Senior Advisor, Research and Business Development
Bisrat Teklu, Attorney
Binyam Nibret, Attorney
Habtamu Hailemeskel, Attorney
Overview
1. What is the general business, economic and cultural climate in your jurisdiction?
Economy
Ethiopia is one of the fastest growing economies and the second most populous country in Africa. The strong economy has
been assisted by the significant public sector investment in infrastructure including roads, railways, dams, industrial parks and
housing complexes. According to the 2020 World Bank Report, GDP amounted to $107.65 billion, with a per capita of $936.3
(2020). The GDP adjusted by purchasing power parity (PPP) was $2423.0.
The economy is increasingly being liberalised with ongoing reforms aimed at ending government monopoly in areas that were
reserved for state enterprises. Agriculture has historically contributed the biggest share of GDP although it has recently been
overtaken by the service sector including tourism and transport, by slight margins. The agriculture sector is still the largest
employer offering a livelihood to the majority of the population. The top agricultural exports of Ethiopia are coffee, pulses, oil
seeds and flowers. It is the fifth largest coffee producer and also has one of the largest livestock herds in Africa, contributing
to the export of cattle, meat hides, and skins.

Ethiopia has the second largest hydro power potential next to the Democratic Republic of Congo. It has petroleum and rich
mineral resources which remain largely untapped including gold, tantalum, potash, gemstones, iron ore as well as various other
industrial, energy and construction minerals. Ethiopia's currency is Birr.
Dominant Industries
Outside of the agriculture and services sector, the main industries include food processing, beverages, textiles, leather, garments,
chemicals, metals processing and cement. The textile industry has seen a significant expansion, having been a key aspect of
the Government's development strategy, aimed at attracting foreign direct investment in the industry as a springboard towards
rapid industrialisation.
Population and Language
The population of Ethiopia is estimated to be 114.96 million. Ethiopia has a total area of 1,136.3sq km. Amharic is the official
working language at the federal level while Amharic, Afaan Oromo, Somali, Tigrinya, Afar, Sidamo and Harari are the working
languages at the level of the respective regional states. More than 80 other local languages are spoken in Ethiopia. English is
widely spoken in business circles and is a medium of instruction starting from secondary school.
Business Culture
Business etiquette is relatively formal in Ethiopia. Prior appointments and formal attire are appreciated for business meetings.
English is widely used in business circles. It is common to shake hands to greet, using the right hand or both hands. Ethiopians
also often greet close friends with an embrace. Ethiopia remains a traditional and hierarchical society and people stand up to
greet those who are older, to their superiors and guests. It is recommended to use titles such as 'Ato' (Mr), 'Woizerit' (Miss),
'Woizero' (Mrs) and professional or academic titles until invited otherwise. Titles are used in combination with first names,
not surnames.
Working hours are between 8:30am to 12:30pm and 1:30pm to 5:30pm from Monday to Friday. On Fridays, Government offices
are open from 8:30am to 11:30 and 1:30 pm to 5:30pm. Banks are open from 8:00am to 5:30pm Monday to Saturday. Ethiopia
follows the Julian calendar comprising 12 months of 30 days each and a 13th month of five or six days (in a leap year). The
Ethiopian calendar is seven or eight years behind the Gregorian Calendar and the new year starts on the 11 or 12 of September
(depending on the leap year). Ethiopia is in a GMT +3 time zone. However, the day is equally divided following the pattern of
sunrise and sunset, with the 12 hour clock counting from 7am for daytime and from 7pm for night time.
There are public holidays on or around 11 September, 27 September, 18 October, 7 January, 19 January, 2 March, 22 April,
24 April, 1 May, 3 May, 5 May, 28 May and 10 July.
2. What are the key recent developments affecting doing business in your jurisdiction?
Key Business and Economic Events

The Ethiopian government has initiated significant reforms aimed at opening up the economy for the private sector and attracting
FDI since Prime Minister Abiy Ahmed came into office in 2018. These include the decision to liberalise key sectors of the
economy and to partially or fully privatise state monopolies such as Ethio-Telecom, Ethiopian Electric Power, Ethiopian
Airlines and the Ethiopian Sugar Corporation. The Government has also begun to engage the private sector in public works
and infrastructure projects through PPP schemes.
These initiatives are reinforced by the Home-Grown Economic Reform Agenda adopted in September 2019 which seeks to
overcome existing obstacles to economic growth including foreign exchange imbalances, external debt burden and limited
private sector access to finance through structural and institutional reforms. The Reform Agenda is integrated into the
Government's Ten-Year Perspective Development Plan (2021 to 2030) that was unveiled in June 2021. The latter plan, dubbed
Pathway to Prosperity, envisions Ethiopia becoming an industrialised lower-middle income country by 2030, with shared
prosperity.
The Ethiopian Communications Authority (ECA) issued the first private telecom licence to Global Partnership for Ethiopia (a
consortium composed of Safaricom, Sumitomo Corporation, Vodacom, Vodafone and CDC) that won the bid for one of the
two licences on offer. Though the Request for Proposal for the second licence was published by late September 2021, the ECA
suspended the bidding process in December 2021. The Ministry of Finance launched an Invitation for Expression of Interest to
the proposed sale of a 40% stake in the state-owned operator Ethio Telecom. The government will retain 55% ownership while
the remaining 5% is expected to be sold to domestic investors.
The government has also embarked on comprehensive legal and institutional reforms as part of the Ease of Doing Business
Reform.
On the negative side, the COVID-19 pandemic has particularly affected the tourism, air transport, hospitability and
manufacturing sectors, understandably resulting in economic slowdown to some extent. The economy reportedly grew by 6.1%
in 2020, compared to 8.4% in 2019 (African Development Bank, 2021).
Political Events
National elections were held in June 2021 in most parts of the country, which the ruling party overwhelmingly won. These
enable the Prime Minister to pursue the ongoing reforms. There are, however, concerns that the ongoing conflict in the Tigray
region, one of the regions where the national elections have not been held, may adversely affect the economy.
New Legislation
A significant number of new laws and amendments have been enacted in recent years. The outline below only covers those
enacted since 2019.
The Revised Commercial Code: Company Law. One major development is the enactment of the revised Commercial Code
in March 2021 amending major parts of the law that has been in effect since 1960. The revised Commercial Code repealed three
sections of the old commercial code governing traders, business organisations and bankruptcy, while the remaining sections
dealing with carriage and insurance (Book III) and negotiable instruments and banking transactions (Book IV) will remain in
force. The old Commercial Code recognised six forms of business organisations: ordinary partnership, general partnership,
limited partnership, joint venture, share company and private limited company. The revised Commercial Code removed ordinary
partnership and introduced limited liability partnership (LLP) and a one-person private limited company.
The new Commercial Code also recognises holding companies and allows them to own shares in subsidiaries or invest directly
in trade activities. The code also introduced new rules governing groups of companies and division of business organisations
and sets new provisions on the procedures to be followed on mergers (which includes acquisitions) and division.

The revised Commercial Code introduced major changes on the section governing share companies. Among others, it prohibits
the issuance of bearer shares and obliges holders of bearer shares to convert them into registered shares within three years from
the date of publication of the code in the Negarit Gazette.
The revised Codes also introduces new provisions governing the:
• Qualification of directors.
• Liability of directors and shareholders.
• Dealings between a share company and persons affiliated with the company.
• Conflict of interest.
• Supervisory mechanisms.
The other new features of the revised Code include:
• The mandatory redemption of shares on request by both majority and minority shareholders.
• A mandatory bid rule that requires a buyer of shares to make a tender offer to all shareholders if buying shares
representing 50% or more of the capital.
• Provisions protecting minority shareholders from ordinary meeting resolutions that are against the minority
shareholders' interest.
Arbitration.On 2 April 2021, Ethiopia enacted the Arbitration and Conciliation Working Procedure Proclamation No.
1237/2021, which applies to both domestic and international commercial arbitration. Arbitration was previously governed by
the provisions of the 1960 Civil Code and the 1965 Civil Procedure Code. The Arbitration and Conciliation Proclamation fills
important gaps in existing legislation. It provides a comprehensive legal framework governing the creation, perfection and
enforcement of arbitral clauses, as well as the conduct of arbitral proceedings and enforcement of arbitral awards in Ethiopia.
The above development came after Ethiopia's ratification of the UN Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958 (New York Convention) through the Proclamation to Ratify the Convention on Recognition and
Enforcement of Foreign Arbitral Awards Proclamation No 1184/2020. The Proclamation contains a declaration to the effect
that the Convention would only apply with respect to arbitral awards made in another contracting state and differences arising
from legal relationships considered commercial under Ethiopian Law. The Convention also applies only in respect of arbitration
agreements concluded after the date of Ethiopia's accession.
Advocates proclamation. Ethiopia enacted the Federal Advocates Licensing and Administration Proclamation No 1249/2021
which allows law firms to be established for the first time. The Proclamation also allows foreign lawyers or law firms to provide
legal services to their clients in Ethiopia if the advice relates to the law of a foreign country and the advice is given in partnership
with local lawyers or law firms.
Investment Law. The House of Peoples' Representatives adopted Investment Proclamation No. 1180/2020 on 30 January
2020, which was followed by the adoption of Investment Regulation No. 474/2020 on 2 September 2020 by the Council of
Ministers. The Proclamation and Regulation replace Proclamation No.769/2012 and Investment Regulation No. 270/2012,
respectively and contain detailed provisions that are aligned with the Government's policy aimed at encouraging private
investment, including foreign direct investment. Among the key features of the new legislation is the negative listing approach,
which sets out the areas that are not open to foreign investors rather than seeking to enumerate those that are open. All other

investment areas are open for foreign investment. The Proclamation also provides enhanced complaint and dispute resolution
mechanisms.
E-commerce and e-government. Another major legislative development is the enactment of the Electronic Transaction
Proclamation No. 1205/2020, which covers both e-governance and e-commerce and contains detailed provisions regulating
matters such as digital signatures, electronic receipts and consumer protection (see Question 33).
Business registration and licensing. A number of measures have been implemented to ease the process of starting a new
business in Ethiopia, primarily through the enactment of the Commercial Registration and Business Licensing (Amendment)
Proclamation No. 1150/2019 and Council of Ministers Commercial Registration and Licensing (Amendment) Regulation No.
461/2020. The following are some of the measures adopted:
• The Ministry of Trade and Regional Integration has launched an online services platform, including registration and
licensing services.
• The rule that imposed cancellation of registration as a penalty for failure to obtain a business licence within one year of
commercial registration has been abolished.
• The Ministry of Trade and Regional Integration must set up a one-stop shop service centre and provide its services to
applicants, including authentication and tax registration services, although this is not operational yet.
• Business vehicles are no longer required to publicise the establishment of companies, cancellation of business licences
and commercial registration in a newspaper. However, the cancellation of registration for private limited company can
only be valid a month after the registering authority publicised it by way of accessible communication and information
technology. In addition, according to the subsequently enacted Commercial Code, the cancellation of registration
of a business organisation must be published in a newspaper with wide circulation in the area where the business
organisation had its head office
• The rule prohibiting investors from obtaining certificates of registration and business licences via proxy has been
abolished.
• The requirement on principals based overseas to deposit the minimum capital only in their commercial representatives'
names has been lifted. Deposits can now be made in the name of the principal.
• Foreign investors are allowed to sell their own products produced in Ethiopia through electronic commerce. In the past,
retail business was exclusively reserved to Ethiopian nationals or foreigners of Ethiopian origin in the past.
Establishment of Capital Markets Proclamation No. 1248/2021. The Proclamation, which was enacted in June 2021,
establishes the first full-fledged capital market in the country. It provides for the transaction of equities, bonds and financial
derivatives, units in investment schemes, real estate investment trusts, currency exchange contracts and other products as
determined by the Capital Markets Authority. The Authority is the regulatory body established under the Proclamation and
its mandate will include granting licences to the various players and regulating the listing and delisting of financial products
including bonds and stocks on the trading platform. It will also approve securities exchange and derivatives exchange operations
and authorise the establishment and licensing of securities exchanges. The Proclamation also envisages the establishment of the
Ethiopian Securities Exchange as a share company with up to 25% of the shares allocated to the government. The government,
however, can acquire more shares in the event there is insufficient interest from the private sector.
Tax Law. The Excise Tax Proclamation No. 1186/2020, the Excise Tax (Amendment) Proclamation No. 1229/2020 and the
Excise Tax Proclamation Implementation Directive No. 67/2020 were enacted in 2020.

Proclamation No. 1186/2020, which replaces the Excise Tax Proclamation No. 307/1995, seeks to modernise the excise tax
administration with stricter regulation on tax liability at different stages, and acquittal from liability.
The Value Added Tax Proclamations No. 285/2002 and VAT Amendment Proclamation No. 609/2008 have also been amended
by Proclamation No. 1157/2019 (VAT Amendment Proclamation). The Amendment Proclamation and VAT Refund Directive
No. 148/2019 have introduced major changes including:
• To accounting periods and VAT refunds.
• Defined the term "capital goods".
• Reduced the proportion of VAT that government entities and public enterprises were allowed to withhold by 50%,
making the remaining 50% payable to the seller or provider of the service.
Contract for the International Sale of Goods. Ethiopia ratified the United Nations Convention on Contracts for the
International Sale of Goods (CISG) through Proclamation No. 1220/2020 with two reservations. One of the reservations relates
to Article 1(1)(b) of the Convention and the other relates to formal requirements with respect to a party having a place of
business in Ethiopia. The reservations mean that CISG does not apply in Ethiopia to contracts of sale of goods between parties
in different states when the rules of private international law lead to the application of the law of a Contracting State. It also
means that the form requirements of sales contracts will be applicable if one of the parties has its place of business in Ethiopia.
Banking and Finance.The National Bank of Ethiopia (NBE), the regulator of the financial services sector, has issued directives
on a number of matters. Among these, the directives governing payment systems and authorising entities other than financial
institutions to engage in digital payment services, which are in line with the National Digital Payments Strategy (NDPS) for
2021 to 2024 aimed at modernising Ethiopia's national retail payment system. The main directives are:
• Licensing and Authorisation of Payment Instrument Issuer Directive No. ONPS/01/2020. This establishes clear
and enabling regulatory requirements for payment instruments issuers, including mobile money, wallet and related
digital financial services providers. It expands the definition of financial institutions beyond banks and microfinance
institutions, to include technology companies owned by Ethiopian nationals or foreign nationals of Ethiopian origin that
can operate as payment instrument issuers.
• Licensing and Authorisation of Payment System Operators Directive No. ONPS/02/2020 (PSO Directive). The
PSO Directive allows non-financial institutions including financial technology companies to provide payment related
services in Ethiopia under a payment system operator licence issued by the National Bank of Ethiopia. The specific
activities that are subject to the licensing requirement consists of payment processing, personalisation of payment
cards, acquiring payment transactions, point of sale machine operation, payment aggregation and payment applications
or solutions.
• Financial Consumers Protection Directive No. FCP/01/2020 (FCP Directive). In June 2020, the NBE issued the
FCP Directive setting out a detailed set of rules for the protection of consumers including consumer data protection as
well as compliant and dispute resolution procedures.
• Open Market Operations and Standing Facilities Directive No. MFAD/OMO and SFs/001/2021. The OMO and
SFs Directive is designed to formalise and transform the money market between banks which is largely based on trust.
It mandates the NBE to advance short- and long-term refinancing facilities to banks and other financial institutions; and
issue its own debt and payment instruments for this purpose.
• Foreign exchange directives. The NBE has issued various foreign exchange directives over the last couple of years
(see Question 6 for details).

Energy. The Council of Ministers adopted the Geothermal Resource Development Council of Ministers Regulation in 2019
in accordance with the 2016 Geothermal Resources Development Proclamation. Under it, the Ethiopian Energy Authority can
grant the following licences to operators of geothermal resources capable of generating electric power and providing services,
such as direct heating and combined heat and power:
• Reconnaissance licence.
• Exploration licence.
• Geothermal well-field development and use licence.
Securities. In 2019, Ethiopia enacted the Movable Property Security Right Proclamation No. 1147/2019, which eliminates
dispossession as a mandatory requirement to create valid security rights over movable property. Under the new Proclamation,
valid security rights can be created on movable assets by entering into a simple security agreement with a grantor that has
legitimate title over the assets regardless of whether the debtor retains possession.
As envisaged under the Movable Property Security Rights Proclamation, the Ethiopian Collateral Registry Office was
established by the NBE through the Operationalisation of Movable Collateral Registry Directive No. MCR/001/2020. The
NBE further issued Codification, Valuation and Registration of Movable Properties as Collateral for Credit Directive No.
MCR/002/2020 and established a collateral registry electronic system for receiving, sorting and making accessible to the public
information about security rights and non-consensual rights in movable property.
Telecommunications.Parliament has approved Communications Service Proclamation which (for the first time) liberalises
the telecommunications sector. The Proclamation provides that telecommunications services, including the ownership of a
telecommunications operator or a telecommunications network are open without limitation to private investors, both domestic
and foreign. The proclamation establishes the Ethiopian Communications Authority as an autonomous regulatory body for the
telecommunications sector. The Authority enacted the following Directives:
• Telecommunications Interconnection Directive No. 791/2021.
• Telecommunications Licensing Directive No. 792/2021.
• Telecommunications Infrastructure Sharing and Collocation Directive No. 793/2021.
• Telecommunications Quality of Service Directive No. 794/2021.
• Telecommunications Numbering Directive No. 795/2021.
• Telecommunications Dispute Resolutions Directive No. 796/2021.
• Telecommunications Lawful Tariffs Directive No. 797/2021.
• Telecommunications Competition Directive No. 798/2021.
• SIM Card Registration Directive No. 799/2021.
• Telecommunications Wholesale National Roaming Directive No. 800/2021.
Legal System

3. What is the general legal system in your jurisdiction?
Ethiopia is a federal state with a civil law legal system combined with procedural laws, principally inspired by the common law
system. Sources of Ethiopian law include the Constitution, international treaties, proclamations, decrees, regulations, directives
and customary laws. A ruling of the Cassation Division of the Federal Supreme Court interpreting the law has a binding effect
on federal and state courts. The Constitution provides legal status to some pre-existing religious and customary courts, and
gives federal and regional legislatures the authority to recognise other courts. Sharia courts may hear religious and family cases
involving Muslims. All parties to a dispute must agree to the forum before a customary or religious court can hear a case.
Foreign investment
4. Are there any restrictions on foreign investment, ownership or control?
Ethiopian investment law provides that foreign investors can engage in all areas of investment that are not expressly prohibited
to them. Foreign nationals must obtain an investment permit from the Ethiopian Investment Commission before starting a
business in Ethiopia. Likewise, a foreign investor intending to buy an existing enterprise or to purchase shares in an existing
enterprise must obtain prior approval from the Commission.
Restrictions on Foreign Shareholders
The following include the areas that are not open for foreign investment:
• Banking, insurance and micro-credit and saving services.
• Broadcasting and mass media services.
• Legal practice and legal consultancy services.
• The preparation of indigenous traditional medicines.
• Advertisement, promotion and translation.
• Air transport services using aircraft with a seating capacity of up to 50 passengers.
However, foreign nationals of Ethiopian origin have recently been allowed to engage in financial services, legal practice and
legal consultancy.

Government Authorisations
Areas of investment such as the transmission and distribution of electrical energy through the integrated national grid system,
is reserved for the government. However, the Investment Board is mandated to open up investment areas that are exclusively
reserved for domestic investors under special circumstances.
Specific Industries
The investment laws do not apply to mining and petroleum operations, which are governed by Petroleum Operations
Proclamation No. 295/1986 and Petroleum Production and Sharing Agreement (PPSA) and Mining Operations Proclamation
No. 678/2020 as amended by Proclamation No. 816/2013 and Proclamation No. 1213/202.
5. Are there any restrictions or prohibitions on doing business with certain countries, jurisdictions, entities,
organisations or individuals?
There are no restrictions on doing business with specific countries or jurisdictions.
6.Are there any exchange control or currency regulations or any registration requirements under anti-money
laundering laws?
Ethiopia has a number of exchange control directives issued by the National Bank of Ethiopia (NBE), which is the main
regulatory body for the financial sector and established by the National Bank of Ethiopia Establishment (Amendment)
Proclamation No. 591/2008.
The Proclamation outlaws foreign exchange transactions except with banks or other dealers authorised by the NBE and grants
the NBE a range of other powers related to foreign exchange control. These include the authority to:
• Determine the conditions, limitations and circumstances under which residents and non-residents can possess and
utilise foreign currency or instruments of payments in foreign exchange.
• Establishes the terms and conditions for the transfer of foreign exchange to and from Ethiopia and the settlement of any
foreign exchange that results from export, import or transfer.
• Determine the terms, conditions and circumstances under which the Ethiopian Revenue and Customs Authority may
allow the import or export of valuable goods or foreign exchange.
• Monitor the foreign exchange transactions of financial institutions.

The Ethiopian Birr is not freely convertible. There are strict regulations governing access to foreign loans. The NBE does not
authorise the repatriation of interest and principal payments on loan or credit facilities that have not been approved and registered
by it. Therefore, all capital brought in and invested in Ethiopia must be registered by the Ethiopian Investment Commission
and the NBE. Technology transfer agreements must also be registered with the Ethiopian Investment Commission to avoid
difficulties during repatriation of profits and dividends and other payments.
The following are some of the specific NBE directives dealing with foreign exchange:
• Foreign Currency Intermediation by Banks Directive No. SBB/77/2020 (FCIB Directive). The FCIB Directive
authorises local banks to borrow from external lenders in foreign currency and extend foreign currency denominated
loans to local entities engaged in foreign exchange generating business. The NBE lays down strict requirements that
must be met for local banks to be able to borrow from external sources and extending loans locally in foreign currency.
• Retention and Utilisation of Forex Earnings Directive No. FXD/70/2021 (amending Directives No. FXD/66/2020).
The Directive seeks to provide incentives to exporters of goods and services in importing and repaying external debts.
Recipients of foreign exchange and exporters can now hold 45% of their export earnings and remittances indefinitely
in a Retention Account. However, the remaining 55% must be surrendered at the prevailing exchange rate on the day
of receipt to the recipient's bank and the latter must pay the equivalent in Birr. The Directive lifts the restrictions on the
utilisation of the amount in retention accounts, which can be used to import goods, provided the account holder has the
required business licence, or can be sold to the relevant bank.
• Establishment and Operation of Foreign Currency Account for Non-Resident Ethiopians and Non-Resident of
Ethiopian Origin Directives No. FXD/69/2021.The Directive replaces Directive No FXD/64/2019, which set out the
conditions for the establishment and operation of foreign currency accounts and allowed the account holder as well as
their spouses, employers and business entities to credit their foreign currency account. The main novelties of Directive
No. FXD/69/2021 include the provisions designed to curb the use of foreign currency account privileges for import of
non-essential goods and illegal currency trading. Account holders can only use the foreign currency to import priority
items such as agricultural and manufacturing input, medicine and related items, education materials, chemicals and
some other basic commodities. Interest will not be paid to a non-resident foreign currency current account. However,
interest can be paid to a fixed non-resident foreign currency account and the banks can set their own interest rate
through negotiation. The interest rate paid on a fixed account cannot be less than the London Interbank Offered Rate
(LIBOR). The Directive allows banks to set their own interest rates on non-repatriable ETB accounts, provided the rate
is not less than the minimum saving deposit rate set by the NBE.
• Establishment and Operation of Foreign Currency Saving Account for residents of Ethiopia, Non-Resident
Ethiopian and Non-Resident Ethiopia Origin Directives No FXD/68/2020. The Directive, adopted on 19 November
2020, allows residents of Ethiopia, Ethiopians residing abroad and foreign nationals of Ethiopian origin to establish
savings accounts in Ethiopia. The minimum deposit amount required is USD50 or the equivalent in sterling or euros.
A bank can also accept deposits in other convertible currencies including Australian dollars, Canadian dollars, Chinese
yuan, Japanese yen, Saudi riyals and UAE dirhams. These other currencies must be converted into dollars, euros or
sterling at the spot exchange rate. The foreign currency saving account can be interest bearing or interest free and in the
case of the former, the interest rate is calculated in foreign currency but paid in local currency
• Foreign Currency Allocation and Foreign Exchange Management (Amendment) Directive No. FXD/67/2020
(amending Directive No. FXD/62/2019). These Directives regulate the availability and allocation of foreign currency
based on priority levels per sector classified from one to four on a first-come first-served rule. The new Directive alters
the level of priority of certain headings such as profits and dividends, which have now been moved from second to
third priority level, back to where they used to be before the enactment of Directive No. FXD/62/2019.
• Transfer of the NBE's Foreign Exchange Functions to Commercial Banks (Amendment) Directive No.
FXD/63/2019. This Directive allows commercial banks to issue permits for the import and export of goods for

any value against the submission of the required documents by the importer and exporter. For imports of goods
worth at least USD1 million, banks must check that the import application is supported by the relevant International
Competitive Bid (IBD) documents. Imports made by the government and public enterprises (regulated under the
government procurement proclamation) or by public enterprise laws and imports using from own foreign currency
accounts do not need to be supported by IBD documents. The NBE Governor or the Vice Governor of Monetary
Stability Cluster can give discretionary special approval on a case-by-case basis.
• Regulation of External Loan in Kind Directive No. FXD/61/2019. The Directive allows investors to obtain external
loans in kind (which was not permitted under the previous External Loan Directive). Similar to a loan in cash, the
person who acquires the external loan in kind must register it with the NBE. The Directive defines "external loan"
as the acquisition of capital goods from an eligible foreign lender in the form of sale with deferred payments, lease
agreement or any other legal arrangement approved by the NBE.
• Fixation of the Daily Foreign Exchange Cash Notes and Transaction Rate (Amendment) Directive No.
FXD/60/2019. The Directive is aimed at encouraging clean competition between banks by setting a maximum margin
between the buying and selling rate. Banks must not exceed 2% from the interbank foreign exchange market indicative
daily buying rate. The Directive requires banks to publish the daily buying and selling rate, and to use it throughout the
day. Banks can buy foreign exchange from the retention account holder at a negotiable rate up to its selling rate of the
day.
• Foreign Exchange Directive in Industrial Parks Directive No. FXD/59/2019. The Directive aims to facilitate the
smooth operation of industrial parks and allows investors to:
• Purchase raw materials manufactured by another investor within the same industrial park or from another
industrial park with funds from its foreign currency and/or retention account;
• Sell their manufactured products within the industrial park to other investors in the same industrial park in
exchange for foreign currency to be credited to its retention account;
• Pay the salary of their expatriate employees in foreign currency from their retention or foreign currency account.
A foreign employee at an industrial park can open a foreign currency account with a bank located in the industrial
park. Any foreign currency account must be credited up to the amount of their net monthly salary (excluding any other
benefits). The employee can transfer abroad or reconvert into ETB at any time from its foreign currency account. The
Directive also allows banks to issue interim import and export permits to investors to buy and sell raw material from or
to another investor in the industrial park, or another investor in another industrial park.
7. What grants or incentives are available to investors?
Incentives
Ethiopia offers a number of incentives to foreign investors such as allowing an investor who has incurred loss within the period
of income tax exemption to carry forward the loss for half of the income tax exemption period after the period expires. Investors
can also import duty-free capital goods and construction materials that are necessary to establish a new enterprise or expand

or upgrade an existing enterprise. They can also import duty free vehicles depending on the areas of investment they engage
in. In addition, an investor who exports or supplies to an exporter as a production or service input is entitled to an income tax
exemption of at least 60% of the products or services.
Business Vehicles
8. What are the most common forms of business vehicle used in your jurisdiction?
Main Business Vehicles
The main business vehicles are share companies and private limited companies. For partnerships, at least one of the partners
must have unlimited liability. Ethiopian law does not provide for business trusts or their equivalent.
Foreign Companies
Private limited companies are used more commonly by foreign investors due to their management flexibility and easier set-up.
9. What are the main formation, registration and reporting requirements for the most common corporate business
vehicle used by foreign companies in your jurisdiction?
Registration and Formation
A minimum of two and a maximum of 50 members are required to register a private limited company (PLC). Foreign investors
prefer a plc to control the majority of the shares. Typically, two people form a PLC in which one holds 99.9% of the shares and
the other holds the remaining 0.1% share. However, the introduction of a one-person company in the new Commercial Code
may attract individual foreign investors to form a company in which they are the 100% owner.
Where a foreign company is going to be a member of a PLC, the following are required:
• Minutes of the board resolution passed by the authorised organ of the parent company evidencing a decision to
establish a plc in Ethiopia.
• The certificate of incorporation of the parent company.
• Copies of memorandum and articles of association or similar documents of the parent company.
• If the process is carried out through an attorney, a power of attorney.

All the documents originating from abroad must be notarised by the relevant notary office and the Ethiopian Embassy in
the company's home country. The minimum capital required from a foreign investor for a single investment project must be
deposited in a bank account in the name of the PLC under formation, until it gets its registration certificate and investment
permit. The share capital of the PLC will be the allocated capital for the investment.
Reporting Requirements
A PLC must audit its financial statements and submit reports to the Ministry of Trade and Regional Integration. An annual
tax report must include a profit and loss statement as well as balance sheet for the tax year. It must withhold and comply with
reporting obligations for other taxes. In addition, it must report to the Accounting and Auditing Board of Ethiopia.
In addition, the Investment Proclamation requires an investor to submit quarterly reports on the implementation of their
investment project. Foreign investors must submit their report to the Ethiopian Investment Commission.
Share Capital
For any foreign investment, there is a minimum capital requirement of USD200,000 for an investment project by a foreign
investor and USD150,000 where the foreign investor is investing jointly with a domestic investor. The minimum capital
requirements for a foreign investor investing in architectural or engineering work or related technical consultancy services,
technical testing and analysis or in publishing work are USD100,000 or USD50,000 depending on whether or not the investment
is jointly made with a domestic investor.
Non-Cash Consideration
Shares can be issued for non-cash consideration. In-kind contributions are possible under the new Commercial Code. According
to the new Code, in-kind contributions can be made in the form of movable or immovable property, skills, trade marks,
goodwill, patents, lease rights, usufruct, or other contributions. However, PLCs, share companies, and limited partners in limited
partnerships are prohibited from contributing skills as an in-kind contribution. The new Code requires members who contribute
an in-kind contribution to produce an expert valuation report, unlike the shareholders' agreement that was previously required.
Rights Attaching to Shares
Restrictions on rights attaching to shares. Shares in a private limited company cannot be transferred to non-members unless
the transfer is approved by a majority of the members representing at least three-quarters of the capital. The assignment of shares
must be in writing. Under the new Commercial Code, a member must, before disposing of their shares to a person outside the
company, give the opportunity to other members to purchase the shares by revealing to them the price and conditions on offer.
Automatic rights attaching to shares. Every share confers a right to participate in the annual net profits and to a share of the
net proceeds in the winding up. In addition, every shareholder has a preferred right (in proportion to its holding) to the allotment
of cash shares issued on an increase of capital.

10. What is the standard management structure and key liability issues for the most common form of corporate
business vehicle used by foreign companies in your jurisdiction?
Management Structure
The new Commercial Code allows private limited companies to have board of directors. For a company to have a board of
directors, its memorandum of association must include provisions to this effect. The number of directors must not be less than
three and more than seven. The Code requires the company to have one general manager. The general manager can either be
appointed from among members of the company (a shareholder) or a third party.
Management Restrictions
There is no restriction on foreign managers. A foreign investor has the right to employ expatriate employees for top management
positions in the enterprise.
Directors' and Officers' Liability
A manager is liable to the company, members, and third parties for any breach of their duties under the law or the memorandum
of association. If, in the case of bankruptcy, the assets are shown to be inadequate, managers (current and previous as well as
de facto managers) may be declared bankrupt personally and/or required to pay the company's debts (either all or in part) or
when they have not acted with due care and diligence.
Directors are also jointly and severally liable to the company for damages caused by failure to carry out their duties. The
company's decision not to institute proceedings against the directors does not affect the creditors' rights to sue them.
Parent Company Liability
The Commercial Code defines "group of companies" as "a set of companies comprising the parent company and all its national
and foreign subsidiaries, unless otherwise indicated." The general rule is that private limited companies have limited liability
and the parent company is not liable to its subsidiaries. However, the provisions dealing with groups of companies provide
exceptions where a parent company can be held liable for its subsidiary's debts.
Whenever a subsidiary company, which has been managed according to instructions issued by its parent in the interests of the
group, has no reasonable prospect, through its own resources, of avoiding a winding-up (that is, it reaches a crisis point), the
parent company must, without delay, effect a fundamental restructuring of the subsidiary or initiate its winding-up procedure. If
the parent company acts in contravention of this obligation, it will be held liable for any unpaid debts of the subsidiary incurred
after the crisis point. In addition, if the parent company has managed the subsidiary to its detriment, and in violation of the
interests of the group, it will be held liable for any unpaid debts that are the consequences of the harmful instructions.
Environment

11. What are the main environmental regulations and considerations that a business must take into account when
setting up and doing business in your jurisdiction?
The Investment Proclamation requires investors to give due regard to social and environmental sustainability values,
including environmental protection standards and social inclusion objectives, when carrying out their investment projects. The
Environmental Impact Assessment Proclamation also requires an environmental impact assessment to be done and reviewed
by relevant government organs before the investment is implemented.
Employment
Laws, Contracts and Permits
12. What are the main laws regulating employment relationships?
Foreign Employees
Employment of foreign employees in Ethiopia is governed by the following laws:
• The Constitution of the Federal Democratic Republic of Ethiopia.
• Labour Proclamation No. 1156/2019 (Labour Proclamation).
• Investment Proclamation No. 1180/2020.
• Investment Regulation No. 474/2020.
• The Civil Code (Civil Code Proclamation No. 165/1960), title XVI, "Contracts for the Performance of Services",
specifically Articles 2512 to 2593.
• A Directive Regulating the Issuance of Work Permit to Expats Employed in Investments and the Implementation of
Knowledge and Skill Transfer from Expats to Ethiopians Directive No. 772/2021.
• Expat Work Permit Directive No. 44/2021.
• Employment Relations Established by Religious and Charitable Organisations Council of Ministers Regulation No.
342/2015.
• The Proclamation to Provide for the Right to Employment of Persons with Disabilities Proclamation No. 568/2008.
Discussions under Question 13, Question 15, Question 16 and Question 17 do not apply to managerial employees, who are
regulated by the provisions of the Civil Code.

Employees Working Abroad
The law that applies to employees working abroad is Ethiopia's Overseas Employment Proclamation No. 923/2016 (as amended
by Proclamation No. 1246/2021).
Mandatory Rules of Law
The Ethiopian Labour Proclamation sets out mandatory minimum requirements on working hours, leave, working age, overtime
pay and weekly rest. These conditions cannot be overridden by an employment contract, work rules or collective agreements.
13. Is a written contract of employment required?
Main Terms
Unless otherwise provided by law, a contract of employment is not subject to any formal requirements. However, it is advisable
to have it in writing so it can be used as evidence in case of contention over the existence of employment relations.
The terms in a contract of employment must be clearly set out in a way that the parties are left with no uncertainty as to their
rights and obligations under its terms. In particular, the terms of an employment contract must specify the:
• Type of employment.
• Place of work.
• Wages and their method of calculation.
• Manner and interval of payment.
• Duration of the contract.
An employment contract cannot lay down less favourable conditions for the employee than those provided for by law, collective
agreement or work rules.
Implied Terms
Under Ethiopian law, employment contracts are always presumed to have been made for an indefinite period of time. It is only
when employment relations fall under explicitly stated exceptions that this presumption can be rebutted and the duration of the
contract becomes for a definite period. Whether included in the employment contract or not, employees are entitled to minimum
conditions of work like minimum working hours, paid leave on public holidays, overtime pay, annual, maternity and sick leaves.
Collective Agreements
Collective agreements can set out:

• Rights and obligations of the worker during the probationary period.
• Conditions for the modification of the contract of employment where it is not provided for under the law.
• Grounds for the termination of the contract of employment without notice.
14. Do foreign employees require work permits and/or residency permits?
Work Permits
A foreign national must have a work permit to undertake any type of work in Ethiopia. A work permit for employees of foreign
investors is issued for a specific type of work by the Ethiopian Investment Commission (EIC) as part of its one-stop service.
The work permit is subject to renewal every year. One of the grounds taken into account by the EIC in determining whether to
grant work permit or to renew the same is the unavailability of the work force locally having the required skill and experience
for the position.
Residency Permits
Residence permits are issued by the Ethiopian Immigration, Nationality and Vital Events Agents. A work permit is one of the
mandatory requirements for applying to get a temporary residence permit. Residence permits are typically issued within two
business days after the application is submitted and can take up to five days in exceptional cases.
Termination and Redundancy
15. Are employees entitled to management representation and/or to be consulted in relation to corporate
transactions (such as changes in control, redundancies and disposals)?
Where a workforce is reduced, the employer must consult with trade union representatives or the employees and discuss options,
including priority criteria for layoffs and the retention of higher productivity rates.

16. How is the termination of an individual's employment regulated?
Termination
A contract of employment can be terminated (by the employer or employee) only under the conditions laid down by law,
collective agreement or the employment contract.
The Labour Proclamation sets out the grounds for termination of employment contracts with notice and without notice. In
general, employment contracts can only be terminated where there are grounds connected with the worker's conduct or objective
circumstances arising out of ability to do the work, or the organisational or operational requirements of the undertaking.
Fair Dismissal
Termination of an employment contract without notice is lawful only when it is based on the grounds provided by the law, the
contract of employment or the collective agreement. The Labour Proclamation specifically provides for grounds for termination
of employment contracts.
An employment contract can be terminated with notice on grounds provided by the Labour Proclamation. These are related
to the loss of capacity of the worker and the organisational and operational requirements of the enterprise. Termination of a
contract of employment on grounds other than those provided in the Labour Proclamation is unlawful and unjustified.
Statutory minimum notice. The notice period given by the employer must be:
• One month for a worker who has completed the probation period and has a period of service not exceeding one year.
• Two months for a worker who has a period of service above one year but less than nine years.
• Three months for a worker who has a period of service of more than nine years.
• Two months for a worker who has completed the probation period and whose contract of employment is terminated due
to reduction of work force.
The notice of termination must be in writing, specify the reason for termination and be handed to the worker in person.
Severance payment. Lawful termination results in payment in lieu of annual leave, severance pay and a certificate of service.
Unfair Dismissal
Grounds for unfair dismissal. Dismissal of an employee for grounds other than those specifically provided under the Labour
Proclamation is deemed to be unlawful.
Remedies. Unlawful termination results in reinstatement and/or compensation together with a severance payment, payment in
lieu of notice period and a fine.
Class of Individuals

The Labour Proclamation allows employees to form a trade union and employers to form an employers' association. Employers
cannot terminate a contract of employment on the grounds of workers' membership of a trade union and participation in its
lawful activities.
17. Are redundancies and mass termination regulated?
Redundancies and Mass Termination
Mass layoffs are regulated as a "reduction of workforce", applying to workers representing at least 10% of the number of
workers employed or, in the case of an undertaking where the number of workers employed is between 20 and 50, a reduction
of workers affecting at least five employees over a continuous period of not less than ten days.
Procedural Requirements
The law sets out an order of priority in relation to the type of employees affected in the event of mass layoffs/reduction of
workers that allows the employer to retain workers with skills and a higher rate of productivity. Where there is parity in those
criteria, the workers affected by the reduction must be determined in the following order (from the first to the last to be affected):
• Employees with the shortest length of service in the undertaking.
• Those with fewer dependents.
• Those who are disabled by an employment injury.
• Workers' representatives.
• Expectant mothers.
The procedure will not apply to the reduction of workers linked to a normal decrease in the volume of construction work as a
result of successive completion of parts of the work they were employed for.
Tax
Taxes on Employment
18. In what circumstances is an employee taxed in your jurisdiction?

Tax Residence
The Federal Income Tax Proclamation provides that Ethiopian income tax applies to residents of Ethiopia on their worldwide
income and to non-residents on their income from an Ethiopian source. An individual is considered to be an Ethiopian resident
if they are:
• Domiciled in Ethiopia.
• A citizen of Ethiopia with a consular, diplomatic or other official posting abroad.
• Present in Ethiopia, continuously or intermittently, for more than 183 days in a one year period.
Employment income that an Ethiopian resident receives from a foreign source is taxable subject to foreign tax credit and double
avoidance treaties. Employment income is "Ethiopian source income" to the extent that it is derived from employment exercised
in Ethiopia, wherever it is paid. Employment income paid to the employee by (or on behalf of) the Ethiopian Government,
wherever the employment is exercised, is also Ethiopian source income.
Other Methods to Determine Residency
There are no other methods of determining tax residency than those explained above.
19. What income tax, social security and other tax or contributions must be paid by the employee and the
employer during the employment relationship?
Tax Resident Employees
A tax resident employee who receives employment income during the month (or part of it) must pay employment income tax.
The rate of employment income tax is progressive and ranges from 0% to 35% depending on the salary range of the employee.
An employee is not allowed any deductions for any expenditure incurred when earning employment income. International
organisations or embassies, diplomatic missions, or other consular establishments in Ethiopia belonging to a foreign government
or of an entity exempt by law from tax withholding obligations must withhold tax from employment income received from
these entities, unless the employees are exempt from income tax.
Employees are also expected to contribute to the Private Organisation Employee Pension Fund (Pension Fund) that applies to
employees of private organisations who are Ethiopian nationals. Employees must contribute 7% of their salary to the Pension
Fund.
Non-Tax Resident Employees
A non-resident whose employment income is sourced from Ethiopia must pay employment income tax. The rate is similar to
that of resident taxpayers.
Employers

An employer must withhold the tax payment from the gross amount of each payment made to an employee as employment
income. An employer must also contribute to the Pension Fund that applies to employees of private organisations who are
Ethiopian nationals. The amount of contribution payable to the Pension Fund is 11% of the employee's salary.
Business vehicles
20. When is a business vehicle subject to tax in your jurisdiction?
Tax Resident Business
Business income made by a resident of Ethiopia is subject to tax in Ethiopia unless it is attributable to a business conducted by
the resident through a permanent establishment outside Ethiopia.
An individual qualifies as tax resident if they meet all of the following requirements:
• Domiciled in Ethiopia.
• A citizen of Ethiopia who has a consular, diplomatic or other official posting abroad.
• Present in Ethiopia, continuously or intermittently, for more than 183 days in a year.
Entities are tax residents if they are incorporated or formed or have a place of effective management in Ethiopia.
Non-Tax Resident Business
Non-resident businesses are taxed in Ethiopia only if their income is sourced from Ethiopia. Business income of a non-resident
is Ethiopian source income only if it is attributable to:
• A business conducted by the non-resident through a permanent establishment in Ethiopia.
• Disposals in Ethiopia by the non-resident business of goods or merchandise of the same or similar kind as those
disposed of by the non-resident business through a permanent establishment in Ethiopia.
• Any other business activity conducted by the non-resident in Ethiopia of the same or similar kind as that conducted by
the non-resident through a permanent establishment in Ethiopia.

21. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction?
Resident business vehicles are taxed on their worldwide income subject to foreign tax credit and double taxation treaties. A
non-resident business vehicle that derives income from an Ethiopian source must pay tax in Ethiopia.
The following are the main taxes payable by corporate bodies.
Business Income Tax
The rate of business income tax is 30%. A business income tax rate of 25% applies to a licensee who is engaged in mining
operations and a contractor who carries out petroleum operations.
Business income taxpayers are classified under three categories.
• Category A taxpayers are entities and any other person with an annual gross income of ETB1 million or more. They
must file a tax declaration within four months from the end of the tax year.
• Category B taxpayers are taxpayers other than entities with an annual gross income between ETB500,000 and ETB1
million. They must file a tax declaration within two months from the end of the tax year.
• Category C taxpayers are persons other than entities with an annual gross income of less than ETB500,000. The
taxpayers in this category must pay tax between the 7 July and 6 August in each fiscal year.
Interest Income
A resident of Ethiopia who earns interest will be liable for income tax at the rate of 5% of the gross amount for savings deposits
with a financial institution that is a resident of Ethiopia or 10% of the gross amount of the interest in any other case. A non-
resident who has earned Ethiopian source interest will be liable for non-resident tax at 10% of the gross amount of the interest.
Royalty Tax
A resident of Ethiopia who earns a royalty is liable for income tax at the rate of 5% of the gross amount of the royalty.
Capital Gains Tax
A person who makes a gain from the disposal of an immovable asset, a share, or a bond will be liable to pay income tax. The
rate of income tax is 15% for immoveable assets and 30% for shares and bonds.
Repatriated Profit
A non-resident entity conducting business in Ethiopia through a permanent establishment must pay 10% on the repatriated
profit of the permanent establishment.
Other Income

A person who derives any income that is not taxable under Schedule A, B, C or any provisions of Schedule D of the Income
Tax Proclamation must pay 15% on the gross income.
A resident of Ethiopia or a permanent establishment of a non-resident in Ethiopia must withhold tax from the gross amount it
paid in the form of a dividend, repatriated profit, interest and royalty. The amount withheld by the withholding agent must be
paid to the tax authority within 30 days after the end of the month in which the withholding income was paid.
Capital gains tax and tax on other income must be paid within two months after the date of the transaction giving rise to the
income.
State or Local Taxes
Regional states can collect income taxes from regional government employees and employees of private enterprises located in
their own territories. They also collect profit, sales, excise and personal income taxes on income of enterprises they own. They
also administer fees for land usufructuary rights and taxes on income derived from artisanal and small-scale mining.
Value Added Tax (VAT)
VAT of 15% is payable on every taxable transaction made by a person registered for VAT or required to be registered for
VAT. Any person who carries out a taxable activity must be registered for VAT if the total value of the taxable transaction
made by the person during a period of 12 months exceeds ETB1 million. An application must be filed for VAT registration
if there is a reasonable ground to expect that the taxable transaction likely to be made within a period of 12 calendar months
will exceed ETB1 million.
A VAT registered person with annual taxable revenue of ETB70 million and above must file a VAT return for each calendar
month with the tax authority by the last day of the next calendar month. A VAT registered person whose annual taxable
transaction is below ETB70 million must account its VAT on a quarterly basis and file its VAT return for each quarter with the
tax authority within the calendar month following the end of the quarter.
Dividends, Interest and IP Royalties
22. How are the following taxed:
• Dividends paid to foreign corporate shareholders?
• Dividends received from foreign companies?
• Interest paid to foreign corporate shareholders?
• Intellectual property (IP) royalties paid to foreign corporate shareholders?
Dividends Paid

A dividend paid to non-resident corporate shareholders is subject to 10% non-resident tax on the gross amount of the dividend.
The same rate applies to a dividend attributable to a business carried out by a non-resident business through a permanent
establishment in Ethiopia. A resident of Ethiopia or a permanent establishment of a non-resident in Ethiopia paying out a
dividend must withhold tax from the gross amount of the dividend paid.
Dividends Received
A resident of Ethiopia who receives a dividend from foreign companies must pay 10% of the gross amount of the dividend
subject to foreign tax credit and double taxation treaties.
Interest Paid
A non-resident who earns interest from an Ethiopian source is liable for non-resident tax at the rate of 10% of the gross amount
of interest paid. A resident of Ethiopia or a permanent establishment of a non-resident in Ethiopia making a payment of interest
must withhold the tax from the gross amount of interest paid.
IP Royalties Paid
Royalties paid to non-residents are taxed at 5% of the gross amount of the royalty. A resident of Ethiopia or a permanent
establishment in Ethiopia of a non-resident paying the royalty must withhold the tax payment from the gross amount of the
royalty paid.
Groups, Affiliates and Related Parties
23. Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)?
Foreign controlled resident companies whose average debt to average equity ratio exceeds 2:1 for the tax year are not allowed
a tax deduction for the interest paid on the excess debt. However, this rule does not apply if the amount of the debt for the year
does not exceed the arm's length debt amount. An arm's length debt amount is the amount of debt that a financial institution
would be prepared to lend to the company in an arm's length transaction having regard to all circumstances of the company.
A foreign controlled resident company is defined as a resident company in which more than 50% of the membership interest
in the resident company is held by a non-resident either alone or together with related persons.
A permanent establishment in Ethiopia is treated as a foreign controlled resident company. The average debt to the average
equity ratio is computed based on the debt obligations of the non-resident company attributable to the permanent establishment
and the equity of the non-resident company attributable to the operations by the permanent establishment.

24. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction
(controlled foreign company rules)?
Ethiopia does not have specific controlled foreign company rules.
25. Are there any transfer pricing rules?
The Ethiopian Ministry of Revenues is given the power to distribute, apportion, or allocate income, gains, deductions, losses and
tax credits between persons that are parties to a transaction that is not an arm's length transaction. Both international transactions
and domestic transactions are assessable by the tax authority. Taxpayers must submit details of transactions with related persons
while filing tax declarations. Taxpayers can enter into advance pricing arrangements with the tax authority.
Customs Duties
26. How are imports and exports taxed?
Imported goods are subject to the following duties and taxes:
• Customs duty. An importer of goods pays customs duty calculated based on the percentage of the duty paying value
(the CIF value). The duty rate ranges from 0% to 35% depending on the type of imported goods.
• Excise tax. Excise tax is imposed on 378 categories of imported goods. It is computed based on the CIF value plus the
customs duty payable on the imported good. Its rate ranges from 5% to 500% depending on the type of imported goods.
In addition, importers of excisable goods must be licensed and registered by the Ministry of Revenue.
• Value added tax (VAT). VAT is levied at a flat rate of 15% on the sum of the CIF value, the customs duty and the
excise tax paid on the good.
• Surtax. 10% of surtax is imposed on the sum of the CIF value, the customs duty, the excise tax and VAT paid on the
imported goods, unless the imported goods are exempt from surtax.
• Advance payment of tax. Business income taxpayers importing goods for commercial use must make an advance
payment of business income tax equal to 3% of the CIF value of the goods. This tax paid in advance will be credited
against the business income tax liability of the taxpayer in the year in which the import occurred.

Special customs tariff rates ranging from 4.5% to 31.5% apply to goods produced and imported from Common Market for
Eastern and Southern Africa (COMESA) member countries.
Import of Services
VAT at 15% is payable on imported services. This tax is payable when a non-resident person who is not registered or required
to register for VAT renders services to a customer registered for VAT in Ethiopia or a resident legal person. The customer must
withhold the tax from the amount payable to the non-resident.
Taxes on Exports
No export duty is levied on export goods except for raw hides and skins. Raw hides and skins are subject to export duty at the
rate of 150%. Subject to certain qualifications, value added tax is imposed on exported goods and services at zero rate.
Double Tax Treaties
27. Is there a wide network of double tax treaties?
Ethiopia has signed double tax treaties with around 35 countries. More than 30 of them are ratified by the legislature. It has
exchanged instruments of ratification with 13 countries and the treaties have entered into force. These treaties are concluded
with the UK, Turkey, France, China, Sudan, India, Egypt, Italy, The Netherlands, Saudi Arabia, Ireland, Portugal and the United
Arab Emirates.
Competition
28. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct
regulated by competition law?
Restrictive agreements and practices are regulated by the Trade Competition and Consumers' Protection Proclamation No.
813/2013, which also regulates unilateral conduct. Proclamation No. 813/2013 applies to all commercial activities conducted
or having effect in Ethiopia, including foreign entities as long as their business is conducted or has an effect in Ethiopia. The
law sets out criminal liabilities for violation of some of its provisions. Accordingly, persons can be subject to a fine ranging
from 5% up to 10% of their annual turnover and/or imprisonment ranging from one to seven years depending on the offence
committed if they:

• Fail to observe the decisions of the courts on civil liabilities.
• Are found hoarding and diverting, committing prohibited acts such as disseminating false information on the nature of
goods, giving false information on reduction of prices.
Ministry of Trade and Regional Integration
The Ministry of Trade and Regional Integration (MoTRI) is the main regulatory body in Ethiopia. MoTRI has the power to
investigate competition or consumer protection cases, either on receipt of complaints or on its own initiative. The Adjudicative
Bench established under Proclamation No. 813/2013 has judicial powers to take administrative measures and imposing fines,
and ordering payment of compensation to victimised business persons.
The administrative measures include:
• The discontinuation of the act pronounced unfair.
• The taking of any appropriate measure that enables reinstatement of the victim's competitive position.
• The suspension or revocation of the business licence of the offender.
Restrictive Agreements and Practices
Restrictive agreements or concerted practices that in effect prevent or significantly lessen competition with no outweighing
technological efficiency or other pro-competitive gain, including price fixing and setting minimum resale prices, are prohibited.
In addition, participating in tenders in a collusive manner, dividing markets by allocating customers, suppliers, territories or
specific types of goods or services is also prohibited.
Unilateral Conduct
Abuse of market dominance and acts of unfair competition are the type of unilateral conduct prohibited under Ethiopian Law.
Some forms of abuse of market dominance include:
• Limiting production, hoarding or diverting, preventing or withholding goods from being sold in the regular channels of
trade.
• Harmful acts aimed at competitors in relation to price fixing and cost escalation.
• Setting unfair selling and purchase prices.
A conduct which is dishonest, misleading, deceptive and harmful (likely harmful) to the business interest of a competitor is
considered to be unfair competition.

29. Are mergers and acquisitions subject to merger control?
Transactions Subject to Merger Control
No merger can be effected without approval from MoTRI. Mergers whose combined capital, asset or annual turnover is less
than ETB30 million are not required to be notified whereas those equal to or above ETB30 million should be notified to the
MoTRI and approved before being implemented. MoTRI evaluates the effect of a merger on trade competition, the market and
public interest before it issues its approval.
Foreign-to-Foreign Acquisitions
Foreign-to-foreign acquisitions are subject to merger control if they have effects in Ethiopia. There are no exemptions.
Specific Industries
Mergers with respect to businesses engaged in financial, energy and telecommunications sectors are subject to notification and
approval from each sector's regulator.
Anti-Bribery and Corruption
30. Are there any anti-bribery or corruption regulations affecting business in your jurisdiction?
The Corruption Crimes Proclamation No. 881/2015 prohibits giving or offering an advantage or gift to an employee of a public
organisation or a public servant with the intent to get performance or non-performance of an act in violation of proper duty.
The punishment ranges from simple imprisonment and fine to rigorous imprisonment of up to seven years and a fine of up
to ETB30,000. This proclamation also criminalises giving or offering an advantage or gift to any official or employee of a
foreign state with the intent of getting performance or non-performance of an act related to international trade or transaction
in violation of the official's/employee's duty.
Intellectual Property
31.What are the main IP rights that are recognised in your jurisdiction?

Patents
Definition and legal requirements. Patents are defined as a title granted to protect something that is new, has an inventive
step and is industrially applicable anywhere in the world. The invention can relate to a product or a process.
Registration. The Ethiopian Intellectual Property Office (EIPO) registers patents. Its website (www.eipo.gov.et) provides
guidance on the patent application procedures.
Enforcement and remedies. A right holder has the exclusive right to make, use or otherwise exploit the patented invention.
In addition to this, the patentee can institute court proceedings against any person who infringes the patent.
A party aggrieved by any decision of the EIPO can submit an appeal within 60 days from the date of receipt of the decision
to the Federal High Court.
Length of protection. A patent is granted for an initial period of 15 years starting from the filing date of the application. It can
be extended for five years if it is proved that the invention is being properly used in Ethiopia.
Trade Marks
Definition and legal requirements. Any trade mark that is capable of clearly distinguishing goods or services of a person from
those of other persons is eligible for registration. A trade mark is defined as any visible sign capable of distinguishing goods or
services of one person from those of other persons. It includes words, designs letters, numerals, colours, or the shape of goods
or their packaging or any combinations of them.
Protection. The EIPO registers trademarks and its website provides guidance on the application procedure. Ownership rights
for trademarks are acquired and binding on third parties once the trade mark registration certificate is granted.
Enforcement and remedies. Only a registered trade mark holder can enforce the trade mark. Actions for trade mark right
infringement can be brought to the Federal High Court, which can order provisional measures to prevent damage or to preserve
relevant evidence with regard to an alleged infringement of a right, without summoning the defendant. If the court finds an
infringement, it can award compensation equal to the net profit earned by the defendant from the use of the trade mark, or the
amount of royalty the defendant would have been charged had it used the trade mark under a licence.
There is also a criminal sanction for an intentional violation of trade mark rights resulting in imprisonment for between five
and ten years, and for one to five years for gross negligence. In addition, the customs authority can seize and detain goods that
are subjects of the alleged infringement on the basis of a written application by the right holder, accompanied by a certificate
of trade mark registration and other relevant evidence and provided a security deposit is made.
Length of protection and renewability. A trade mark registration lasts for seven years from the date of submission of the
application for registration, and it can be renewed for every seven years on request from the owner.
Registered Designs
Definition. Registered designs are protected under the rules governing industrial designs. An industrial design is a design that
constitutes the ornamental or the aesthetic aspect of an article. It must also be different from that of pre-existing designs in any
part of the world and cannot have been disclosed for more than one year before the filling date. Moreover, it must be capable
of serving as a model for repeated manufacture of products.

Registration.An industrial design must be registered with the EIPO to be protected and the website provides guidance on the
application procedure.
Enforcement and remedies. See above Patents: Enforcement and remedies.
Length of protection and renewability. The maximum period of protection for industrial designs is 15 years. The law grants
protection to registered industrial designs for an initial period of five years, which can be extended for two periods of five years
on application for renewal.
Unregistered Designs
Definition and legal requirements. Unregistered designs are not protected under Ethiopian law.
Enforcement and remedies. Not applicable.
Length of protection. Not applicable.
Copyright
Definition and legal requirements. Copyright is an economic right subsisting in a work and, where appropriate, includes the
moral rights of an author.
Copyright arises where the work is original and fixed in a tangible form of expression.
Protection. The author of a work is entitled to protection for the work without any formality and on creation provided that it is
original and fixed. In addition to this, photographic works are protected where they form part of a collection and bear the name
and address of the author or agent. The protection given to the author of a work must not interfere with any right accruing to
a sound recording producer, broadcaster or performer.
Copyright can be registered with the EIPO, however, registration is not mandatory. The registration of copyright and
neighbouring rights constitutes prima facie evidence of ownership.
Enforcement and remedies. The author of a work has an exclusive right over it. Likewise, performers, producers of sound
recordings and broadcasting organisations have neighbouring rights over the work.
Copyright infringement actions must be brought before the Federal High Court by the copyright holder. The court can grant
provisional measures as well as civil and criminal remedies for infringement of copyright and related rights.
Length of protection and renewability. Copyright belongs to the author during their lifetime and to heirs or legatees for
50 years after their death. However, in exceptional circumstances (such as the economic rights of photographic works) the
protection lasts for 25 years. Similarly, economic rights in relation to broadcasting works are protected for 20 years from the
moment the broadcast takes place.
Marketing Agreements

32. Are marketing agreements regulated?
Any marketing agreement that has the effect of preventing or significantly lessening market competition is prohibited unless it
is established that the technological efficiency or pro-competitive gain outweighs the adverse effect.
Agency
Agency agreements are regulated under the:
• Civil Code.
• Commercial Code.
• Commercial Registration and Licensing Proclamation No. 980/2016.
• Commercial Registration and Licensing Regulation No. 392/2016.
Except for a power of attorney, agency agreements need not be registered at the Documents Authentication and Registration
Service.
The Commercial Registration and Licensing Proclamation and the Commercial Registration and Licensing Regulation
specifically regulate the activities and the licensing procedure for commercial representatives and commercial agents, which
are among the forms of agency under Ethiopian law. A commercial representative must obtain a special certificate from the
Ministry of Trade and Regional Integration to be able to operate. A commercial agent carries out independent business activities
and must have a certificate of business registration and a business licence. Commercial agency is not open for foreign investors.
Foreign investors can engage in freight forwarding and shipping agency services jointly with domestic investors, but only as
minority shareholders.
An agency agreement can be terminated by:
• Revocation of the principal.
• Renunciation of the agent.
• Death, incapacity or bankruptcy of the agent or of the principal.
The principal must indemnify the agent for any damage caused by the revocation of the agency. The agent must also compensate
the loss that the principal sustained as a result of the renunciation of the agency by the agent.
Distribution
Distribution agreements are primarily governed by the provisions of the Civil Code governing supply contracts. The parties
are free to determine the details of the distribution agreement. In addition to the Civil Code provisions on supply contracts, a
distribution agreement can also be governed by general contract law and the law of sales. Sole distributorship is prohibited.
Any distribution agreement that has the effect of preventing or significantly lessening competition is prohibited. Compensation
on termination of a distribution agreement is governed by the provisions of general contract law. Distribution agreements need
not be registered.

Franchising
Ethiopia does not have detailed rules regulating franchises. A franchise must be registered in accordance with the procedures
set out under the Commercial Registration and Licensing Proclamation and the Commercial Registration and Licensing
Regulation. In addition, the Commercial Registration and Licensing Proclamation imposes certain obligations on the franchisee.
A franchisee must function to the same standards as the franchiser. Clients must obtain the same product and services from
the franchisee as they would from the franchisor. Compensation for termination of franchise agreements is governed by the
provisions of general contract law.
The Trade Competition and Consumers' Protection Proclamation provides that any marketing agreement between business
persons that has the effect of preventing or significantly lessening competition is prohibited unless a party to the agreement
proves that any technological efficiency or other pro-competitive gain outweighs that effect.
E-commerce
33. Are there any laws regulating e-commerce?
E-commerce and E-government
Ethiopia adopted its first Electronic Transaction Proclamation No. 1205/2020 in 2020 covering both e-governance and e-
commerce. It contains detailed provisions regulating matters such as digital signatures, electronic receipts and consumer
protection. An electronic signature law was enacted in 2018 (Electronic Signature Proclamation No.1072/2018). The new law
provides for the recognition of electronic signatures and deals with the issue of digital signatures in detail. General transactional
laws apply to distance selling in the context of e-commerce. The Proclamation mandates the Ministry of Innovation and
Technology (MiNT) and the ECA as the regulatory bodies.
34. Are online platforms regulated in relation to their use for marketing/sales purposes?
Under the Electronic Transaction Proclamation No. 1205/2020, online platforms (electronic commerce platform operators and
electronic commerce intra-platform operators) must be registered and bound by the laws governing the running of commercial
activities. They must also ensure that local products and services constitute at least 50% of their offer. The platforms are required
by law to collect accurate information about the traders using their platform including licences, identity, address and contact
information and register and verify them on a regular basis.
Advertising

35.How is advertising regulated in your jurisdiction?
Digital Advertising
The Advertisement Proclamation No. 759/2012 and provisions of the Trade Competition and Consumer Protection Proclamation
regulate advertising in Ethiopia. The Advertisement Proclamation provides that advertisements must not be contrary to the law
or morality, must be free from misleading or unfair statements, respectful of the social and traditional values of society and not
infringe the legitimate interests of consumers. They must describe the true nature, use, quality and other similar information of
the goods/services and not undermine the commodities or services of others.
Advertisements of goods and services cannot be misleading or false in particular with regards to the:
• Nature, components and quantity of the goods.
• Source, weight, volume, method of manufacturing, date of manufacturing and expiry date of the goods and instructions
for use.
• Manufacturer of the goods or the supplier of the service.
• Place of delivery of the service, its basic nature and use and how to use it.
• Conditions of purchase of the goods or the service, after-sales services, warranty, price and conditions of payment.
• Quality marks.
• Trade mark and emblem.
• Results expected by using the goods or services.
Direct Marketing
The Electronic Transaction Proclamation provides that a contract will not arise from unsolicited communication and consumers
are entitled to request and know the source of the information that the ecommerce operator used when sending the unsolicited
communication.
36. How are sales promotions regulated in your jurisdiction?

There is no law specifically regulating sales promotions. The Trade Competition and Consumers Protection Proclamation
generally provides that commercial advertisements should not be misleading as to quality, nature, benefits and general
characteristics of the goods or services and their suppliers. Prize draws for alcoholic beverages are also prohibited under Food
and Medicine Administration Proclamation No. 1112/2019.
Data Protection
37. Are there specific data protection laws? If not, are there laws providing equivalent protection?
Data Protection Laws
There is no specific law in Ethiopia that deals with the protection of data. However, a number of laws contain data protection
provisions including:
• Authentication and Registration of Documents' Proclamation No.922/2015.
• Civil Code of the Empire of Ethiopia No. 165/1960.
• Communications Service Proclamation No.1148/2019.
• Computer Crime Proclamation No. 958/2016.
• Constitution of the Federal Democratic Republic of Ethiopia (FDRE) 1994.
• Criminal Code of the Federal Democratic Republic of Ethiopia Proclamation No. 414/2004.
• Criminal Procedure Code of the Empire of Ethiopia, 1961.
• Electronic Signature Proclamation No.1072/2018.
• Electronic Transaction Proclamation No.1205/2020.
• Federal Tax Administration Proclamation No.983/2016.
• Financial Consumer Protection Directive No. FCP/01/2020.
• Food, Medicine, and HealthCare Administration and Control Council of Ministers Regulation.
• Freedom of the Mass Media and Access to Information Proclamation No. 590/2008.
• Licensing and Authorisation of Payment Instrument Issuers Directive No. ONPS/01/2020.
• Registration of Vital Events and National Identity Card Proclamation No. 760/2012.
A draft bill on Data Protection has been under consideration for several years and is currently before parliament. The latest
version of the comprehensive Draft PDP Proclamation contains detailed provisions on data collection, use, protection and
processing and provides for the establishment of a regulatory entity called the Ethiopian Personal Data Protection Commission.

Consumer Privacy Laws
There is no comprehensive consumer privacy law and the relevant rules are found scattered in different legislation. With respect
to financial services consumers, the National Bank of Ethiopia enacted the Financial Consumers Protection Directive No.
FCP/02/2020, which requires financial services providers to keep consumers' data confidential and secure and to use and disclose
it only for legitimate purposes agreed to it by financial consumers or otherwise permitted by law. The National Payment System
Proclamation, Banking Business Proclamation and Payment Instrument Issuers Directive also contain provisions dealing with
the protection of consumers' privacy. There are also general criminal law prohibitions in the Criminal Code and the Computer
Crimes Proclamation that can afford protection to privacy consumers.
Product Liability
38. How is product liability and product safety regulated?
The Trade Competition and Consumer Protection Proclamation, Food and Medicine Administration Proclamation No.
1112/2019 and the Civil Code regulate product safety.
A seller must assure the buyer that the product sold conforms to the contract and is not affected by defects. Defects in goods
and services can result in liability for the seller of the goods and services. Defects in goods and services and their damage can
be reported to the Ministry of Trade and Regional Integration or Trade and Industry Bureaus of regional states. Consumers
can secure a refund or a replacement for defective goods, and a refund or redelivery free of charge for services. Payment of
compensation may also be required for any damage resulting from the use of the defective goods or services or from the failure
of the seller to meet this demand. Affixing labels, complying with international standards on food and medicine and product
packaging are some of the requirements of product safety regulations.
Regulatory Authorities
39. What are some of the key regulatory authorities relevant to doing business in your jurisdiction?
Environment, Forest, and Climate Change Commission
Main activities. Formulating environmental safety policies and laws on the production, importation, management and
utilisation of hazardous substances or wastes, as well as on the development of genetically modified organisms and the
importation, handling and utilisation of genetically modified organisms or alien species, and ensure their implementation.

Establishing a system for evaluating and deciding on the impacts of implementing investment programmes and projects on the
environment before approvals of their implementation.
W Not available. However, services provided online by this institution can be accessed here: www.eservices.gov.et
National Bank of Ethiopia
Main activities. It is the regulatory body for financial institutions including banks, insurance companies, micro finance
institutions, payment instrument issuers and payment system operators. It sets out the criteria for licence, grants licences on
fulfilment of the conditions, oversees their operation and governance and regulates mergers in the sector. It registers and
approves external loans both in cash and kind. It also regulates transactions in foreign currencies.
W www.nbebank.com
Ethiopian Investment Commission (EIC)
Main Activities. EIC is the regulatory body for foreign investments in all sectors except for mineral and petroleum operations.
The EIC also provides post-investment support for investors. The Telecommunications, Aviation and Energy sectors have
different regulatory bodies exercising their power through legislative delegation
W www.investethiopia.gov.et
Ministry of Mines
Main Activities. This is the regulatory body for investments in mining and petroleum operations.
W www.mom.gov.et
Ministry of Trade and Regional Integration
Main Activities. The main activities include registering traders, granting licences to traders and renewing or cancelling them. It
also regulates trade in essential goods like sugar, edible oil and cement, including, where necessary, determining the maximum
selling price. It also reviews and decides on merger notifications, announces to the public the list of goods that are banned
by government or international bodies from being consumed or sold, protects consumers from unfair trade practices and bans
advertisements that are inconsistent with health and safety requirements
W www.motin.gov.et
Ethiopian Energy Authority
Main Activities. It issues, renews, amends, substitutes and cancels investment permit for investors in the energy services sector
(mainly generation, transmission and distribution of electric power); approves power purchase agreements and off-national
grid tariffs and submits recommendation for approval of national-grid related tariffs after reviewing the tariff submitted to it
by a licensee.
W www.eaa.gov.et
Ethiopian Communications Authority

Main Activities. It issues, renews, amends, substitutes and cancels investment permits for investors in the telecom sector. It
also grants business licences for investors starting to provide services. It is a regulatory body in charge of implementing the
telecommunications proclamation and electronic transaction proclamation and their subsidiary laws.
W www.eca.et
Contributor Profiles
Dr Dadimos Haile, Senior Advisor, Research and Business Development
Tadesse & Dadimos Legal Services LLP

T +251115548949 / +251115548950
E dadimos.htklawoffice@gmail.com
W www.tadessekiros.com
Professional qualifications. Lawyer, Ethiopia
Areas of practice. Arbitration, banking and finance; IT and Communications; employment; law of agency; tort.
Non-professional qualifications. LLB (Addis Ababa University); LLM (K.U. Leuven); S.J.D (Duke University);
Associate Professor of Law at Bahir Dar University, Ethiopia; Senior Research Associate (Honorary) at Bristol
University Law School UK
Bisrat Teklu, Attorney

T +251115548949/ +251115548950
E bisrat.t@tadessekiros.com
Professional qualifications. Consultant and attorney-at-law, Ethiopia
Areas of practice. Contracts, secured transactions, construction law, insurance, tax and customs, bankruptcy.
Non-professional qualifications. LL.B, (Jimma University); LL.M (Addis Ababa University); FIATA National
Diploma in International Freight Forwarding (FIATA); Lecturer of Law at Ethiopian Civil Service University;
Part-Time Lecturer of Law at Addis Ababa University School of Law
Binyam Nibret, Attorney

T +251115548949 / +251115548950
E binyam.n@tadessekiros.com
Professional qualifications. Lawyer, Ethiopia
Areas of practice. Investment, Corporate Law, Merger and Acquisition, Competition Law, Telecommunications
regulation, and Employment law.
Non-professional qualifications. LL.B (Hawassa University)
Habtamu Hailemeskel, Attorney
Tadesse & Dadimos Legal Services

T +251115548949/ +251115548950
E Habtamu.h@tadessekiros.com
Professional qualifications. Attorney, Ethiopia
Areas of practice. E-commerce, infrastructure, public-private partnership, Energy, telecommunications, payment

systems.
Non-professional qualifications. LL.B (Mekelle University); LL.M (Addis Ababa University); Lecturer
(Ethiopian Civil Service University)
END OF DOCUMENT
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Practical Law Country Q&A w-016-1313

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Doing Business in Ethiopia: Overview

Country Q&A | Law stated as at 01-Feb-2022 | Ethiopia

A Q&A guide to doing business in Ethiopia.

Termination and Redundancy

Business Income Tax

Capital Gains Tax

State or Local Taxes

Value Added Tax (VAT)

Dividends, Interest and IP Royalties

Groups, Affiliates and Related Parties

© 2024 Thomson Reuters. All rights reserved. 1

Double Tax Treaties

Bisrat Teklu, Attorney

Binyam Nibret, Attorney

Habtamu Hailemeskel, Attorney

© 2024 Thomson Reuters. All rights reserved. 2

Population and Language

Key Business and Economic Events

© 2024 Thomson Reuters. All rights reserved. 3

© 2024 Thomson Reuters. All rights reserved. 4

The revised Codes also introduces new provisions governing the:

• Liability of directors and shareholders.

The other new features of the revised Code include:

© 2024 Thomson Reuters. All rights reserved. 5

© 2024 Thomson Reuters. All rights reserved. 6

• To accounting periods and VAT refunds.

• Defined the term "capital goods".

© 2024 Thomson Reuters. All rights reserved. 7

• Geothermal well-field development and use licence.

• Telecommunications Interconnection Directive No. 791/2021.

• Telecommunications Licensing Directive No. 792/2021.

• Telecommunications Infrastructure Sharing and Collocation Directive No. 793/2021.

• Telecommunications Quality of Service Directive No. 794/2021.

• Telecommunications Numbering Directive No. 795/2021.

• Telecommunications Dispute Resolutions Directive No. 796/2021.

• Telecommunications Lawful Tariffs Directive No. 797/2021.

• Telecommunications Competition Directive No. 798/2021.

• SIM Card Registration Directive No. 799/2021.

• Telecommunications Wholesale National Roaming Directive No. 800/2021.

© 2024 Thomson Reuters. All rights reserved. 8

3. What is the general legal system in your jurisdiction?

4. Are there any restrictions on foreign investment, ownership or control?

Restrictions on Foreign Shareholders

• Banking, insurance and micro-credit and saving services.

• Broadcasting and mass media services.

• Legal practice and legal consultancy services.

• The preparation of indigenous traditional medicines.

• Advertisement, promotion and translation.

• Air transport services using aircraft with a seating capacity of up to 50 passengers.

© 2024 Thomson Reuters. All rights reserved. 9

There are no restrictions on doing business with specific countries or jurisdictions.

• Monitor the foreign exchange transactions of financial institutions.

© 2024 Thomson Reuters. All rights reserved. 10

© 2024 Thomson Reuters. All rights reserved. 11

7. What grants or incentives are available to investors?

© 2024 Thomson Reuters. All rights reserved. 12

Main Business Vehicles

Registration and Formation

• The certificate of incorporation of the parent company.

• If the process is carried out through an attorney, a power of attorney.

© 2024 Thomson Reuters. All rights reserved. 13