New Investment Related Regulations in Ethiopia

Present Opportunities for Foreign Firms

In the past two years, the Government of Ethiopia (GOE) has undertaken a number of notable regulatory reforms to make the country more welcoming to foreign firms. Specifically, the GOE now added tax incentives for companies that export or supply input items to exporters and for new investments in hotels in select tourist destinations. The GOE  also expanded the list of sectors qualifying for tax incentives and duty-free privileges. These sectors now include mining, energy production, transport, architectural and engineering works, technical inspection and analysis services, health services, ICT, hospitality, and logistics.

More recently, in 2023, the Ministry of Finance issued a directive that expands incentives for existing foreign firms that upgrade or expand existing operations. Such activity can now qualify for corporate income tax exemptions and duty-free imports of capital goods, motor vehicles, and construction materials. 

These reforms represent, first in a decade, significant changes to Ethiopia’s investment incentives and are expected to stimulate demand for foreign input items and certain industry-specific services. Overall, the moves are expected to attract more foreign firms into a country already rich in natural resources, has relatively low labor and energy costs, and has a large domestic consumer market.

To learn more, contact:

Yemesrach Kassu

 Commercial Specialist

Email: Yemesrach.Kassu@trade.gov