INVE VEST STMENT OPPORTUN UNITI ITIES S IN E ETHIOPIA Inter ternational national Cooperation eration Expo, o, Fiera ra di Roma, a, May 15-17 17 FDRE Ministr try y of Fi Finance nce H.E. Admasu Nebebe be, State Minister ter
Country ntry Pr Profile le 1) 1) Cooperat eration on for Sustain tainabl ble e Deve velopment opment 2) 2) Favo vorab rable e Condit itio ions ns to Invest vest in Ethiopi pia 3) 3) Devel velopm opmen ent/Investment t/Investment Opportuniti rtunities es 4) 4) FDRE RE Minis istr try y of Fina nanc nce
Locatio cation: n: Horn of Africa, close to Middle East and Europe market Political itical Sys ystem: em: Federal state with multi-party system Capita tal l City : Addis Ababa, which is the seat of AU and ECA Area: 1.104 million square kilometers Arab able e lan and: 513,000 square kilometers (45%) Irriga igated ted land: 34,200 square kilometers (3%) Popul pulation: ation: approximately 105 million, diverse ethnicities
As witnessed in the realization of most of the MDGs, Ethiopia is strongly committed to contribute to the global achievements of the SDGs as well. The SDGs are mainstreamed in the national GTP II. The implementation of GTP II and the SDGs require a collaborative efforts mainly from development partners and investors. Apart from loan and grants, the government of Ethiopia is looking for a sustainable mechanism of financing development needs, i.e, Trade and Investment.
3) Favorabl ble e Condit ition ions s to In Invest t in in Ethio iopia ia 3) Unprecedented Political and Economic Reforms Political Reforms Democracy and Rule of Law Building peace in the region, particularly with Eretria Structural reform and reshuffling Economic Reforms Partial Privatization of SOEs (airline, telecom, energy, shipping and others) Strengthening Public-Private Partnership business model Ensuring stable and free market
Favorab able le Condit ition ions s to In Invest st in in Ethio iopia ia Growing Economy Ethiopian economy is one the fastest growing economy in the world, exhibiting double digit growth for almost the last ten years. The economy has shown a 46% growth in FDI inflow- one of the most dynamic and largest FDI recipients in Africa (UNCTAD World Investment Report,2017). Excellent Climate and Fertile Soil Diverse topography and geographical location Moderate climate by African standards due to its elevation
Fa Favo vorab rable e Con onditio ditions ns to I o Invest vest in Ethiop iopia ia Strong Guarantee and Protection Private property is protected by the constitution and the investment law. Young and Trainable Labor Force Ethiopia is the second populous country in Africa with 60% of working population. The abundant labor makes Ethiopia favorite for investment. Regional Hub with Access to and wider market Large domestic market (more than 100 million population). Member of COMESA Addis Ababa is the regional air hub and home of the reputable Ethiopian airlines.
Favo vorab rable e Condi diti tions ons to I Inve vest t in Ethiopia iopia Improved Economic Infrastructure Building and expanding Industrial Parks and Industrial Clusters for FDI Increment of power production. The electricity generating capacity is expected to reach 10 thousand MW by mid 2025. Expanding telecom services Growing road and rail way networks that connect national and regional markets. Excellent passengers and cargo services of Ethiopian airlines Government Commitment High level political commitment for investment promotion Introduction incentiv ntive e packages for investors
Su Summa mary y of Major Incentive ive Package ges
Fis isca cal Incent centives Brie ief f Desc scrip ription ions Eligi igibil iliti ties es Business Income Tax exemption exemption reduced by up to 2 years if investment is in 1) Eligible sector/Sub-sector of investment in the manufacturing sector (up Addis & Special Zone of Oromia. Exemption up to 6 2) Holding of investment permit to 6 years) years for: manufacturing food, textile, leather, chemical, 3) Holding of business license metal, machinery and vehicles. Less than six years for 4) Investment to establish a new enterprise other industries. or expansion or upgrading Business Income Tax exemption exemption reduced by up to 3 years if investment is in 1) Eligible sector/Sub-sector of investment in the agriculture sector (up to Addis & Special Zone of Oromia. Up to 6 years for crop 2) Holding of investment permit 10 years) production; up to 4 years for animal production and 3) Holding of business license mixed farming; up to 9 years in forestry; and up to 10 4) Investment to establish a new enterprise years for horticulture in cluster zones identified by the or expansion or upgrading government with at least 80% export. 10 years if the park is in Addis Ababa and Special Zone Business Income Tax exemption 1) Holding of investment permit for of Oromia Surrounding Addis Ababa; fifteen years for for industrial parks development industrial park development industrial parks in other areas /developers (10-15 years) 2) Holding of business license Available for exporters Export-linked business income 1) Eligible sector/Sub-sector of investment tax exemption (additional two 2) Holding of investment permit 3) Holding of business license years for at least 60% export or 4) Direct export or supply to an exporter of supply to exporter) at least 60% of own products or services Differentiation based on location of industrial park (two Business Income Tax exemption 1) Manufacturing company investing within years if the park is in Addis Ababa and Special Zone of in industrial parks (additional an Industrial Park Oromia Surrounding Addis Ababa; four years for parks two-four years for industrial 2) Holding of investment permit in other areas) park enterprises with 100% 3) Holding of business license export plan and achive at least 4) Direct export or supply as production 80% export) input to a producer exporter of at least 80% of own products
Fis isca cal Incent centives Brie ief f Desc scrip ription ions Eligi igibil iliti ties es Business Income Tax 1) Investment in Active Pharmaceutical Ingredients: 12-14 1) Eligible sector/Sub-sector of investment exemption for years (eight-ten years base depending on location of park + 2) Holding of investment permit pharmaceutical sector in two years for 30% export + two years for 60 % export) 3) Holding of business license industrial parks 2) Investment in Final medicine/Formulation 10-12 years 4) Investment in an industrial park to (six-eight years base depending on location of park + two establish a new enterprise (Greenfield) or years for 30% export + two years for 60 % export) for expansion or upgrading of an existing 3) Investment in Pharmaceutical Packaging 7-8 years enterprise as defined under the Investment (three-four years base depending on location of park + two Proclamation years for 30% export + two years for 60 % export) Business Income Tax exemption reduced by one year if 1) Eligible sector/Sub-sector of investment Business Income Tax investment is in Addis Ababa and Special Zone of Oromia 2) Holding of investment permit exemption in Electricity surrounding Addis Ababa 3) Holding of business license generation, transmission and 4) Investment to establish a new enterprise or distribution (up to five years) expansion or upgrading Business Income Tax exemption reduced by one year if 1) Eligible sector/Sub-sector of investment Business Income Tax investment is in Addis Ababa and Special Zone of 2) Holding of investment permit exemption in Information Oromia surrounding Addis Ababa 3) Holding of business license and Communication 4) Investment to establish a new enterprise or Technology (ICT) expansion or upgrading development (up to five years) The list of non-traditional tourism destinations is defined Business Income Tax 1) Eligible sector/Sub-sector of investment through Investment Board Decision including: Bale and exemption for hotel and tour 2) Holding of investment permit Simien Mountains; Ertale, Gerehalta mountains; rift valley 3) Holding of business license service providers in non- lakes (Abaya, Shala, Chamo and Abiyata); and Wanchi 4) Investment to establish a new enterprise traditional tourism mountain (lake and afro-alpine). or expansion or upgrading destinations (up to five years) Up to five years for expatriate employees of sourcing Personal Income Tax (PIT) 1) The employer company has to be in its companies located in industrial parks exemption for expatriate first five years of operation 2) The expertise offered by the employees expatriate has to be unavailable in the local market
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