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Opening a company in Ethiopia is a rather tempting offer for foreign investors, as well as for those who want to start a medium and large business in Africa.

Ethiopia (formerly Abyssinia) is a sovereign state with an agrarian economy, located in the east of the African continent and having no access to the sea. The Federal Democratic Republic of Ethiopia is the 2nd most populous African country.

The closest neighboring countries are South Sudan, Sudan, Somalia, and Somaliland (an unrecognized state), Eritrea, Djibouti.

The key sectors of the economy are agriculture (coffee, cereals, sugar, cotton, potatoes) and animal husbandry, industry (textiles and leather), food industry (drinks, meat products), and extraction of natural resources (gold).

The capital of the state and the largest city is Addis Ababa. The population is over 109.5 million people. The national language is Amharic. The currency is the Ethiopian Birr (ETB). The climate is equatorial/subequatorial.

Participation in international organizations: OAU, UN, Group 24, Group 77, IBRD, ADB, African Union, IAEA, IMF, and others.

Main advantages of Ethiopian jurisdiction

If you are considering such an option as registering a company in Ethiopia, then we present to your attention the following advantages of the business climate of this jurisdiction:

  • Rapid economic growth;
  • Developed banking sector;
  • An important trade center in Africa;
  • Comfortable environment for creating all types of business;
  • State orientation towards attracting foreign capital;
  • Availability of a qualified workforce;
  • Loyal taxation system;
  • Free economic zone;
  • Simple business registration process.

If you decide to register a company in Ethiopia, then in 2021 you should choose one of these business areas: IT technology, hospitality, food industry, medicine, transport, light, and mining industries.

Popular types of companies in Ethiopia

Those who plan to open a company in Ethiopia remotely should choose a suitable form of business, including:

  • Limited Liability Company (LLC);
  • Joint Venture (JV);
  • Free Zone Limited Liability Company (FZ LLC);
  • Public limited liability company specializing in agri-business (PLC);
  • Representation.

If you are going to register a company in Ethiopia, we recommend choosing one of these OPFs: a limited liability company (LLC) or a free zone limited liability company (FZ LLC).

Conditions for starting a business

Those who are interested in registering a company in Ethiopia and opening a corporate account in a bank in Ethiopia should carefully study the following list of requirements of the Regulator:

  • The unique name of the enterprise (at the end the full form or the abbreviation OPF is indicated);
  • Number of directors: 1 or more;
  • Number of shareholders: 2 or more;
  • Resident status: not required;
  • Enterprise management: both individuals and legal entities are allowed;
  • The presence of a secretary: not required;
  • Authorized capital – 200 thousand USD;
  • Office registration: yes;
  • Financial reporting: yes.

The tax system in Ethiopia

For large mining companies, the tax rate is 25%

In other cases – 30% and 0% (local tax).

The VAT law contains two VAT rates. One is the regular 15 percent rate and the other is zero.

The following transactions are taxed at a 0 percent rate:

  • Export of goods or services
  • Provision of transport or other services directly related to the international carriage of goods or passengers, as well as the supply of consumable technical materials that are taken on board for consumption during international flights
  • Gold stocks to the National Bank of Ethiopia.

To establish a company in Ethiopia, it is enough:

  • Two shareholders of any residence;
  • 1 director of any residence;
  • Payment of the authorized capital of $ 200 thousand;
  • 5 weeks for incorporation.
  • You can open an account for a company in Ethiopia remotely and incognito: the country does not participate in the automatic exchange of tax information (CRS).