CAPITAL
Addis Ababa
POPULATION
108 Million
AREA
1,104,300 sq km
LEGAL SYSTEM
A civil law system
TAX REGIME
Personal Income Tax | Local & Expatriate
| Summary | Tax Rate/s |
| 0-35% |
Corporate Income Tax
| Summary | Tax Rate/s |
|
Incorporated businesses
|
30% |
Withholding Tax
| Summary | Tax Rate/s |
|
On transaction worth more than EBR 10000
|
|
Capital Gains Tax
| Summary | Tax Rate/s |
| On appreciated amount of share | 30% |
Environmental Levy
| Summary | Tax Rate/s |
|
There are some rules and regulations that businesses should comply. |
No |
Inheritance Tax
| Summary | Tax Rate/s |
|
No |
No |
Dividend Tax
| Summary | Tax Rate/s |
|
Tax on profit of shares
|
10% |
VAT/GST
| Summary | Tax Rate/s |
|
Levy on taxable supply
|
15% |
Bilateral Tax Treaties and DTAAs
| Summary | Tax Rate/s |
| Varies |
Tax Incentives
| Summary | Tax Rate/s |
|
|
Tax Rulings and Directives
| Summary | Tax Rate/s |
|
|
TOP INDUSTRIES
FOOD PROCESSING
BEVERAGES
TEXTILE
LEATHER
GARMENTS
METAL PROCESSING
CEMENT
ECONOMIC OVERVIEW
Ethiopia – the second most populous country in Africa – is a one-party state with a planned economy. For more than a decade GDP grew at a rate between 8% and 11% annually. This growth was driven by government investment in infrastructure, as well as sustained progress in the agricultural and service sectors.
More than 70% of Ethiopia’s population is still employed in the agricultural sector, but services have surpassed agriculture as the principal source of GDP. Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of the Scandinavian countries.
The state is heavily engaged in the economy. Ongoing infrastructure projects include power production and distribution, roads, rails, airports and industrial parks. Key sectors are state-owned, including telecommunications, banking and insurance, and power distribution. Under Ethiopia’s constitution, the state owns all land and provides long-term leases to tenants.
Ethiopia’s foreign exchange earnings are led by the services sector – primarily the state-run Ethiopian Airlines – followed by exports of several commodities. While coffee remains the largest foreign exchange earner, Ethiopia is diversifying exports, and commodities such as gold, sesame, khat, livestock and horticulture products are becoming increasingly important.
Manufacturing represented less than 8% of total exports in 2019, but manufacturing exports should increase in future years due to a growing international presence. The banking, insurance, telecommunications, and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted roughly $8.5 billion in foreign direct investment (FDI), mostly from China, Turkey, India and the EU; US FDI is $567 million.
Investment has been primarily in infrastructure, construction, agriculture/horticulture, agricultural processing, textiles, leather and leather products. In 2017, the government devalued the birr by 15% to increase exports and alleviate a chronic foreign currency shortage in the country.