Draft regulation offers reduced income tax to boost investment, exports, and green-energy projects.
Ethiopia’s Ministry of Finance released a draft regulation aimed at updating the country’s investment incentive framework. The draft introduces new tax breaks for exporters, startups, and green-energy projects.
Key highlights of the proposed incentives include a reduced income tax rate of 5% for certain investors and investment fields:
- Special Economic Zone (SEZ) Developers and Sub-Developers: SEZ developers and sub-developers are eligible for a 5% income tax rate based on location and investment size. Those operating in Addis Ababa and Oromia Sheger City Administration would enjoy the reduced rate for 10 years, while developers outside these areas would benefit for 15 years. To qualify, developers must invest at least USD 75 million unless otherwise determined by the Investment Board.
- Startups: Recognised startups would pay a 5% income tax rate on taxable income for 10 years from the start of operations, after which the standard commercial profit tax applies.
- Export-Oriented Investors in SEZs: Investors operating within SEZs and exporting products from their manufacturing facilities would also benefit from the 5% commercial profit tax on their taxable income for the relevant tax year.
The draft regulation is part of Ethiopia’s broader effort to attract investment, promote exports, and support innovative and green-energy initiatives.
