Exemption from the Payment of Customs Duty
Investors are allowed to import to Ethiopia capital goods and construction materials that are “necessary for the establishment of a new enterprise or for the expansion or upgrading of an existing enterprise.” Further, an investor who is granted custom duty-free is also allowed to “import duty-free capital goods necessary for his enterprise”.
Income Tax Holiday
An investor engagd in the following sectors may be eligible for exemption from income tax as determined by directives issued by the investment board.
b) agro-industrial activities
C) the production of agricultural products that are to be is eligible.
To invest in the aforementioned sectors of the economy, an investor should export at least 50% of his products, or if he is not directly involved in export, he should supply 75% of his/her products to an exporter as a production input.
The exemption is given for a five year period. The Board may extend this for a period of seven years in special circumstances. Further, the period may be extended for more than seven years by the decision of the Council of Ministers.
The period of exemption may be decreased to two years if the investor engages in investment sectors not mentioned above and “exports less than 50% of his/her products or supplies his/her products only to the domestic market”. Under special circumstances, the board may extend the period for not more than five years.
Loss Carry forward
In a business transaction, there could be a loss. In case an investor faces losses rather than income, the law provides that “an investor who has incurred loss within the period of income tax exemption shall be allowed to carry forward his loss for half of the income tax exemption period, after the expiry of such period”.
Duty Drawback Scheme
Investors (exporters) are also given facilities of the duty-drawback scheme, the voucher, and the bonded warehouse. According to the duty-drawback scheme, investors are exempted from the payment of customs duties and other taxes levied on imported and locally purchased raw materials used in the production of export goods. Duties and other taxes paid in importing are drawn back at the time of the export of the finished goods.