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Ethiopia

Legal form:

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Delivery:

6 months

Price: $

500

Payment methods:

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Requirements:

Document checklist:

Local legal address (Handled by B2B Hub) 

1.Passport
2.Proof of Residence 

Registrar

Organization name

Abbreviation

Country

Ethiopia

Email

Phone

Listing
Open website
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About

Ethiopia

Capital
Official languages
Population 
Currency

ISO 4217

Addis Ababa

Amharic, Oromo, Tigrinya, Somali, Sidamo, Gurage, Afar, Harari, Hadiyya, Gamo-Gofa-Dawro, Wolaytta, and Silt'e.

112,078,730 (as of July 2020)

Ethiopian Birr

ETB

FAQ

FAQ for Company Formation in Ethiopia:


1. What are the types of companies that can be formed in Ethiopia?

There are four types of companies that can be formed in Ethiopia, namely private limited companies, public limited companies, sole proprietorship, and partnership.


2. What is the minimum capital required to form a private limited company in Ethiopia?

The minimum capital required to form a private limited company in Ethiopia is ETB 15,000 (approximately USD 500).


3. How many shareholders are required to form a private limited company in Ethiopia?

A minimum of two shareholders is required to form a private limited company in Ethiopia.


4. Can foreign nationals form a company in Ethiopia?

Yes, foreign nationals can form a company in Ethiopia. However, they are required to have a local partner who will hold at least 30% of the shares.


5. What is the process of company formation in Ethiopia?

The process of company formation in Ethiopia involves the following steps:

- Reservation of the company name

- Drafting of the memorandum and articles of association

- Obtaining a business license from the Ministry of Trade

- Registering with the Ethiopian Investment Commission

- Registering for taxes with the Ethiopian Revenue and Customs Authority

- Obtaining other necessary licenses and permits from relevant authorities


6. What is the time taken for company formation in Ethiopia?

The time taken for company formation in Ethiopia varies depending on the type of company and the efficiency of the authorities. However, it generally takes around 2-3 months to complete the process.


7. What are the taxes applicable to companies in Ethiopia?

Companies in Ethiopia are required to pay corporate income tax, value-added tax (VAT), and other taxes such as withholding tax and customs duties.


8. What are the employment regulations in Ethiopia?

Employment in Ethiopia is governed by the Labor Proclamation, which sets out the rights and obligations of employers and employees. Companies are required to provide a safe working environment and comply with minimum wage and other labor standards.


9. Can a company in Ethiopia repatriate profits?

Yes, companies in Ethiopia can repatriate profits subject to certain conditions and approval from the National Bank of Ethiopia.


10. What are the incentives available for foreign investors in Ethiopia?

Foreign investors can avail of various incentives such as tax holidays, exemption from customs duties, and repatriation of profits. These incentives are provided by the Ethiopian Investment Commission to encourage foreign investment in the country.

Economy

"Ethiopia has seen a steady growth in its economy over the past few years. According to the World Bank, Ethiopia's GDP grew by an average of 8.5% between 2010 and 2019. This growth has been driven by the country's agricultural sector, which accounts for around 45% of the GDP. Additionally, the manufacturing sector has seen a significant increase in output, with the sector contributing around 10% of the GDP. The services sector has also seen a steady increase in output, accounting for around 45% of the GDP.

In terms of foreign investment, Ethiopia has seen a steady increase in the amount of foreign direct investment (FDI) it has received. According to the World Bank, Ethiopia received $3.2 billion in FDI in 2019, up from $2.3 billion in 2018. This increase in FDI has been driven by the country's efforts to attract foreign investors, as well as its growing economy.

Overall, Ethiopia has seen a steady growth in its economy over the past few years, driven by the agricultural, manufacturing, and services sectors. The country has also seen an increase in foreign direct investment, which has helped to further fuel its economic growth."

Taxation

In Ethiopia, both individuals and corporations are subject to income tax. The tax year for individuals is the Ethiopian fiscal year, which runs from July 8 to July 7 of the following year. For corporations, the tax year is the calendar year. 


Individuals are taxed on their employment income, business income, and other sources of income. The tax rates range from 0% to 35%, depending on the amount of income earned. 


Corporations are taxed at a flat rate of 30% on their net profit, with some exceptions for certain sectors, such as agriculture and small-scale manufacturing. Additionally, there is a 10% withholding tax on dividends paid to non-residents.


Taxpayers are required to register for tax and obtain a tax identification number (TIN) before they can make tax payments. Tax returns must be filed annually, and tax payments are due within four months of the end of the tax year. 


Taxpayers can make tax payments at designated banks or through online payment systems. Failure to pay taxes on time can result in penalties and interest charges. Additionally, the Ethiopian Revenue and Customs Authority (ERCA) can take legal action, such as seizing assets or filing a lawsuit, to collect unpaid taxes.

Company incorporation application form

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