Ethiopia can prove to be a tempting market for international entrepreneurs looking to do business in Africa as the country is a member of the Common Market for Eastern and Southern Africa (COMESA) which offers broad access to the entire African continent.

This jurisdiction has an excellent domestic market thanks to its large population. Ethiopia is one of the fastest growing economies in Africa with a GDP of $ 177.5 billion and an average growth rate of 10.2% and an inflow of foreign direct investment (FDI) of $ 3.2 billion.
The Government of Ethiopia allows full repatriation abroad of profits, interest, dividends and capital gains without restrictions.

Local products and services in Ethiopia produced and destined for export are not subject to any form of export tax.

Investors wishing to engage in new agribusiness or manufacturing activities in Ethiopia will enjoy an income tax holiday of 5-6 years as long as they export at least 50% of all their products. Ethiopia has access to the market free of customs duties and quotas for both the EU and the US.

Legal forms available in Ethiopia

To consolidate a company in this jurisdiction, the main thing is to choose the type of legal form that you want to register. Limited Liability Companies or LLCs are frequently used by foreign entrepreneurs who want to establish business in Ethiopia.

When registering an LLC you should know that they require at least one director and two shareholders, they can be natural or legal persons and they can be of any nationality. The minimum paid-up capital required for registration is USD 200,000. In this type of entity, three auditors must be appointed if the Limited Liability Company has more than 20 shareholders.

Public Limited Companies are also available in Ethiopia, they require the same amount of paid-up capital, but their incorporation requires at least five shareholders and three directors of any nationality. A statutory auditor must also be appointed, it can be a natural or legal person.

If you already have a consolidated company abroad, but want to expand your business on another continent, establishing a branch may be the most viable option. Such a branch must have the approval of the Ethiopian Investment Commission before starting operations in the country.

When establishing a branch, at least one director of any nationality must be appointed to be the legal representative of the branch in Ethiopia. If you are interested in this legal form, Foster Swiss can advise and guide you for all the respective procedures.

If instead you do not plan to do commercial activities with your company, the entity that you can use is a Liaison Office or representation. This structure is not considered a legal entity and therefore does not have the permits to conduct business in Ethiopia.

A liaison office requires the approval of the Ministry of Commerce and Industry prior to its establishment. A director needs to be appointed to represent the entity in Ethiopia and the office can only engage in promotional activities, marketing of products and services for its parent company in Ethiopia.

If you want to register a company in Ethiopia, Foster Swiss can advise you.

We help you in practically everything: we provide advice from the moment you choose a corporate structure for your company until even one year after having incorporated your company. And of course we take care of the entire process for you.

For more information on this topic or any requirement related to our services, you can contact us directly through info@fosterswiss.com