PROCLAMATION No. 280/2002
RE-ENACTMENT OF THE
INVESTMENTPROCLAMATIONAS AMENDED BY PROCLAMATION NO.
375/2003

PART ONE
General
1. Short Title
This Proclamation may be cited as the "Investment
Proclamation No. 280/2002."

WHEREAS, the encouragement and promotion of investment
has become necessary so as to accelerate the economic
development of the country and to improve the living standardsof its peoples;

2. Definitions
In this Proclamation, unless the context requires otherwise:1) "Investment" means expenditure of capital by aninvestor to establish a new enterprise or to expand or
upgrade one that already exists;

WHEREAS, in addition to that of domestic investors, it isdeemed essential to widen the scope of participation of foreign
investors and to facilitate conditions thereof with a view toenhancing the country's investment activities;

2) "Enterprise" means an undertaking established for
purposes of gaining profit;

WHEREAS, the system of administration of investment needs
to be transparent and efficient;
WHEREAS, to these ends, it has become necessary to revise
the existing law on investments;

3) "Capital" means local or foreign currency, negotiable
instruments, machinery of equipment, buildings, initial
working capital, property rights, patent rights or otherbusiness assets;

NOW, THEREFORE, in accordance with Article 55(1) of theConstitution of the Federal Democratic Republic of Ethiopia, it
is hereby proclaimed as follows:

4) "Investor" means a domestic or foreign investor having
invested in Ethiopia;

20

service rendering or other economic and related
activities for gain;

5) "Domestic investor" means an Ethiopian or a foreign
national permanently residing in Ethiopia having madean investment, and includes the Government, public
enterprises as well as a foreign national, Ethiopian bybirth, and desiring to be considered as a domestic
investor;11) "Government" means the Federal Government or a
Regional Government;
12) "Region" means any of those specified under Article
47(1) of the Constitution of the Federal Democratic
Republic of Ethiopia and for the purpose of thisProclamation, includes the Addis Ababa City
Administration and the Dire Dawa Administrative
Council;

6) "Foreign investor" means a foreign or an enterprise,owned by foreign nationals, having invested foreign
capital in Ethiopia, and includes an Ethiopian
permanently residing abroad and preferring treatment
as a foreign investor;

13) The phrase "export-oriented non-equity based foreign
enterprise collaboration" means a 100% exportoriented contractual arrangement between a domestic
investor and foreign enterprise in which the foreign
enterprise provides, among others, all or some of thefollowing:

7) "Foreign capital" means capital obtained from foreignsources, and includes the re-invested profits anddividends of a foreign investor;
8) "Expansion/upgrading" means increasing in value,by more than 25%, the full production or service
capacity of an existing enterprise, be it in variety,volume or both;a) guaranteed external market access;b) export product and production know-how;9) "Appropriate investment organ" means the Ethiopian
Investment Commission, (hereinafter referred to as the"Commission"), or the executive organ of a region
empowered to issue investment permits;c) export marketing know-how;d) export business management know-how;10) "Public enterprise" means an undertaking, wholly
owned by the Federal or Regional Government,
established to carry out manufacturing, distribution,e) raw materials and intermediate inputs needed forexport production.

211) to accelerate the country's economic development;

14)"Transfer of technology" means the transfer ofsystematic knowledge for the manufacture of a product,
for the application of improvement of a process or for therendering of a service, including management andmarketing technologies, but shall not extend totransactions involving the mere sale or lease of goods.

2) to exploit and develop the immense natural resources of
the country;
3) to develop the domestic market through the growth of
production, productivity and services;

3. Scope of Application4) to increase foreign exchange earnings by encouraging
expansion in volume and variety of the country's export
products and service and the improvement of their
quality as well as to save foreign exchange throughproduction of import substituting products;

The provisions of this Proclamation shall not beapplicable to investments in the prospecting,
exploration and development of minerals andpetroleum resources.

5) to encourage balanced development and integrated
economic activity among the Regions and to strengthen
the inter-sectoral linkages of the economy;

PART TWO
Investment Objectives, Areas andIncentives

6) to enhance the role of the private sector in theacceleration of the development of the country's
economy;7) to render foreign investment play its proper role in the
country's economic development;

4. Investment Objectives of the Federal Democratic
Republic of Ethiopia8) to create wide employment opportunities for Ethiopians
and to foster the transfer of technical know-how, ofmanagerial skills and of technology required for the
progress of the country.

The objectives of the investment policy of the Federal
Democratic Republic of Ethiopia are designed to improve
the living standards of the peoples of Ethiopia through therealization of sustainable economic and social
development; the particulars of which are the following:22

5. Areas of Investment Reserved for theGovernment or Joint Investment with theGovernment

7. Regarding Investments to be undertaken in Joint
Venture with the Government

1) The following investment areas are exclusively
reserved for the Government;

The Supervising Authority of Public Enterprises shallreceive investment proposals submitted by any private
investor intending to invest in joint venture with theGovernment; it shall submit same to the Ministry of Tradeand Industry for decision and, upon approval, designate apublic enterprise to invest as partner in the joint investment.

a) Transmission and supply of electrical energy
through the Integrated National Grid System; andb) Postal services with the exception of courier
services;

8. Areas of Investment Open for Foreign Investorsc) Air transport services using aircraft with a seating
capacity of more than 20 passengers.

All areas of investment, other than those exclusively
reserved under this Proclamation for the Government or
joint venture with the government or for Ethiopian
nationals or other domestic investors which shall be
specified by regulations to be issued by the Council of
Ministers, shall be open for foreign investors.

2) Investor shall be allowed to invest in the following
areas only in joint venture with the government:a) Manufacturing of weapons and ammunition; and9. Investment Incentivesb) Telecommunication services.

1) Areas of investment specified by regulations to beissued by the Council of Ministers pursuant to theinvestment objectives stated under Article 4 of thisProclamation shall be eligible for investment
incentives.

6. Areas of Investment Reserved for Domestic
Investors
Areas of investment exclusively reserved for Ethiopian
nationals and other domestic investors shall be specified byregulations to be issued by the Council of Ministers.

232) The regulations to be issued pursuant to sub-article (1)of this Article shall determine the type and extent ofentitlement to incentives.

11. Capital Requirements for Foreign Investors
1) Any foreign investor, to be allowed to invest pursuant
to this Proclamation, shall be required to allocate aminimum capital of 100,000 US dollars for a single
investment project.

PART THREE
Forms of Investment and Capital
Requirements for Foreign Investors

2) Notwithstanding the provision of sub-Article (1) of this
Article, the minimum capital required of a foreign
investor investing jointly with domestic investors
should be 60,000 US dollars.

10. Form of Investment
3) The minimum capital required of a foreign investor
investing in areas of engineering, architectural,accounting and audit services, project studies orbusiness and management consultancy services or
publishing shall be:1) Investments may be effected in one of the following
forms:(a) Sole proprietorship;a) 50,000 US dollars if the investment is made whollyon his own;(b) Business organizations incorporated in Ethiopia orabroad;b) 25,000 US dollars if the investment is made jointlywith domestic investors.

(c) Public Enterprises established in accordance withthe relevant law;4) A foreign investor:(d) Cooperative Societies formed in accordance withthe relevant law.

a) re-investing his profits or dividends; or2) Any business organization specified under sub-Article(1) (b) of this Article shall be registered in accordancewith the Commercial Code or any other relevant law.

b) exporting at least 75% of his outputs

24shall not be required to allocate a minimum capital.

2) Notwithstanding the provision of sub-Article (1) of
this Article, a foreign investor intending to buy anexisting enterprise in order to operate it as it stands or
to buy shares of an existing enterprise shall obtainprior approval from the Ministry of Trade andIndustry.

5) Any foreign investor having brought investment capital
into the country shall have registered same at the
National Bank of Ethiopia and obtain a certificate ofregistration.

3) Upon receipt of an application made in accordancewith sub-Article (2) of this Article, the Ministry ofTrade and Industry shall, after examining the matterin light of the relevant laws within two working days:

PART FOUR
Investment Permita) register the share transfer or replace the businesslicense upon receipt of the appropriate fee, where
the application is found acceptable; or

12. Requirement of Permit
1) The following investors shall be required to obtain
investment permits;b) notify to the investor its decision and the reason
thereof in writing, where the application is foundunacceptable.

a) Foreign investors;

4) The provisions of this Article shall not affect the rightof an investor of Ethiopian national or foreign national,
an Ethiopian by birth, taken for domestic investor
intending to invest, in conformity with the relevant lawsof the country, in areas not eligible for incentives or,
waiving his right of entitlement in those areas eligible
for incentives.

b) Foreign nationals, excluding Ethiopians by birth,
taken for domestic investors pursuant to Article 2(5) of this Proclamation;c) Domestic investors investing in areas eligible forincentives;d) Domestic and foreign investors making investmentsin partnerships.

13. Application for Investment Permit by a Domestic
Investor

25e) Where the investment is to be made by acooperative society, a photocopy of its Articles of
Association.

1) An application for investment permit by a domestic
investor shall be made in a form designed for such
purpose and submitted together with the following
documents:

2) The application form and documents stipulated undersub-Article (1) of this Article shall be made:a) Where the application is signed by an agent, aphotocopy of his power of attorney;a) in two copies, where they are to be submitted to theCommission; orb) Where the investment is to be made by anindividual person, a photocopy of his identity card,or a photocopy of the certificate evidencing his
domestic investor status and his recent two
passport size photographs;b) in one copy, where they are to be submitted to
Regional Investment Organs.

14. Application for Investment Permit by a Foreign
Investorc) Where the investment is to be made by a businessorganization, photocopies of its memorandum ofassociation and articles of association; or where
the business organization is to be newly
established, in addition, it shall submit
photocopies of the shareholders' identity cards orphotocopies of certificates evidencing theirdomestic investor status;

Application for investment permit by a foreign investor
shall be made in a form designed for such purpose andsubmitted to the Commission together with the following
documents in two copies:
1) where the application is signed by an agent, aphotocopy of his power of attorney;d) Where the investment is to be made by a public
enterprise, a photocopy of the Regulation underwhich it is established or a photocopy of its
memorandum of association and articles ofassociation; and2) where the investment is to be made by an individual
person, a photocopy of the pages of a valid passportshowing his identity and his recent two passport size
photographs;

263) where the investment is to be made by a businessorganization incorporated in Ethiopia, photocopies
of its memorandum of association and Articles ofassociation; or where it is to be newly established, in
addition, it shall submit photocopies of the pages of avalid passport of each shareholder showing his
identity;a) where the application is signed by an agent, aphotocopy of his power of attorney;b) where the investment is made by a businessorganization, photocopies of its memorandum ofassociation and Articles of Association; andc) photocopy of a valid business license of theexisting enterprise.

4) where the investment is to be made by a branch of aforeign business organization in Ethiopia,
photocopies of its memorandum of association and
Articles of Association or a similar document of theparent company; and2)

The application form and documents stipulated undersub-Article (1) of this Article shall be made:a) in two copies, where they are to be submitted to theCommission; or5) where it is a joint investment by domestic and foreign
investors, in addition to the documents provided
under (c) above, photocopies of identity cards orphotocopies of certificates evidencing the domestic
investor status of the domestic investors, as the casemay be.

b) in one copy, where they are to be submitted to
Regional Investment Organs.

16. Issuance of Investment Permit

15. Application for Investment Permit for Expansion
or Upgrading

1) Upon receipt of an application made in accordancewith Article 13, 14 or 15 of this Proclamation, theappropriate investment organ shall, after examining
the intended investment activity in light of the
Proclamation, Regulations and directives issued
thereunder within five working days;

1) An application for investment permit to expand or
upgrade an existing enterprise shall be made in aform designed for such purpose and submitted
together with the following documents:a) issue the investment permit upon receipt of theappropriate fee, where the application is foundacceptable; or27b) notify to the investor its decision and the reason
thereof in writing, where the application is foundunacceptable.

17. Renewal of Investment Permit
1) An investment permit shall be renewed annually until
the investor commences the marketing of his output orservices; provided, however, the investor shall submit
progress reports on the implementation of the project,
to the appropriate investment organ, at the end of every
six months.

2) The appropriate investment organ shall, after issuing
the investment permit, notify the concerned
government institutions so that the latter could
conduct the necessary follow up.
3) An investment permit shall contain the following:

2) An application for renewal of an investment permit
shall be submitted at least a month before the end of aperiod of one year for which the permit remains valid.

a) the name, nationality and address of the investor;b) the investment activity; and

3) The appropriate investment organ shall renew theinvestment permit, where satisfied, as to the existenceof sufficient cause for the delay in the commencement
or completion of the project.

c) the region in which the investment is to be made.
4) A holder of an investment permit shall not be required
to obtain a business license until completion of project
implementation and the commencement of production
or rendering of service.

18. Suspension or Revocation of Investment Permit
1) Where an investor violates the provisions of thisProclamation or regulations or directives issued to
implement this Proclamation, the appropriate investment
organ may suspend the investment permit until the investor
takes due corrective measures.

5) An investment permit may not be transferred to anotherperson without the prior authorization of theappropriate investment organ.
6) Where an investment permit is transferred to anotherperson or where any change occurs in its content, it
shall be submitted to the appropriate investment organ
and amended accordingly.

2) The appropriate investment organ may revoke an
investment permit where it is ascertained that:28a) the investor obtained the permit fraudulently or bysubmitting false information or statements;

6) Upon revocation of an investment permit, the investor shallreturn within 6 months all the benefits he was granted.

b) the investor has transferred the permit to another person
without the authorization of the appropriate investment
organ;

7) An investment permit may not be suspended or revoked byany organ other than the appropriate investment organ
having issued same.

c) incentives granted are misused or illegally transferred
to another person;

19. Right to Appeal
An investor who has a grievance against a decision of an
appropriate investment organ may, within 30 days fromreceipt of the decision, appeal to the Federal Investment
Board or to concerned organ of a Regional government, as
may be appropriate.

d) the investor has failed, without good cause, to renew
the permit in accordance with Article "17" of thisProclamation;e) if the investor is found engaged in a commercial
activity without obtaining a business license.

PART FIVE

3) The appropriate investment organ shall, prior tosuspending or revoking a permit, notify the investor inwriting as to the causes for taking such action and allow
him a period of one month to present his views thereon.

Transfer of Technology, Loans,
Utilization of foreign Currency,
and Remittance of Funds

4) The appropriate investment organ shall suspend or revoke
the permit where the investor fails to respond within thetime limit prescribed in sub-Article (3) of this Article orpresents unacceptable justification.

20. Technology Transfer Agreement
1) Where an investor concludes a technology transfer
agreement related to his investment, he shall submit
the same to the Commission for approval andregistration.

5) Upon suspension or revocation of an investment permit,
the investor shall immediately lose entitlement to all
benefits.

29b) Principal and interest payments on external loans;2) Upon receipt of an application for registration as per
sub-Article (1) of this Article, the Commission shallissue the registration certificate within two working
days.

c) Payments related to a technology transfer agreement
registered in accordance with this Proclamation;d) Proceeds from the sale or liquidation of anenterprise;3) A technology transfer agreement which is notregistered in accordance with this Article shall haveno legal effect.

e) Proceeds from the transfer of shares or of partial
ownership of an enterprise to a domestic investor.

21. Loans and Utilization of Foreign Currency

2) Expatriates employed in an enterprise may remit, inconvertible foreign currency, salaries and otherpayment accruing from their employment in accordancewith the foreign exchange regulations or directives of
the country.

1) An investor who acquires an external loan shall havesuch loan registered with the National Bank of Ethiopia
in accordance with the directives of the Bank.
2) For transactions related to their investment, foreign
investors shall be allowed to open and operate foreign
currency accounts in authorized local banks inaccordance with directives of the National Bank ofEthiopia.

PART SIX
Investment Guarantees and Protections

22. Remittance of Funds
23. Investment Guarantees and Protections

1) Any foreign investor shall have the right, in respect ofan approved investment, to make the following
remittances out of Ethiopia in convertible foreign
currency at the prevailing rate of exchange on the dateof remittance:

1) No investment may be expropriated or nationalized
except when required by the public interest and then,
only in compliance with the requirements of the law.
2) Adequate compensation, corresponding to theprevailing market value, shall be paid in advance ina) Profits and dividends accruing from investment;301) The administration of investment in respect of thefollowing shall be under the jurisdiction of theCommission:case of expropriation or nationalization of aninvestment for public interest.
3) Any foreign investor may remit compensation paid tohim, pursuant to this Article, out of Ethiopia inconvertible foreign currency.

a) Investment made by foreign investor;b) Investment made by a foreign national
permanently residing in Ethiopia taken for adomestic investor

PART SEVEN
Investment Administrationc) Investment made, in areas eligible for incentives
by domestic investor who is required to obtainbusiness license from concerned federal organs;

24. Investment Administration Organsd) Joint investment by domestic and foreign
investor.

The administration of investment shall be carried out
through the following organs:
1)

The Ministry of Trade and Industry;2)

The Investment Board;

3)

The Commission;

4)2) Notwithstanding the provision of sub-Article (1) of
this Article, the issuance, renewal and cancellation of
investment permits for air transport services and forgeneration of transmission or supply of electrical energy
shall be carried out by the Ethiopian Civil Aviation
Authority and the Ethiopian Electric Agency
respectively, representing the Commission.

Regional investment organs to be defined by thelaws of the respective region.

3) Investments other than those referred to in sub-article(1) of this Article shall fall under the jurisdiction ofregional investment organs.

25. Jurisdiction

31his Article in compliance with the relevant laws
thereof.

4) The granting of incentives by way of exemptions fromimport taxes and customs duties shall fall under the
exclusive jurisdiction of the Ministry of Revenues.

4) Upon receipt of an application for a business license
in accordance with sub-Article (1) (e) of this Article,
the appropriate investment organ shall, after
examining the matter in light of the relevant laws
within five working days:

26. One-Stop Shop Service
1) The Commission or Regional Investment Organs
shall provide the following services, as required
under the relevant laws, to investors they have given
investment permits, representing the competentFederal or Regional executive bodies, as
appropriate:a) Issue the business license upon receipt of theapplication fee, where the application is foundacceptable; orb) Notify to the investor its decision and the reason
thereof in writing, where the application is foundunacceptable.”a) Notarization of memorandum of association and
Articles of association;b) Effecting commercial registration;5) Notwithstanding the provision of Article 22 subArticle (2) (a) of Commercial Registration and Business
Licensing Proclamation No. 67/1997, the appropriate
investment organ shall issue the business license uponsigning, by the investor, of an undertaking to respect therelevant laws and directives of the land.

c) Issuance of work permits to expatriate employees;d) Grading of construction contractors; ande) Issuance of business licenses

6) Notwithstanding the provision of sub-Article (1) of
this Article, the Commission shall issue businesslicenses representing only the Ministry of Trade andIndustry.”2) The Commission shall register and render a one-stop
service to export-oriented non-equity base foreign
enterprise collaborations.
3) The Commission and regional investment organs
shall carry out their functions under sub-Article (1) of

7) Notwithstanding the provision of sub-Article (1) of
this Article, amendments, notarization, renewal,

322) The Minister of Trade and Industry shall be the
Chairperson of the Investment Board.

replacement or cancellation to be made in relation
to documents stated therein shall be effected by therelevant Federal or Regional executive bodies.

3) The members of the Board shall be drawn from
Government and the private sector.

8) The appropriate investment organ shall, after
rendering the service listed under sub-Article (1) of
this Article, notify the concerned government
institutions so that the latter could conduct thenecessary follow up.

4) The “Commissioner” of the Commission shall be amember of the Board.
5) The Board shall have its own Secretariat. The powers
and duties of the Secretariat shall be determined by theinternal rules of procedures of the Board.

27. Transmission of Information on Investment
Each regional investment organ shall transmit to theCommission information compiled with respect to theresource potential and investment opportunities of theRegion as well as periodic reports on investment
activities therein.

29. Powers and Duties of the Board
The Board shall:
1) Supervise and follow up, as the superior authority, theimplementation of this Proclamation and the activities of
the Commission;

PART EIGHT

2) Decide on policy issues arising in connection with theimplementation of this Proclamation.

The Investment Board

3) Issue directives necessary for the implementation of thisProclamation and regulations issued hereunder;

28. Members of the Board

4) Submit, as necessary, amendments on investment
incentives, to the Council of Ministers for approval;

1) The number of members of the Investment Board shallbe determined by Government.

335) Decide on appeals submitted to it by investors against
decisions of the Commission;4) Without prejudice to the provisions of this Article, theBoard shall draw up its own rules of procedure.

6) Determine service fees to be charged by theCommission

PART NINE
The Investment Commission7) Approve the annual work program and budget of theCommission;

31. Re-establishment

8) Publicly notify investors of directives issues from time
to time;1) The Commission is hereby re-established as anautonomous public institution having legal personality.

9) Whenever it deems necessary, decide on new oradditional incentives, other than what is provided forunder the Investment Incentives Regulations and submit
same to the Council of Ministers for approval.

2) The Commission shall be accountable to the Investment
Board.

32. Powers and Duties of the Commission

30. Meeting of the Board

The Commission shall:

1) The Board shall meet regularly once in a month.
However, it may hold extra-ordinary meetings at any
time when necessary.

1) Serve as a nucleus for matters of investment andpromote, coordinate and enhance activities thereon:

2) There shall be a quorum where more than half of themembers are present at meetings of the Board.

2) Initiate and submit to the Board policy andimplementation measures needed to create a conducive
investment climate for both domestic and foreign
investors and follow up the implementation of same
upon approval;

3) Decisions of the Board shall be passed by a majority
vote, however, the chairperson shall have a casting votein case of a tie.

3411) Give advice and technical support to regional
investment organs with a view to building up theircapacity; and

3) Collect, compile, analyze and disseminate informationon the resource potential of the country and on theinvestment opportunities it offers, promote concrete
investment projects, provide, upon request, matchmaking service of possible joint investment partners;

12) Perform such other functions as may help to promoteand enhance investment.

4) Organize, with a view to helping promote investment,such activities as exhibitions, training and seminars
locally or abroad as may be appropriate, give advisory
support to investors;

33. Organization of the Commission
The Commission shall have:5) Realize liaison and coordination between investors,
public offices, Regional governments and other relevantorgans, with a view to enhancing investment;

1) a Commissioner to be appointed by the Government;and2) the necessary staff

6) Prepare and distribute pamphlets, brochures, films andother materials that help enhance investment;
7) Issue investment permits in accordance with Article“25” of this Proclamation;

34. Power and Duties of the “Commissioner”
1) The “Commissioner” shall be the Chief Executive
Officer of the Commission and, as such shall, subject tothe general directives of the Board, direct andadminister the activities of the Commission.

8) Monitor the implementation of investment projects forwhich it has issued permits and ensure that the terms of
the investment permits are complied with;

2) Without limiting the generality of sub-Article (1) of this
Article, the “Commissioner” shall:

9) Approve and register technology transfer agreements
related to investments;a) exercise the duties of the Commission specified in
Article “32” of this Proclamation;10) Negotiate bilateral investment promotion andprotection treaties for conclusion between Ethiopia andother countries and sign same upon approval by theCouncil of Ministers;

35b) income, assistance and grants obtained from anyother sources.

b) employ and administer the personnel of theCommission in accordance with the Federal Civil
Service Law;

36. Books of Accountsc) prepare and submit to the Board the work programand budget of the Commission and implement same
upon approval;

1) The Commission shall keep complete and accurate
books of accounts.

d) effect expenditure in accordance with the budget
approved for the Commission;2) The accounts and financial documents of theCommission shall be audited annually by the Auditor
General or by auditors designated by him.

e) represent the Commission in all its dealings withthird parties; andf) prepare and submit to the Board reports on theperformance and Financial operations of theCommission.

PART TEN
Miscellaneous Provisions

3) The “Commissioner” may, to the extent necessary forthe efficient performance of the functions of theCommission, delegate part of his powers and duties toothers officials as well as employees of theCommission.

37. Allocation of Land1)

35. Source of Fund

Where a Regional Government receives anapplication for the allocation of land for an
approved investment, it shall, on the basis of theFederal and its own laws, deliver within 60 days therequired land to the investors.

The sources of the fund of the Commission shall be:a) budgetary allocations
Government;

made

by

the

2) The Region shall allocate land for investment
activities and transmit information on suchallocations to the appropriate investment organ.

Federal36

1) Rights and privileges as well as restrictions solely
relating to foreign investors shall not be applicable
to a foreign national who invests in Ethiopia isbeing taken for a domestic investor.

3) Each Region shall, in the allocation of land givepriority to approved investments.
4) The appropriate investment organ shall, in
cooperation with the concerned regional executive
organs, facilitate and follow up the allocation ofland for approved investments.

2) A foreign national permanently residing in
Ethiopia to be taken for a domestic investor shallfill a form designed for such purpose andsubmitted together with the following documents
to the Commission:

38. Employment of Expatriates
1) Any investor may employ duly qualified expatriate
experts required for the operation of this business.

a) Where the application is signed by an agent,his power of attorney;

2) An investor who employs expatriates pursuant to
sub-Article (1) of this Article, shall be responsible
for replacing, within a limited period, such
expatriate personnel by Ethiopians by arranging thenecessary training thereof.

b) A photocopy of his valid business license;c) A photocopy
certificate;ofprincipal

registrationd) A photocopy of valid residence permit;

3) Notwithstanding the provisions of sub-articles (1)and (2) of this Article, a foreign investor upon
obtaining the prior consent of the Commission shall,
without and restriction, have the right to recruit
expatriate employees on top management positionsof an enterprise of which he is the sole or major
owner of shareholder.

e) Where the business license is that of abusiness organization, photocopies of its
memorandum of Association and Articles of
Association;f) Where the applicant is dependent or heir of aperson taken for a domestic investor andpermanently residing in Ethiopia, in addition to
the above mentioned documents pertaining to
the supporting person or the deceased, a

39. Foreign Nationals Taken for Domestic
Investors

37

photocopy of the dependent’s valid residence
permit or a court decision declaring his status asan heir; andb. Forward to the Commission photocopies of theinvestment permits they issued and the relevant
documents.

g) The applicant’s recent three passport size
photographs.

42. Duty to Provide Information
Any executive organ of the Federal or a Regional
Government shall have the duty to provide information
relating to investment whenever so requested byappropriate investment organ.

40. Ownership of Immovable Property
1) Notwithstanding the provisions of Articles 390-393
of the Civil Code, a foreign national taken for adomestic investor or a foreign investor shall havethe right to own a dwelling house and otherimmovable property requisite for his investment.

43. Repealed Laws
1) The Investment Proclamation No. 37/1996 (asamended) is hereby repealed.

2) The provisions of sub-Article (1) of this Article
shall include those who have invested prior to theissuance of this proclamation.

2) No law, regulation, directive or practice inconsistent
with this Proclamation shall have effect with respect
to matters provided for in this Proclamation.

41. Power Delegated to the Ethiopian Civil
Aviation Authority and the Ethiopian ElectricAgency.

44. Transitory Provisions
1) Notwithstanding the provisions of Article “43”incentives provided for in the Investment
Proclamation No. 37/1996 (as amended) and in
regulations and directives issued thereunder shallremain applicable in respect of investment approved
prior to the issuance of this Proclamation.

The Ethiopian Civil Aviation Authority and theEthiopian Electric Agency shall:a.Carry out functions delegated to them under
Article 25 sub-Article (2) in compliance withthis Proclamation and Regulations andDirectives issued thereunder.

382) Where an investor, eligible for incentives under
Investment Proclamation No. 37/1996 (asamended), opts instead to be a beneficiary of
incentives provided for in this Proclamation and in
regulations to be issued hereunder, he may notify
the appropriate investment organ and be entitledthereby.

PROCLAMATION No. 375/2003
A PROCLAMATION TO AMEND THE
INVESTMENT RE ENACTMENTPROCLAMATION
No. 280/2002

45. Effective Date
This Proclamation shall come into force as of 2nd day ofJuly, 2002.

WHEREAS, the system of administration of investment
needs to be transparent and efficient;

Done at Addis Ababa, this 2nd day of July, 2002.

WHEREAS, to this end, it has become necessary to amend
the existing law on investments;
NOW, THEREFORE, in accordance with Article 55 (1) of
the Constitution of the Federal Democratic Republic ofEthiopia, it is hereby proclaimed as follows:

1. Short Title
This Proclamation may be cited as the “Investment(Amendment) Proclamation No.375/2003.”

2. Renaming

GIRMA WOLDEGIORGISPRESIDENT OF THE FEDERAL
DEMOCRATIC REPUBLIC OF ETHIOPIAThe Ethiopian Investment Authority, which has been reestablished under Proclamation No.280/2002, is hereby
renamed as the Ethiopian Investment Commission.

39

3. Amendment 1
4. Power to Issue Regulation
The Council of Ministers may issue Regulations toamend the list of documents stipulated under Articles
13, 14, 15 and 37 of this Proclamation.

GIRMA WOLDEGIORGISPRESIDENT OF THE FEDERAL
DEMOCRATIC REPUBLIC OF ETHIOPIA

5. Repealed Law
Transfer of technology Council of Ministers
Regulations No.121/1993 is hereby repealed.

6. Effective Date
This Proclamation shall enter into force as of 28th dayof October 2003. Done at Addis Ababa, this 28th day ofOctober, 2003.

1

Since provisions issued under this Article areamendment provisions, they are included or are
taken as a guide to amend the legal provisions of
the investment proclamation No. 280/2002 as it isproduced in this document.

40

2. Definitions

COUNCIL OF MINISTERSREGULATIONS NO. 84/2003

Unless theRegulations:

COUNCIL OF MINISTERSREGULATIONS ON INVESTMENTINCENTIVES ANDINVESTEMENT AREAS RESERVEDFOR DOMESTIC INVESTORS

context

requiresotherwise,

in

these

1) “Authority” means the Ethiopian Investment Authority;
2) “Board” means the Federal Investment Board;3) “Capital Goods” means machinery, equipment andaccessories, needed to produce goods or renderservices;

These regulations are issued by the Council of
Ministers pursuant to Article 5 of the Definition ofPowers and Duties of the Executive Organs of theFederal Democratic Republic of Ethiopia Proclamation
No.4/1995 (as amended) and Articles 6 and 9 of the Reenactment of Investment Proclamation No.280/2002.

4) “Customs Duty” includes taxes levied on imported
goods.
5) “Income Tax” means tax levied on profits frombusiness and categorized as the revenue of the Federal
Government, Regional Governments or as their joint
revenue;

Part One

6) “Proclamation”
No.280/2002;

Generalmeans

Investment

Proclamation

7) The definitions provided for under Article 2 of the
Proclamation shall apply to these Regulations.

1. Short Title
These Regulations may be cited as the “Investment
Incentives and Investment Areas Reserved for Domestic
Investors Council of Ministers Regulations No.84/2003”.

3. Investment
Investors

41

Areas

Reserved

for

Domestic

Areas of investment listed in the schedule attached to theseRegulations are exclusively reserved for domestic investors.

3) An investor engaged in activities mentioned under sub
article 1 of this Article who exports less than 50% / (fifty
percent) of his products or supplies his products only tothe domestic market shall be eligible for income tax
exemption for 2 years.

Part Two
Exemption from Income Tax

4) Notwithstanding the provision of sub article 3 of this
Article, the Board may, under special circumstances,
grant income tax exemption for a period not longer than
5 years.

4. Investment Activities Eligible for Income Tax
Exemption5) Notwithstanding the provision of sub article 3 of this
Article, directives issued by the Board may prohibit
exemption from income tax with respect to an investor
who supplies his products only to the domestic market.

1) Where an investor engaged in manufacturing or agroindustrial activities or the production of agricultural
products to be determined by directives to be issued by
the Board;6) Notwithstanding the provision of sub article 1 and 3 ofthis Article, an investor who exports hides and skins
after processing up to crust level may not be entitled toincentives provided therewith.

a. exports at least 50% / (fifty percent) of his products, orb. supplies at least 75% / (seventy five percent) of his
product to an exporter as a production input;

7) Notwithstanding the foregoing provisions of this Article,
where the investment is in relatively under developed
regions such as Gambella, Benishangul and Gumz,
South Omo, in Afar Zones to be determined by the
Board, Somali and other regions to be determined by the
Board, the investor shall be eligible for income tax
exemption for an additional 1 year period.

he shall be eligible for income tax exemption for 5 years.
2) Notwithstanding the provisions of sub articles 1 of this
Article the Board may, under special circumstances,
grant income tax exemption for a period not longer than
7 years. However, the granting of income tax exemption
for a period longer than 7 years requires the decision of
the Council of Ministers.

8) The income tax exemption under the foregoingprovisions of this Article shall be effective when the

42

Part Three

investor provides the information for the relevant revenue
collection institution and its validity is ascertained for each
income tax period.

Exemption from the Payment of Customs Duty

5. Income Tax Exemption for Expansion orUpgrading of an Existing Enterprise

8. General
1) An investor shall be allowed to import duty free capital
goods and construction materials necessary for theestablishment of a new enterprise or for the expansion or
upgrading of an existing enterprise.

An investor engaged in activities mentioned under sub
article 1 of Article 4 who exports at least 50% / (fifty
percent) of his products and increases, in value, his
production by 25% shall be eligible for income tax
exemption for 2 years.

2) In addition, an investor granted with a customs duty
exemption privilege shall be allowed to import duty freecapital goods necessary for his enterprise.

6. Commencement of Period of Exemption from
Income Tax
The period of exemption from income tax shall begin fromthe date of commencement of production or the date ofprovision of services, as the case may be.

3) Notwithstanding the provision of sub article 1 and 2 ofthis Article the Board may, by its directives, bar the
duty-free importation of capital goods and construction
materials where it finds that they are locally producedwith competitive price, quality and quantity.

7. Carry Forward of Losses
An investor who has incurred loss within the period ofincome tax exemption shall be allowed to carry forward
his loss for half of the income tax exemption period, after
the expiry of such period.

4) An Investor eligible for duty-free importation of capital
goods pursuant to these Regulations shall be given thesame privilege for spare parts whose value is not greaterthan 15% (fifteen percent) of the total value of thecapital goods to be imported.

43

e. postal and courier services;

9. Conditions for Importing Vehicles Duty Freef. real estate development;

The Board shall determine, by its directives, conditions forimporting vehicles duty free depending on the type andnature of the project. However, any investor may importduty free:g. business and management consultancy services;h. advertisement services;a. ambulances for employees that are needed for
emergency cases.

i.cinematography and similar activities;

b. buses for tour operation services.

j.radio and television broadcasting services;k. theatre and cinema hall operations;

10. Areas of Investment Not Eligible for Customs
duty exemptionl.customs clearance services;

1) Notwithstanding the provision of Article 8 of theseRegulations, the following areas of investment are noteligible for exemption from the payment of customs
duty.

m. laundry services;n. travel agency, trade auxiliary and ticket-selling
services;a. hotels (excluding star-designated hotels), motels, tea
rooms, coffee shops, bars, night clubs and restaurants
which do not have international standards;

o. lottery and games of a similar nature;2) Notwithstanding the provision of sub-article 1 of this
Article, the Board may, where it finds appropriate, issue
directives providing for additional areas of investment
which may not be eligible for exemption from thepayment of customs duty.

b. wholesale, retail and import trade;c. maintenance services;d. commercial road transport and car-hire services;442) Any regulations or directives inconsistent with theseRegulations shall not have effect with respect to mattersprovided for in these Regulations.

11. Transfer of Capital Goods Imported Free ofCustoms Duty
Capital goods imported free of customs duty shall not
be transferred to third parties not entitled to similar duty
free privileges, unless prior payment of the customs
duty is effected thereon.

14. Transitory Provision
1) Notwithstanding the provision of Article 13 of theseRegulations, incentives granted pursuant to theInvestment Incentives Council of Ministers Regulations
No.7/1996 (as amended) and the directives issued
thereunder, shall continue to take effect.

Part Four
Miscellaneous Provisions2) Where an investor granted with incentives under
Regulations No.7/1996 (as amended) opts instead to be abeneficiary of incentives provided for in theseregulations, he may notify the appropriate investment
organ and be entitled thereby.

12. Penalty
Any investor who acts contrary to Article 11 of theseRegulations shall be punishable in accordance with
Article 73 of the Re-establishment and Modernizationof Customs Authority Proclamation No.60/1997.

15. Effective Date
These regulations shall come into force on the date of
publication in the Federal Negarit Gazzeta.

13. Repealed and Non-effective Regulations andDirectives

Done at Addis Ababa, this 7th day of February, 2003
1) Investment Incentives Council of Ministers Regulations
No.7/1996 (as amended) and Investment Areas Reservedfor Domestic Investors Council of Ministers Regulations
No.35/1998 are hereby repealed.

Meles Zenawi,
Prime Minister,
Federal Democratic Republic of Ethiopia

45

restaurants excluding international and specialized
restaurants;

Schedule
Areas of Investment Reserved for Domestic
Investors8) travel agency, trade auxiliary and ticket selling services;9) car-hire and taxi-cabs transport services;

1. The following areas are exclusively reserved fordomestic investors:10) commercial road transport and inland water transport
services;

1) retail trade and brokerage;11) bakery products and pastries for the domestic market;

2) wholesale trade (excluding supply of petroleum and its
by-products as well as wholesale by foreign investors of
their products locally produced);12) grinding mills;
13) barber shops, beauty salons, and provision of smith
workshops and tailoring services except by garment
factors;3) import trade (excluding LPG, bitumen and upon
approval from the Council of Ministers, material inputs
for export products);

14) building maintenance and repair and maintenance ofvehicles;4) export trade of raw coffee, chat, oil seeds, pulses, hides
and skins bought from the market and live sheep, goats
and cattle not raised or fattened by the investor;15) saw milling and timber making;16) customs clearance services;5) construction companies excluding those designated as
grade 1;17) museums, theaters and cinema hall operations;6) tanning of hides and skins up to crust level;18) printing industries.

7) hotels (excluding star-designated hotels), motels,
pensions, tea rooms, coffee shops, bars, night clubs and46

2. Notwithstanding the provision of paragraph 1 ofthis schedule, the following areas of investment
are exclusively reserved for Ethiopian nationals:
1) banking, insurance and micro credit and saving services;
2) forwarding and shipping agency services;
3) broadcasting services
4) using aircraft with a seating capacity of up to 20
passengers.

47