GENERAL INFORMATION

Location: Northern tip of Ethiopia between 120-150 north latitude & 360:30’- 400: 30’ east longitude

Area: 53,638km2

Boundary: Afar region on the east

Amhara region on the south
Sudan on the west
Eritrea on the north

Population: 3.8 million (out of which 51% are in the 15-64 age range

Language: Tigrigna is the official language of the region. Erobgna, Kunamgna, Amharic & English are also spoken

Economy: Predominantly agriculture

Altitude: 500-3935 meters above sea level

Agro ecology: 11.5 % Dega (high land)
40.5% Woyna Dega (temperate zone)
48% Kola (low land)

Rainfall: The annual average rainfall is between 650-980 mm

OBJECTIVE OF THE OFFICE

• To serve as a nucleus for matters of investment and consequently promote, coordinate and enhance private investment activities in the region.
• Under its “one stop shop “service delivery arrangement to facilitate the issuance of investment permit and permanent license in hours time.

One – stop shop investment service

• To eliminate all cumbersome bureaucratic procedures, the region’s investment office is organized as a one-stop shop services & hence, provides both pre & post approval investment services.
• The office provides information required by investors, receives investment application, approves & issues investment permits, & provides trade registration services to the newly incorporated business enterprises.
Investment Permit

If decision is made upon the area of investment, the next major process is securing an investment permit. Is an investment permit needed; where is it obtained from? How is it obtained?

Need for investment permit

A domestic investor requires an investment permit for a new project with an investment capital of at least birr 250,000.However should a domestic investor engage in areas ineligible for incentives, or should he wish to invest in areas eligible for incentives without any claim to incentives, he shall do so without an investment license according to the relevant law of the country.

With regard to foreign investors, all foreign investors should possess investment permits prior to investing in areas open for foreign investment.

Any foreign investor, to be allowed to invest, shall be required to allocate a minimum capital of 100,000 US dollar for a single investment project. On the other hand, the minimum capital required of a foreign investor investing jointly with domestic partners shall be 60,000 US dollars.

The minimum capital required of a foreign investor investing in areas of engineering, architectural, Accounting & Audit services, project studies or business and management consultancy services or publishing shall be 50,000 US dollar if the investment is made wholly on his own or25, 000 US dollar if the investment is made jointly with domestic investors. A foreign investor re-investing his profits or dividends or exporting at leas 75% of his outputs shall not be required to allocate a minimum capital.

Where to obtain investment permit?

Investors with the following categories of investment should submit their request for investment permits to the Ethiopian Investment Authority (EIA)

• Investments made by foreign national taken for domestic investors:
• Investment made in areas eligible for incentives and for which appropriate Federal Government bodies will issue business operation licenses and,
• Investments made by foreign investors.

In areas outside the jurisdiction of the Ethiopian Investment Authority, Regional State Investment Bureau shall issue investment permits for investment to be made by domestic investors in their respective region.

CONDUCIVE POLICY

The federal government of Ethiopia and the regional government of Tigrai have adopted conducive policies for the private sector ‘s initiatives to invest. Such as:

• the issuance of investment proclamation and regulation that provide the following major incentives:

1. Exemption from customs duty

• One hundred percent exemption from the payment of import customs duties & other taxes levied on imports is granted to an investor to import all investment capital goods, such as plant machinery, equipment, etc.as well as spare parts worth upto 15% of the value of the imported investment capital goods, provided that the goods are not produced locally in comparable quantity, quality and price.

• Investment capital goods imported without the payment of import customs duties and other taxes levied on imports may be transferred to another investor enjoying similar privileges.

• Exemption from customs duties or other taxes levied on imports are granted for raw materials necessary for the production of export goods. In accordance with the proclamation No 249/2001, three duty incentives schemes are available for exporters. They are duty Draw Back scheme, Voucher scheme and Bounded Manufacturing warehouse schemes. Taxes and duties paid on raw materials are drawn back at the time of export of finished products. The duty draw back scheme applies to all taxes at the time of importation, and those paid on local purchase.

• Ethiopian products & services destined for export are exempted from the payment of any export tax & other taxes levied on exports.

2. Exemption from income profit tax

• Any income derived from an approved new manufacturing & agro-industry investment or investment made in agriculture shall be exempted from the payment of income tax for the periods depicted in the following table depending upon the area of investment selected, the volume & export to be made, & the location in which the vestment is undertaken.