1. Where can I get information about starting a business?
Starting a business requires the gathering and analysis of a great variety of information including, but not limited to, production techniques and costs, processing procedures and costs, market analysis, marketing techniques, business plans and financing. To increase your chances of success, it is important that you gather all this information by professionals before you proceed with stating your business.
2. What should I do before starting a business in Ethiopia?
Prior to starting your business, you need to fulfill a number of prerequisites:
A. Appointing an Agent
It is advisable that the company appoints an agent who will be authorized to deputize on your behalf. This agent should be knowledgeable of the investment procedures in Ethiopia.
B. Power of Attorney
The agent needs a power of attorney to perform his duties on behalf of the investor. The power of attorney authorizes the agent to sign documents and undertake the tasks as mentioned in the letter of power of attorney. This letter can be written by the company itself and must be signed by the manager of the company and the Public Notary. If the letter is signed at the Public Notary of the home country of the investor, it should first be legalized at the Ethiopian Embassy in the home country. In Ethiopia it should be legalized at the Ministry of Foreign Affairs and then signed at a Public Notary.
The documents to take with you to the Public Notary are:
- - Passport of the company’s manager and photocopies of the relevant pages of the passport.
- - Memorandum and Articles of Association.
- - Letter of power of attorney of the agent.
C. Clearance of company name
Any new company that is being established in Ethiopia needs to have its name cleared at the Ministry of Trade and Industry.
3. Do I have to get an investment permit?
This document is required only for Diaspora and foreigners. Here is the requirement for the investment permit.
- Agency: Ethiopian Investment Agency
- Office: Information desk (room No. 8 in the lobby)
Documents required, to be submitted in two copies:
- Application form signed by the investor/agent
- Power of attorney, if application is made through an agent
- Photocopies of Memorandum and Articles of Association, or a similar document of the parent company (where the investment is to be made by a branch of a foreign business organization in Ethiopia)
- Photocopies of the relevant passport pages of each shareholder, if the company is to be established in Ethiopia
- Clearance letter from the Ministry of Trade and Industry for the company name
- 3 recent passport-size photographs if the investor is an individual person
- In the case of a joint investment with a domestic investor, a photocopy of the identity card or certificate evidencing domestic investor status.
Time needed: 1/2 hour inside the building, ready within 4 hours.
Service costs: 600 Birr
Remarks:The investment permit must be renewed annually until operations have started. An updated status report must be submitted every 6 months to the Agency.
4. How is business organized in Ethiopia?
You need to decide as what type of business you want to register. A business in Ethiopia can be organized as:
- Investment to be made by an individual person: sole proprietor,
- Investment to be made by a business organization (to be) incorporated in Ethiopia:
- - share company
- - private limited company (PLC)
- Investment to be made by a branch of a foreign business organization in Ethiopia,
- A joint investment by domestic and foreign investors: joint venture.
Difference between Share Company and PLC
| Share company | Private limited company | |
| Partners | ≥5 | 2-50 |
| Total Minimum Share Capital | ≥50 000 Birr | ≥15 000 Birr |
| General Manager | One manager, elected by the board of directors | One or more managers, appointed by the shareholders, but do not need to be shareholders |
| Name of the Company | Discloses the words “share company” | Discloses the nature of activityand the words "private limited company" |
| Shares | Ø Are freely transferable and the public may be invited to subscribe.
Ø ¼ of the capital raised by subscription shall be deposited at the bank. | May be transferred among shareholders as provided in the Memorandum of Association, but they can be traded with third parties only after seeking the approval of shareholders owning at least three quarter of the capital. |
| Auditor | One or more auditors, elected by the general assembly. Shareholders representing not less than 20% of the capital may appoint an auditor elected by them. | Compulsory if number of shareholders is >20 |
5. How do I register my business?
- Agency: Ethiopian Investment Agency
- Office: Information desk (room No. 8 in the lobby)
Documents required for different business organizations, to be submitted in two copies:
Sole business person:
- - Application form signed by the investor or his agent.
- - Power of attorney if the documents are signed by an agent.
- - 6 recent passport-size photographs of the investor.
- - Photocopies of the relevant pages of a valid passport.
Branch office of a foreign business organization:
- - Application form signed by an agent of the business organization.
- - A photocopy of a document that validates the registration and legal personality of the parent company.
- - Photocopies of the Memorandum and Articles of Association or similar documents of the parent company.
- - Minutes of the meeting held by the authorized body of the parent company in support of the establishment of a branch in Ethiopia, authenticated by the Public Notary in both the country of origin and Ethiopia.
- - A photocopy of the Power of attorney if the documents are signed by an agent.
- - Photocopies of the relevant pages of the agent’s passport or identity card that shows his name and address.
If the business organization is a PLC:
- - Application form signed by an agent of the business organization.
- - Photocopy of the Power of attorney if the application is made through an agent other than somebody authorized in the Memorandum and Articles of Association.
- - Photocopies of the Memorandum and Articles of Association.
- - Photocopies of the relevant pages of each individual shareholder’s passport or identity card or photocopy of a certificate evidencing domestic investor status.
If the business organization is a share company:
- - Completed application form signed by an agent of the company.
- - Bank statement showing that one quarter of the company’s capital is deposited in a blocked account.
- - Minutes, and related documents, showing the commitments to buy shares.
- - A photocopy of the Power of attorney if the application is made by an agent other than a person authorized in the Memorandum and Articles of Association.
- - Report on contributions made in kind, if any, prepared and authenticated by an expert or institution designated by the Ministry of Trade and Industry.
- - Photocopies of the Memorandum and Articles of Association.
Time needed: 4 hours.
Service costs: 80 Birr (Application for Principal)
Remarks:The Application for Principal/Summary Trade Registration with its required documents can be handed in together with the application for the investment permit. The business registration is the identification of the company.
6. How do I get a work permit?
- Agency: Ethiopian Investment Agency
- Office: Information desk (room No. 8 in the lobby)
Documents required:
- 6 copies of the application form filled in and signed by the employer.
- A photocopy of the principal registration certificate if the employer does not have an investment permit.
- Photocopies of the relevant pages of the valid passport that shows the identity of the employee.
- A photocopy of the power of attorney in case an agent is in charge of the application.
- 6 passport-size photographs of the employee.
Time needed: 1 hour
Service costs: 600 Birr
Remarks:Once the employee has a work permit, he can apply for a residence permit at the Security, Immigration and Refugee Affairs Authority office.
7. How do I get a residence permit?
- Agency: Security, Immigration and Refugee Affairs Authority
- Office: White building on the left side when entering the compound, ground floor.
Documents required:
- Passport of the applicant.
- Work permit
- Copy of the relevant pages of the passport.
- Copy of the work permit
- Letter of the company, signed by the employer or his authorized agent, requesting the Immigration and Refugee Affairs Authority to grant a residence permit to the applicant, with full information about the company.
- Completed application form
Time needed: 4 hours in the Immigration Office; the permit will then be ready within 24 hours.
Service costs: 400 Birr
8. How do I get a tax Identification Number (TIN)?
- Agency: Federal Inland Revenue Authority
- Office: Mexico Square, start at 204 for registration
Documents required:
- Application form for taxpayer identification number
- Identification papers of the investor or his authorized agent
- 2 passport size photos of the investor or his authorized agent
- Memorandum and Articles of Association
- Partnership agreement in case of partnership
- 2 copies of Principal Trade Registration Certificate and Trade License, which is the investment license or investment permit
- Trade licenses
- Trade name registration (if applicable)
- Investment permit
- Residence permits in case of foreign partnership
- Power of attorney if registration is submitted by an agent.
Time needed: 24 hours.
9. How do I get a Value Added Tax (VAT) number?
- Agency: Federal Inland Revenue Authority
- Office: Mexico Square, start at 204 for registration
Documents required:
- Application form for VAT number
- Copy of Principal Trade Registration Certificate
- Copy of Investment Permit
Time needed: 1 hour.