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  • In order to establish Company in the Region, investors ought to attend the following procedure and it depends on the Business form and the Origin of the promoter.
  • Any Investor/Company who has got detail Information about investment Opportunity, Registration Requirements, incentives packages, clusters, and standard, the available land and land price has come to an Office for registration physically.
  • Brief description of investment project type and detailed information of the promoter is presented.
  • Bring the approved project proposal done by certified Consultant who do have license, certification, and VAT Registered.
  • The important appraisal Contents to be included in the project proposal:
  • Executive summary
  • Introduction (including Investor’s Profile)
  • Background
  • General description of Project area
    • Location  
    • Topography
    • Climate
    • Soil type
    • Source of Water/ For irrigation projects
    • Economic activity
  • The Project 
    • Description
    • Objectives 
    • Technology used
    • Production/service  capacity & Program
    • Herd Projection/For Livestock development projects
  • Market prospect
  • Land use plan and Action plan
  • Organization & Management
    • Organizational structure 
    • Man power requirement with qualification (male female, skilled  & unskilled ,Permanent & temporary)
  • Financial study
    • Estimation of Project capital
    • Fixed Capital costs estimation
    • Working capital estimation
    •  Source of Finance
    • Production /service Forecast
    • Revenue projection
    • Financial statements
    • Income Statement
    • Cash flow Statement
  • Environmental Impact Assessment
  • Annex/Bank loan Schedule,Depreciation, etc/
  • Land application format from Appraisal Department and duly filled land application format.
  • After Registration is completed, if the Requested Service is to get Investment land, the License is issued after the Land requested by Investor/Company is decided By Investment Board of the Region and allotment of investment land is notified. It is after this time that the Investor/company agent comes to sign agreement and acquire Investment License. But, If the Requested Service is to acquiring Investment License (No Land Requested ) the Investor/Company Who fulfilled the Registration requirement Criterions can acquire the Investment License .

 

Requested ServiceRequirements
Domestic InvestorsJoint Ventures InvestorsForeign Direct InvestorsDiaspora Investors
For Investment Land AcquirementProject proposal prepared by certified consultant;Investment License given by Ethiopia Investment CommissionInvestment License given by Ethiopia Investment CommissionProject proposal prepared by certified consultant;
Copy of renewed identification cardProject proposal prepared by certified consultant;Project proposal prepared by certified consultant;Copy of renewed identification card/Passport
Copy of TIN CertificateCopy of TIN CertificateCopy of TIN CertificateCopy of TIN Certificate
If the application is processed by an agent, he/she has to submit photo copy of power of attorney;Copy of renewed identification card/PassportCopy of renewed PassportIf the application is processed by an agent, he/she has to submit photo copy of power of attorney;
If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of association authenticated by concerned organization;If the application is processed by an agent, he/she has to submit photo copy of power of attorney;If the application is processed by an agent, he/she has to submit photo copy of power of attorney;If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of association authenticated by concerned organization;
A letter written from bank along with bank statement that shows at least a one year cash flow where it’s ending balance is equivalent to 30% of the total initial investment outlay estimated for the envisaged project.If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of association authenticated by concerned organization;If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of association authenticated by concerned organization;A letter written from bank along with bank statement that shows at least a one year cash flow where it’s ending balance is equivalent to 30% of the total initial investment outlay estimated for the envisaged project.
Land use and action plan.Land use and action plan.Land use and action plan.Land use and action plan.
---support letter from the Embassy/ consulate in abroad and yellow passport from concerned organization;
---Support Letter from Diaspora Directorate with reference of Ethiopian Ministry of Foreign Affairs
For Investment
License Acquirement
A letter written from bank along with bank statement that shows at least a one year cash flow where it’s ending balance is equivalent to 30% of the total initial investment outlay estimated for the envisaged project.Investment License given by Ethiopia Investment CommissionInvestment License given by Ethiopia Investment CommissionA letter written from bank along with bank statement that shows at least a one year cash flow where it’s ending balance is equivalent to 30% of the total initial investment outlay estimated for the envisaged project.
Copy of TIN CertificateCopy of TIN Certificate
Copy of renewed identification cardCopy of renewed identification card
Recent 3 passport size photographs Recent 3 passport size photographs
Service charge ETB 1000.Service charge ETB 1000.
If the application is processed by an agent, he/she has to submit photo copy of power of attorney;If the application is processed by an agent, he/she has to submit photo copy of power of attorney;
If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of Association authenticated by concerned organization;If the application is processed by an organization/company or share holder, the applicant has to submit a copy of the article and memorandum of Association authenticated by concerned organization;

The rights of lessor on investment projects Administration

  • Make a follow up works to verify Whether the lessee uses the land leased out in accordance with the conditions stated in this agreement and under the project proposal permitted , without making any hindrance on the day-to-day activities of the Lessee and to take appropriate measure if any faulty occurs:
  • Take back the rented out land in accordance with pertinent investment laws without any precondition if the Lessee failed to develop the land within the given six months.
  • Give notice to the lessee, which expires within one month if the lessee after commencement of the project stops working or after finishing the main construction of the project if the Lessee rent the project before production or if the lessee implements other project which is not indicated on this agreement.
  • To terminate the contract without any pre-condition if the lessee failed to correct in accordance with the notice and commits a crime which is related with Investment.
  • After investigating the request, to give permission on the change of name of the project, change of type of project & transfer of ownership.
  • Request the Lessee to submit a report regarding the project and if the Lessee failed to fulfill this obligation following one final notice to present the case before Oromia Investment Board for decision.

Obligations of the lessor in investment projects administration

  • Obligations of the lessor in investment projects administration

Without prejudice to the existing provisions of the Ethiopian Investment and other relevant laws, the lesser shall:

  • After the agreement is signed by both parties, to write a letter for the responsible government body & to following up the handing over process of the land.
  • Warrant to the Lessee that the Lessee has the right to peacefully and quietly use the land leased and protect the lessee from any third party claims over the landholding through taking legal actions or litigating.
  • Assist the Lessee to acquire land holding certificate through facilitating the process.
  • Strictly comply with all obligations contained in this agreement and respect Lessee’s right in accordance with the relevant laws.
  • To give a written permission for the  requests of the Lessee concerning  change of project type, alteration of project name and transfer of ownership right if the Lessee fulfilled all the requirements stipulated under the Laws of the region.
  • To give grace period if the existence of “Force majeure” is confirmed or verified by the Lessee.
  • Rights of the lessee in investment projects Administration
  • Use the land leased for the purpose of the  project permitted;
  • Transfer the use right of the land leased to any other third party who has the capacity to develop the land  after having written consent from the Lessor,
  • Construct and utilize all types of infrastructures with the prior approval of the concerned governmental organs.
  • To use the land, depending on the permission of the LESSOR on the change of project name or type within the time duration stated on the contract.
  • If the LESSOR interrupts the Lessee and causes any damage or any other kind of loss, the Lessee has the right to claim compensation for the damages and losses incurred,
  • Up on the permission of the LESSOR, to work jointly with other person (natural or artificial).

Obligations of the lessee in investment projects Administration

In addition to obligations found in relevant investment laws, the Lessee shall:

  • Commence its project activities on the land leased out within six months starting from the date of handover of the land leased out and finish the project within two years.
  • Submit a report about the progress of its project to the LESSOR every three months.
  • Open office at the nearest town or at the site of the project & assign his /her representative and make him/her appear when required.
  • Use proper & modern machineries & equipment, in order to supply a type of production which is competitive in the world market or to give service in the level of global standards using recent technologies.
  • Develop the Leased out land in accordance with the purposes mentioned in this agreement, in addition to commence and finish the project within the period indicated in the agreement;
  • Notify the Lessor immediately, if any claim or conflict arises by third party on its use right on the land rented out and when there is any problem which is out of the control of the Lessee,
  • Give job opportunities to the people residing in the investment area unless it requires special professional skills;
  • Submit lists of permanent workers to the LESSOR
  • Allow experts of the LESSOR sent for appraisal and follow up of the use of the land rented in accordance with this agreement and relevant investment laws and shall give them the required information.
  • Respect all other conditions stated in this agreement and relevant laws of the country.
  • Notify the LESSOR, whenever there is a change of address.

Environmental Protections

  • The Lessee has to protect the environment from any type of disasters through applying modern technologies.
  • It’s strictly prohibited to use chemicals and anti-pests which are prohibited by law or which could devastate the environment.
  • Cover 2% of the land rented out with indigenous trees excluding

Penalty

  • The Lessee shall pay birr 10,000(ten thousand) penalty without any preconditions in accordance with this agreement in the attempt to employ unskilled laborers from other regions and the provision stated under Article 10(8) of this agreement shall be applied.
  • The Lessee shall pay penalty, Birr 50,000(fifty thousand) for using legally prohibited chemicals and anti-pests.
  • If the Lessee refuses to submit report on the project and about the employees, the Lessee shall pay 5,000(five thousand) Birr penalty.

Conditions to terminate the contract

  • When the Lessee use the land for other purpose or for the purpose which is not allowed in this agreement.
  • When the Lessee failed to implement the permitted project within the specified period.
  • If work permit or Business license of the Lessee, canceled by the responsible government body following legal procedures;
  • If the Lessee distract natural property of the area or commits any action in opposition to the environment.
  • When the Lessee request the termination of the contract due to lack of capability or interest to accomplish the project;
  • If the Lessee failed to respect the obligations stipulated either under this agreement or the Laws of region and the country.

The requirements to change name of the ownership of the project from sole proprietorship to PLC/Share Company

  • Having title deeds and lease/rent agreement signed authenticated taking in consideration of social benefit are:-
  • If the individual promoter has constructed at least 80% of land given for his project and request in application to change from individual to PLC/S.C.
  • If investor established PLC/S.C. stated in article a, then the share of original/first owner should be 51% share and above as well as the manager of the company.
  • If the company established improve capital out lay of project show increment production and service by 50%.
  • If tow company has merged and have equal share.
  • If investment committee of zonal or town approved the status fulfill the required parameters.
  • If the new company established by the family members of the first land owner without criteria stated in step1 andstep2 change of owners name is possible.
  • Change of name of owner of the project done if and only if the request of ownership of the project proved and accepted by OIC by written letter

The Criteria required for changing ownership right (title deeds) of the project to other promoters

  • If the promoter has completed construction of the projects according to construction design permitted and starts production or service rendering of the project.
  • If the perennial crop production project like banana, sugarcane, mango, coffee, and others are allowed to change title deeds to other promoter after they sold their products on market.
  • If the crop production has started annual production, change to third party possible through Oromia Investment Board decision only.
  • Any type of project, if the investor died even through he/she work his project properly by decision of judiciary body letter the legal family of owner has the right to take the project.
  • Any type of project, if the investor encounter problem of old age or psychic problem not work properly and approved by the legal body the family of the project can take the project.
  • Any person who transfer the project, if the promoter has no capital to the run the project and psychic problem shown by Bank statement and approved document of hospital.
  • If the investor did not pay the bank loan and the bank auction and sell the project to other promoter.
  • If two or more company merged with equal share of capital in the project.
  • If the investment committee of zone or town has agreed on the project and approved by signature on minute.
  • The change is possible if and only if the request approved by Oromia Investment Commission.

The Criteria for Changing Project Types

  • If the new project improved by 25% and above interims of its type and its sector project.
  • If the new project increased by 50% and above in capital out lay and production capacity.
  • If the project has fit to the land use plan or master plan of the town or area.
  • If the new project has no impact on air pollution, environmental degradation, human and animal health.
  • For those projects not implemented it is possible to change the type of project within the first 6 (six) month date of lease /rent agreement signed.
  • If the zonal or town investment committee has agreed on the status of project and approved by minute for the change of the project.
  • Any change of investment project type has been possible through the written letter allowance of Oromia investment commission.

Duty Free

  • To encourage the domestic and foreign investor engaged in eligible new enterprises or expansion projects such as agriculture, manufacturing, agro-industries, and others
  • 100 %exemption from the payments of custom duty and taxes related on imports is granted to all capital goods, plant, machinery and equipment, construction materials.
  • Duty-free imports of spare parts worth up to 15% of the total value of the imported investment  capital goods, provided that the goods are also exempted from the payments of the customs duties;
  • Capital goods imported without the payment of import duties and other import taxes may be transferred to another investor enjoy Similar privileges,
  • Exemption from custom duties or other import taxes are granted on raw materials that are required in the production of export goods.
  • 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 taxed at the time of import, as well as those paid on local purchases.
  • Exemption from any export taxes and other taxes levied on exports for Ethiopian products and services destined for export
  • Carrying forward of losses during a tax exemption period for half of the tax holiday.
  • Any investors engaged in one of the areas of investment imported duty free Capital goods and Constructional materials necessary for the establishment of a new enterprise or expansion or up grading of an existing of enterprise.
  • If an investor entitled to a duty free incentives, buys capital goods or Constructional goods from a local manufacturing industries, he shall be refunded with the custom duty paid for the raw materials or components used as inputs for the production of such goods.
  • Investors may re export the duty free imported capital goods or constructional materials or Motor vehicles. So, any legitimate Investor can Apply for this service online.

Income Tax Exemption

To attract investors to the region and balance the distribution the investment activities specifically in zonal administrations relatively far from the center and also to encourage investment in selected areas. Investment incentives scheme were formulated by the regional government. Some of the incentives related to land that are granted to investors /developers include percentage discount on initial rent/lease prices, provision of grace period of payment, provision of land for free.

#Investment AreasIncome Tax Exemption
Special zone of Oromia surrounding Addis AbabaIn other areas
1Manufacturing of Food IndustryExemption from income tax for three (3) yearsExemption from income tax for five (5) years
2Manufacture of Sugar and OthersExemption from income tax for One (1) year to five (5) yearsExemption from income tax for Two (2) years to Six (6) years
3Manufacture of Beverage IndustryExemption from income tax for One (1) year to three (3) yearsExemption from income tax for Two (2) years to four (4) years
4Textile and Textile Products IndustryExemption from income tax for Two (2) years to five (5) yearsExemption from income tax for Three (3) years to Six (6) years
5Leather and Leather ProductsExemption from income tax for five (5) yearsExemption from income tax for six (6) years
Tanning of hides and skins below finished levelNot eligible for income tax exemptionNot eligible for income tax exemption
6Wood, Paper and Paper Products and Printing IndustryExemption from income tax for One (1) year to five (5) yearsExemption from income tax for Two (2) years to Six (6) years
Printing industryNot eligible for income tax exemptionNot eligible for income tax exemption
7Chemical and Chemical Products IndustryExemption from income tax for Two (2) years to five (5) yearsExemption from income tax for Three (3) years to Six (6) years
8Basic Pharmaceutical products and Pharmaceutical PreparationsExemption from income tax for four (4) years to five (5) yearsExemption from income tax for five (5) years to Six (6) years
9Rubber and Plastics Products IndustryExemption from income tax for One (1) year to four (4) yearsExemption from income tax for Two (2) years to five (5) years
10Other Non-Metallic Mineral Products IndustryExemption from income tax for One (1) year to four (4) yearsExemption from income tax for Two (2) years to five (5) years
Cutting, shaping and finishing of marble and limestone (excluding quarrying)Exemption from income tax for one (1) yearExemption from income tax for two (2) years
Manufacture of cementNot eligible for income tax exemption
Manufacture of clay and cement productsNot eligible for income tax exemptionNot eligible for income tax exemption
11Basic Metals Industry (Excluding Extraction of Minerals)Exemption from income tax for Three (3) years to five (5) yearsExemption from income tax for four (4) years to Six (6) years
12Basic Metals Equipment (Excluding Products of Metals Materials)Exemption from income tax for One (1) year to four (4) yearsExemption from income tax for Two (2) years to four (4) years
13Computers, Electronics Materials, and Vision Materials IndustryExemption from income tax for Two (2) years to four (4) yearsExemption from income tax for Three (3) years to five (5) years
14Electrical Products IndustryExemption from income tax for Two (2) years to four (4) yearsExemption from income tax for four (4) years to five (5) years
15Machinery/ Equipment IndustryExemption from income tax for five (5) yearsExemption from income tax for six (6) years
16Vehicles, Trailers and Semi-Trailers IndustryExemption from income tax for One (1) year to five (5) yearsExemption from income tax for Two (2) years to Six (6) years
17Annual Crop Production AgricultureExemption from income tax for Two (2) year to three (3) yearsExemption from income tax for Three (3) years to four (4) years
Growing of fiber cropsNot eligible for income tax exemptionExemption from income tax for five (5) years
Growing of cereals, leguminous crops and /or oil seeds and riceNot eligible for income tax exemptionExemption from income tax for three (3) years
18Growing of Medium-Term CropsExemption from income tax for three (3) yearsExemption from income tax for four (4) years
19Growing of medium-term spices, aromatic and /or medicinal crops (Hulu, curmuma, black pepper and similar crops)Not eligible for income tax exemptionExemption from income tax for four (4) years
20Perennial Crops ProductionNot eligible for income tax exemptionExemption from income tax for five (5) years to six (6) years
21Animal Production, Mixed Farming and ForestryExemption from income tax for Two (2) year to Eight (8) yearsExemption from income tax for four (4) years to Nine (9) years
Farming of wild animals and production of milk, eggs, and similar productsNot eligible for income tax exemptionExemption from income tax for three (3) years
22ICT, and ElectricityExemption from income tax for four (4) yearsExemption from income tax for five (5) years
23Hotel and TourismNot eligible for income tax exemptionNot eligible for income tax exemption
24Construction Contracting and Real Estate DevelopmentNot eligible for income tax exemptionNot eligible for income tax exemption
25Education and TrainingNot eligible for income tax exemptionNot eligible for income tax exemption
26Health ServiceNot eligible for income tax exemptionNot eligible for income tax exemption
27Architectural, Engineering Works, Publishing, Import Trade, Expert Trade and Wholesale TradeNot eligible for income tax exemptionNot eligible for income tax exemption