Details on Starting a Business in Ethiopia

This article is adapted from 2011 joint publication of  the International Bank for Reconstruction and Development / The World Bank. Doing Business 2011: Ethiopia, Making a Difference for Entrepreneurs.

In summarizing the procedures and the costs associated in seting up a business in Ethiopia, the report listed the following five major steps;

1. Check the company name for uniqueness 

Because it is  fully computerized process, checking the uniqueness takes not more than a day and is free of charge. There are rules as to which names are accepted and rejected. But most importantly, the memorandum of association for private limited companies should indicate that the capital is fully paid making it unnecessary to have evidence of capital deposits.

2. Authentication of the company documents at the office of registration of acts and documents

It takes 2 days and 390ETB to authenticate memorandum and articles of the association at the Office of the registration of Acts and Documents serves.

A stamp cost of 350ETB and 40 birr for total service charge of 4 copies of memorandum of association.

3. Register the company document at the Commercial Register and obtain the trade license

There are three commercial registers,

• Central commercial register administered by the Ministry of Trade and Industry;
• Commercial register, registered by the Ministry of Trade and Industry, in which is registered any person engaged in those commercial activities for which the Ministry issues licensees;
• Commercial register, administered by each relevant Regional Bureau.

The fees to get a trade license depends on the registered capital of the company.  If the company has a registered capital of ETB 15,000, the registration fee is ETB 15, the licensing fee is ETB 35, forms and cards cost ETB 12, and stamps cost Birr 10.

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4. Register with Ethiopian Inland Revenue Authority and Customs for income tax and VAT

A newly established firm must register for income tax, payable at the end of the company’s fiscal year, and pay municipal and license renewal fees and withholding taxes on their employees. Once registered, the Tax Identification Number (TIN) is provided along with the VAT certificate.

5. Make a company seal

While the law does not specifically require a company to have a seal, its required in practice.

The full document is also available online