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Investment Incentives for Tourism Companies

INCENTIVES OFFERED BY THE FEDERAL GOVERNMENT

Investments in tourism can benefit from the following incentives granted by the Federal Government:

  • Exemption of Customs duty for capital goods and construction materials
  • Exemption of Custom duties for motor vehicles
  • Remittance of profit, dividends, principals and interest payments on external loans
  • Access to land at competitive price (land is public in Ethiopia and the government offers long term leases)

Incentives for Investments in Star Rated Hotels

Investors in star rated hotels fulfilling the conditions listed below are allowed to import capital investments, building materials and goods:

  • Evidence that land has been secured;
  • Evidence that the project has commenced, such as the construction of the main building and infrastructure, from the corresponding Regional Investment Bureau/office.

Further details regarding what can be imported duty free can be obtained from the Ethiopian Investment Commission. 

Ethiopian Investment Board Directives No.3/2003E.C regarding duty free vehicles

A. Investments in eligible star rated hotels and accommodation are allowed to import duty free:

  • 1 pickup vehicle for one or two stars properties and 2 pickup vehicles for three and above star hotels;
  • In addition, hotel businesses already operational with 25-50 permanent employees can import free of duty 2 mini buses or 1 bus, those with 50 or more permanent employees can import duty free 3 minibuses or 2 buses.

In order to have access to these incentives investors should provide i) evidence of a land lease contract, ii) if capital equipment is imported from abroad, a bill of landing or airway bill or track way bill and invoice, iii) if the capital goods are procured from a local company, the procurement contract with the essential documents, iv) evidence of the beginning of operations and evidence of at least three month payroll and government tax payable for permanent employees.

  • Companies purchasing the eligible number of duty free vehicles from a local car assembling or production factory are entitled to get a deduction of the Customs duty paid by the factory for importing the necessary assembling parts.

B. Investors in tour operations that fulfill the minimum investment requirements are allowed to import 3 duty free vehicles in two rounds (in any case, they are requested to buy one vehicle and pay the corresponding taxes before they can have access to the duty free privileges). Basic requirements are:

  • Meet the Ethiopian Ministry of Culture and Tourism regulations for a tour operation business to get an Investment License from the Ethiopian Investment Commission;
  • Get a recommendation letter from the Ethiopian Ministry of Culture and Tourism to apply for duty free privileges.
  • Companies purchasing the eligible number of duty free vehicles from a local car assembling or production factory are entitled to get a deduction of the Customs duty paid by the factory for importing the necessary assembling parts.

This is a translation from the original document in Amharic. Investors should contact the Ethiopian Tourism Commission to get more details regarding the type of vehicles they can import duty free.

INCENTIVES OFFERED BY REGIONAL GOVERNMENTS

Some Regional Governments provide additional incentives for investors to facilitate access to land:

  • Amhara National Regional State (Northern Ethiopia):
    Investment activities for which land is provided with initial lease price and grace period are:
    • Residential and commercial housing development
    • Star hotels
    • Tourist lodges
  • Gambella National Regional State (Western Ethiopia): Land is provided free of lease for Star Hotels
  • Benshangul Gumuz National Regional State: Investments in urban areas may obtain land free of lease.