Incentives for Expansion/Upgrading of Investment 

By Dagnachew Tesfaye, Partner at DMLF

The Ethiopian Ministry of Finance has issued a Directive namely a Directive to Provide for the Application of Tax Incentives for Expansion/Upgrading of Investment No 941/2023(the Directive).

The Directive aims to benefit those investors who use their resources or profits back into expanding or upgrading their investment. The tax benefits are twofold namely income tax exemption and exemption from custom duties. The investor who expands or upgrades his existing enterprise shall receive:

•income tax exemption on income obtained from the expansion or upgrading, and

•import duty free those capital goods necessary for expanding or upgrading of the existing enterprise.

The criteria for receiving exemptions in income tax or customs duty rests on the fact that the expansion or upgrade increases in volume at least 50% and above of the attainable production or service rendering capacity of the existing enterprise. Alternatively the investor will benefit from the tax exemption when the expansion or upgrade increases in variety by at least 100% by introducing new production or service rendering lines of the existing enterprise.

For your investment inquiries you may contact us at info@dmethiolawyers.com

Visas in Ethiopia

By Mahlet Mesganaw, partner at DMLF

Email: mahlet@dmethiolawyers.com

Introduction 

Visas are one way of attracting tourism and foreign direct investment into a country. The ease of obtaining visas through online application has been a positive shift. This will have an impact in ease of doing business for investors. However, to witness investors flock into the country, it requires continuous engagement in making visas more attractive. Thus in this article we shall see the visas from the investment side, the industrial park side and the immigration regulations side. A brief conclusion shall end the article.

Investment 

The Ethiopian Investment Commission(EIC) or a delegated investment organ is assigned by the Investment Proclamation No 1180/2020 to facilitate the processing of visa applications of foreigners coming into Ethiopia for investment purposes. Not only the investors themselves but also that of the families of the investors (spouses, children and parents) shall receive similar treatment.

An owner or shareholder of an investment undertaken pursuant to the Investment Proclamation, may be issued a five-year multiple visa. There is one condition involved i.e. the EIC has to provide a confirmation.

In addition to the owner or shareholders of an investment enterprise, the General Manager, Board Member and top Management of an Enterprise and when it is a branch office,  the top management of the parent or holding company of the enterprise shall be issued a three year multiple entry visa. Similarly the EIC confirmation is a prerequisite.

No single stay of any foreigner entering Ethiopia using multiple entry visas issued as mentioned above cannot exceed ninety (90) days. 

The EIC shall work in cooperation with the Immigration, Nationality and Vital Events Agency and other appropriate government bodies for the proper implementation of these visas for investment. 

Investors in the Industrial Parks 

Industrial Park Regulation No 417/2017 incorporates favorable visa terms for investors in industrial parks. There are multiple entry visas or residence permits valid for up to five years. These visas are issued for owners or shareholders of an industrial park developer or enterprise. For industrial park service providers, managers, board members and senior experts employed by foreign investors, up to three years long visas are made available. An assurance from EIC is a prerequisite to issue these visas for five or three years.

Immigration Regulation 

The Immigration Regulation No 114/2004 incorporates different types of visas. These include diplomatic, service, business, immigrant, tourist, transit, and student visas. The writer will look at each of the visa types in brief.

Diplomatic visas are issued for ambassadors, diplomatic agents, attaches and consular representatives who are assigned in foreign embassies, permanent missions and consular posts in Ethiopia and to their spouses. This visa also extends to officials, having diplomatic status, of international and regional organizations having their seats in Ethiopia, and to their spouses. Also foreigners holding diplomatic passports and coming to or transiting through Ethiopia for government business shall be granted diplomatic visas.

The precondition to acquiring a Diplomatic visa is when a diplomatic note from the department of foreign affairs, embassy or consular posts of the requesting state or from the concerned international or regional organization has been presented. 

The second type of visa is a service visa. Service visas are issued for permanent employees of foreign embassies, permanent missions and consular posts in Ethiopia who are holding service passports and to members of their families. In addition to these employees, international civil servants assigned in international or regional organizations having their seats in Ethiopia and to members of their families will acquire the service visa. Last but not least, foreigners holding service passports and coming to or transiting through Ethiopia for government business and the family members of persons issued with diplomatic visas are granted service visas. Similarly Service Visas shall be issued only where a diplomatic note from the department of foreign affairs, embassy or consular post of the requesting state or from the concerned international or regional organization has been presented.

Thirdly, Business visas will be issued to foreigners who are coming to Ethiopia for investment activities and to expats coming for employment in any activity. Business visas are also issued for personnels coming for various activities to be carried out in accordance with an agreement entered into with a foreign government, an international or regional organization or non-governmental organization. Similarly a business visa is issued for humanitarian service personnels wishing to engage in services without remuneration and for people participating in symposia, exhibitions, workshops and similar activities to be held in Ethiopia or for training. Last but not least, business visas are issued for foreigners coming for study,research and for mass media activities. 

Business visas could be issued for single or multiple entry.

The Ethiopian Immigration and Citizenship Service renders online Business visa service. There are 9 different categories of visas within Business Visa. These include Journalist Visa-JV, International organizations (Embassies work visa)-RI, Investment Visa-IV, Government Insitutions Short Task Visa-GIV, NGO work visa-NV, Conference Visa-CV, Ethiopian Government Employment Visa-GV, Foreign Business Firm Employment Visa-WV and Ethiopian Private Business Firm Work Visa-PE.

The fourth type of visa is Immigrant Visa. Immigrant visas will be issued to the following for foreigners who have been adopted by Ethioians or who have valid marriages with Ethiopians and are coming to reside in Ethiopia, and to members of their families. More so family members of foreigners holding permanent resident permits in Ethiopia or for foreigners coming to reside in Ethiopia without either being engaged in any gainful activities or becoming public burden, and to members of their families, immigrant visas could be issued.

Tourist visa is the fifth type of visa. Tourist visas can be obtained online. Tourist visas shall be issued to foreigners who are coming to visit Ethiopia. A tourist visa may be issued for single or multiple entry. Any foreigner who has entered Ethiopia by a tourist visa may not be allowed to work in Ethiopia.  

Tourist Visas are required for all foreign visitors to Ethiopia, with the exception of few neighboring nationals. In addition to online visa service, one can get tourist visas upon arrival. Nationals of 33 countries are now allowed to receive their tourist visas on arrival in Ethiopia. The list includes Argentina, Australia, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Greece, Ireland, Israel, Italy, Japan, Republic of Korea, Kuwait, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Russian Federation, South Africa, Spain, Sweden, Switzerland, Taiwan, United Kingdom and United States.

In sixth place is Transit Visas. Transit visas are issued to a foreigner who is traveling to another country across Ethiopia. A transit visa may be issued for either single or double transit. 

Finally in seventh place one can find student visas. Student visas will be issued to a foreigner who is coming to Ethiopia for education or training. Prior to the issuance of a student visa, the applicant will be required to produce evidence showing her admission to an educational or training institution in Ethiopia and the financial means to cover her educational and accommodation expenses. 

Validity periods of diplomatic and service visas will be determined in accordance with directives to be issued by the Ministry of Foreign Affairs of Ethiopia. However 

validity periods of other visas are determined in accordance with directives to be issued by the Ethiopian Immigration and Citizenship Services.

Conclusion 

The Ethiopian visas need to aim in line with the laws of attracting investment and tourism into the country. Any hurdles, being bureaucratic or untimely validity periods, need to be revised. Long and attractive visas aimed at investors worth a certain amount need to be introduced. Ethiopian Visas have to be vibrant and proactive with the economic development of the country. Ethiopia visas should not be eyed as difficult to obtain or renew. Bureaucratic hurdles and criminal vindictive handling in customer service requires rethinking.

For all your Ethiopian visa inquiries you may contact us at info@dmethiolawyers.com

Land for Investment in Ethiopia

By Dagnachew Tesfaye, Managing Partner at DMLF

One of the most important aspects of an investment is the provision and availability of land for investment purposes. The right of ownership of rural and urban land and all natural resources is exclusively vested in the State and the peoples of Ethiopia, says Article 40(3) of the FDRE Constitution of Ethiopia.

Article 44 of the Investment Proclamation No 1180/2020 establishes the Federal Government and Regional State Administration Investment Council( the Council). Sub-Article 4 of Article 45 tasked the Council with powers to render decisions or put forward recommendations among others on the allocation of land for investment. The FDRE Prime Minister or in his absence the Deputy Prime Minister heads the council. 

Similarly the Investment Regulation No 474/2020 Article 18(5) enforces the Federal and Regional investment organs to a duty to provide support to requests of investors among others on the investors request to obtain land. In the previous Investment Proclamation No 769/2012 on Article 30 under one-stop shop services, the Ethiopian Investment Agency  was the one that took the obligation to provide and answer investors’ requests for land required for their investment projects.

Land is made available for investment on lease-hold and rental basis. Lease right for urban and rental rural land is assigned to investors for up to 80 years. The duration of the lease hold depends on the location and economic sector. Urban Land Leasehold Proclamation No 721/2011 and FDRE Rural Land Administration and Land Use Proclamation No 456/2006 and respective regional laws (Oromia Proc.130/2007, Amhara Proc.No 133/2006 and Tigray Region Proc.No. 136/2007) govern the administration of land in Ethiopia. 

On the other hand, Industrial Park Enterprise makes available developed land as subletting. The investor either can construct own production facility inside the industrial park or the investor can rent or buy factory sheds from the Industrial Park Developer. The Industrial Park Proclamation No 886/2015 and Industrial Park Regulation No 417/2017 regulate the activities of industrial parks.

For any investment inquiries, you may contact us at info@dmethiolawyers.com

Residence Permit for Foreigners in Ethiopia

By Mahlet Mesganaw, Partner at DMLF

The FDRE Immigration and Citizenship Service has a mandate to issue residence permits for foreigners. Immigration Proclamation No 354/2003 and Immigration Council of Ministers Regulation No 114/2004(the Regulation) regulate how residence permits are issued in Ethiopia for foreigners.

From an investment perspective, a residence permit is issued for a foreigner when such a foreigner submits an investment permit issued in his/her name. The investment permit is acquired from the Ethiopian Investment Commission(EIC). This means the foreigner has invested in Ethiopia as a sole proprietorship.

When a foreigner investor is a shareholder of a company or branch company, then he/she is entitled to get a residence permit. 

In addition to being an investor or shareholder, expatriate personnel, hired by an enterprise in Ethiopia, are entitled to have a residence permit. These expatriates need to acquire work permits first.

The effect of acquiring a residence permit allows the holder of such a residence permit to enter and exit the country and live in any part of the country for the validity period of the permit.

The required documents for obtaining residence permit include passport copy, visa copy, photo, signature, work permit or memorandum of association for a shareholder, application letter from the hosting company and support letter from EIC.

The residence permit can extend to family members as well. Those children or spouses of the foreigner who held a residence permit can apply for a family member residence ID. In addition to the general requirement mentioned above, an authenticated birth certificate is needed for children. For spouses, an authenticated marriage certificate has to be presented.

As per the Regulation, residence permit can either be permanent or temporary. Permanent residence permit is issued to those foreigners who have been adopted by Ethiopians.  Permanent residence permit is also issued for those foreigners who have valid marriages with Ethiopian and a lapse of at least one year since the conclusion of marriage. Permanent residence permit also extends to family members of foreigners holding permanent residence permit in Ethiopia.More so permanent residence permit may be given to foreigners coming to reside in Ethiopia without either being engaged in any gainful activities or ascertained not to become a public burden. Such a permit can also extend to members of their families.

Permanent residence may be issued to foreigners who have established his/her domicile in Ethiopia and lived in Ethiopia for at least 3 years preceding the submission of his/her application. Such a foreigner needs to exhibit a sufficient and lawful source of income to maintain himself or herself and his/her family. Such a person has to be of good character as well.

The Regulation provides on Article 28(4) that a foreigner who is engaged in investment or humanitarian activities in Ethiopia or who has made or is expected to make contributions in the interest of Ethiopia may be issued permanent residence permit without the need to live in Ethiopia for three years.

On the other hand, temporary residence permits are issued for foreigners upon application and fulfilling the requirements mentioned in these articles above. Article 29(2) of the Regulation states that temporary residence permit is valid up to one year and be replaced by a new one where it becomes necessary to stay longer.

For any inquiries on the subject matter you may contact us at info@dmethiolawyers.com