Ethiopia to offer additional tax incentives for exporters

Ethiopia to offer additional tax incentives to exporters


The boost its hard currency earnings and reduce unemployment, the government of Ethiopia is set to provide an additional tax incentive to investors engaged in exporting products and services.

Those who generate more foreign currency from export and create more jobs will get more tax incentives, according to the draft investment law of the country. This is indicated by Mr. Abebe Abebayehu, Commissioner of Ethiopian Investment Commission.

The reformist Prime Minister Abiy Ahmed of Ethiopia, who met today the team he organized to improve the country’s business climate, indicated that his administration will focus more on economic reform to brig structural change, create more jobs by attracting more private investments.

The holistic approach the government plan to pursue aims to revitalize the current weak economy of the country suffering from heavy external debt burden, low level of tax income, increasing unemployment and huge trade deficit resulting in chronic shortage of hard currency, among others.

While the import bill of Ethiopia surpasses over $17 billion, the export earning of the country has been declining below $2.8 billion widening the trade deficit.

The tax to GDP ratio of Ethiopia’s tax to GDP ratio, which is around 10% at the moment, is also below the 15% sub Saharan Africa average. This has led to huge budget deficit making the country dependent on external loan, which surpasses $26 billion.

When it comes to unemployment, every year two and half million people enter the job market in Ethiopia while the country only provides job for about a million of them, according to the latest statement of PPM Abiy.