Ethiopia Info
Joined: 23 Feb 2007
Posts: 15
Home Country: ethiopia
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 Posted: Wed Feb 28, 2007 5:13 am Post subject: DOING BUSINESS IN ETHIOPIA / ETHIOPIA BUSINESS GUIDE |
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DOING BUSINESS IN ETHIOPIA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Private Limited Company (PLC)
Minimum Capital Requirement: 15,000
City: Addis Ababa
Registration Requirements:
Procedure 1. Check the company name for uniqueness
Time to complete: 1 day
Cost to complete: no charge
Comment: Evidence of capital deposit is not required for private limited companies. However, the Memorandum of Association should show that "the capital is fully paid" in cash or in kind. For this, the normal practice is to open a blocked account in the name of the company in a local bank and upon registration such presented to the Registrar of Companies. In practice, as long as the MA indicates that "the capital is fully paid" demonstration of actual payment is not insisted.
Procedure 2. The applicants submit document to the Acts and Documents Registration Department at the City Administration of Addis Ababa for authentication
Time to complete: 3 days
Cost to complete: no charge
Comment: The main function of the department is to act as notary public. In the past the authentication and registration of documents was carried out in one office but this task has recently been devolved to the 10 subdivisions of the City Administration. The applicants submit in triplicate the Memorandum and Articles of Association and the department usually takes 3 days to examine the document.
Procedure 3. Sign the Memorandum and Articles of Association in front of an officer and pay the stamp duty
Time to complete: 1 day
Cost to complete: ETB 375
Comment: The applicants appear in person at the appointed date, with an original copy of their letter of appointment (power of attorney) and a valid identity card. Various officers check the validity of the documents, the authenticity of the signatures and the genuineness of the ID's. The Memorandum and Articles of Association is ready for signature and while the applicants do so in front of an officer, stamp duty worth Birr 350 is affixed on the original, and a Birr 5 stamp duty on the other copies.
Procedure 4. Register the memorandum and articles of association in the Commercial Register at the Ministry of Trade and Industry
Time to complete: 3 days
Cost to complete: ETB 80
Comment: The fees depends on the company's registered capital, i.e. if the company has a registered capital of Birr 15,000 then the registration fee would be Birr 15, licensing fee would be Birr 35, forms & cards would be Birr 12 and stamps would be Birr 10; however, if the company's registered capital is Birr 200,000 the registration fee would be Birr 100, licensing would be Birr 200 but the costs of forms and cards and stamps would remain the same Birr 12 and 10, respectively.
Where an application for registration is submitted to the Ministry, it shall upon being satisfied that the application is complete, issue a registration certificate within 5 working days upon payment by the applicant of the appropriate fee.
Reforms in the civil service including staff training in customer service, re-assignment of some staff to other departments, and internal time limits, have been implemented in the Ministry of Trade and Industry.
Procedure 5. Obtain a Business License with the Ministry of Trade and Industry
Time to complete: 3 days in all documents are in place
Cost to complete: ETB 80
Procedure 6. Make a company seal
Time to complete: 3 days
Cost to complete: ETB 100
Comment: Having a seal is not obligatory, but is in practice required.
Procedure 7. Register with the Inland Revenue Authority for income tax and withholding tax for employees
Time to complete: 2 days
Cost to complete: no charge
Comment: A newly established firm needs to register for income tax purposes, payable at the end of the fiscal year of the company including municipal and license renewal fees, as well as withholding taxes on their employees.
TAXATION
Many business and personal income tax rates from the former government were still in effect in 1993, ranging from 10% of monthly incomes to 85%. A 40% income tax was levied on royalties, and a 2% ad valorem turnover tax on domestic sales. On 1 January 2003, Ethiopia replaced its sales tax with a value-added tax (VAT) set at a standard rate of 12%. Exempt from the VAT were food and pharmaceuticals. |
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