Expand Business in Ethiopia

Global Upside helps businesses expand into Ethiopia by providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution that helps you establish your business and optimize your operations, all while maintaining compliance with Ethiopian laws and regulations.

The hiring and incorporation processes in Ethiopia are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies these processes and lifts the compliance burden from your business. Our teams have the experience and expertise required to help you establish a legal entity in Ethiopia. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.

Capital City

Addis Ababa

Currency

Birr (ETB)

Language

Amharic

Government

Federal Parliamentary Republic

Country Overview

One of the oldest countries of the world, Ethiopia is a landlocked nation on the Horn of Africa, in the east of the continent. It has a free enterprise economy. The manufacturing and export of coffee, footwear, textiles have been established. Other top export items include dried legumes, cut flowers, etc.

  • Ethiopia ranks as the 66th largest economy in the world in terms of nominal GDP.
  • Ethiopia ranks as the 8th largest economy in Africa.
  • Ethiopia ranks as one of the top 10 biggest coffee exporters in the world.

Options for setting up a legal entity in Ethiopia include:

Limited Liability Company (LLC)

A limited liability company is the most common form of a legal entity set up for entrepreneurs. It needs at least 2 investors who can either be legal entities or individuals. Additionally, 3 auditors need to be appointed if there are more than 20 investors. The name of the entity must have a Private Limited Company at the end.

Public Limited Company

A public limited company requires a minimum of 5 investors who can either be legal entities or individuals. At the incorporation, 1 statutory auditor has to be incorporated who can again be who can either be a legal entity or an individual.

Branch

A branch is a form of an entity set up that requires approval from the Ethiopian Investment Commission to commence its operations as a part of the parent company. It needs at least 1 director who can administer the operations of the branch.

It takes a minimum of five to seven weeks to establish a legal entity set up in Ethiopia.

Human Resources

The Ethiopian Labor Proclamation 377/2003 governs the employer-employee relationship.

The terms that need to be stipulated in an Ethiopian employment contract are:

  • Name and address of the employer
  • Name and address of the employee
  • The work card number of the employee (if applicable)
  • Duration of employment contract
  • Probation period
  • Remuneration
  • Working hours
  • Leave entitlements
  • Termination

Payroll

The payroll frequency, in Ethiopia, is semi-monthly or monthly.

Accounting

According to Ethiopia’s Financial Report Proclamation that was issued in 2014, all companies including financial institutions and banks need to follow IFRS standards in their financial report presentation.

Tax & Compliance

Corporate Tax

The corporate tax rate in Ethiopia is 30%.

Value Added Tax (VAT)

The VAT rate in Ethiopia is 15%.

Data Privacy

Ethiopia has various legislations that deal with privacy and data security and this includes the 1960 Civil Code, the 2005 Criminal Code of the Federal Democratic Republic of Ethiopia, the Computer Crime Proclamation No. 958/2016, the 1995 Constitution of the Federal Democratic Republic of Ethiopia, and the Freedom of the Mass Media and Access to Information Proclamation No. 590/2008.

Anti-Bribery & Anti-Corruption Law

Bribery, in Ethiopia, is governed by Corruption Crimes Proclamation No. 881/2015. It follows the common laws and regulations that are applicable in the 2004 Criminal Code of The Federal Democratic Republic of Ethiopia.

Furthermore, the Rules of Evidence Proclamation No. 882/2015 and Revised Anti-Corruption Special Procedure grants special guidelines of process and documentation especially relevant for corruption which includes bribery.

Penalty for bribery includes imprisonment of a minimum of 1 year up to 10 years and a monetary fine of ETB3,000 up to ETB40,000.

For judicial persons, the penalties include:

  1. Simple imprisonment and a fine of ETB20,000 every year
  2. Imprisonment for at least 5 years and a fine of ETB30,000 every year
  3. Imprisonment for 5 to 10 years and a fine of ETB50,000 every year
  4. Imprisonment for more than 10 years and a fine of ETB80,000 every year