Starting a Business in Ethiopia

This table summarizes the procedures and costs associated with setting up a business in Ethiopia.

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Legal Form: Private Limited Company (PLC)
City: Addis Ababa

	Procedure	Time to complete:	Cost to complete:
1	Check the company name for uniqueness	1 day	no charge
2	Authentication of the company documents at the office of registration of Acts and documents	2 days	ETB 390
3	Register the company document at the Commercial Register and obtain the trade license	1 day	ETB 85
4	Register with Ethiopian Inland Revenue Authority and Customs for income tax and VAT	2 days	no charge
5	Make a company seal	3 days	ETB 100

Procedure 1.: Check the company name for uniqueness
Time to complete:: 1 day
Cost to complete:: no charge
Name of Agency:
Comment:: Checking for the uniqueness of the company name is mandatory according to Article 19 of the Proclamation 67/1997. The search is conducted at the Ministry of Trade and Industry. The party completes a simple form and hands it over to the agent at window #1. The service is fully computerized and the search is quick. A Letter of Recommendation (LR) will be given by the agent andmust be attached to the Memorandum and Articles of Association for authentication.
The following names are rejected:
• Same name in the same field are not accepted.
• Names which are antagonistic to moral issues
• Names advertising like “fastest way to transfer money” “Best services in town” such adjectives are not accepted.

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. In practice, as long as the memorandum of association indicates that “the capital is fully paid,” demonstration of actual payment is not required.

Procedure 2.: Authentication of the company documents at the office of registration of Acts and documents
Time to complete:: 2 days
Cost to complete:: ETB 390
Name of Agency:
Comment:: According to Proclamation 334/2003, Article 5, the Memorandum and Articles of Associations must be authenticated. The party will deposit the documents and will be given an appointment for the next day. This office will check the following:
• In case of contribution in kind, this office will verify that the value stated in the Memorandum is correct.
• Stamp duty is a flat rate of 350 ETB (Proclamation 110/1998). Payment of stamp duty is done in the same office where the documents are being registered in the books prior to its authentication. All partners are required to sign in front of the public Notary.
The Office of the registration of Acts and Documents serves mainly to provide notary public services. 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. The officer checks the validity of the documents, the authenticity of the signatures, and the genuineness of the identity cards. The applicants sign the documents in front of an officer, and pay a stamp duty of ETB 350 and another service charges of 10 ETB ( 4 copies of Memorandom of Association).

Procedure 3.: Register the company document at the Commercial Register and obtain the trade license
Time to complete:: 1 day
Cost to complete:: ETB 85
Name of Agency:
Comment:: The applicant registers the Memorandum and Articles of Association and request a trade license. after reviweing the documents, the Commercial register delivers a registration certificate and the appropriate license. Companies are encouraged to register to the Regional Trade & Industry bureau closest to their business. These bureaus have the power to issue the registration and license to newly registered businesses.

Payment is done at the same time.The fees depend on the company's registered capital. If the company has a registered capital of ETB 15,000, the registration fee is ETB 15, the licensing fee is ETB 35, forms and cards cost ETB 12, and stamps cost Birr 10. If the company's registered capital is ETB 200,000, the registration fee is ETB 100, the licensing fee is ETB 200, and the costs of forms and cards and stamps remain ETB 12 and ETB 10, respectively.

Procedure 4.: Register with Ethiopian Inland Revenue Authority and Customs for income tax and VAT
Time to complete:: 2 days
Cost to complete:: no charge
Name of Agency:
Comment:: A newly established firm must register for income tax, payable at the end of the company’s fiscal year, and pay municipal and license renewal fees and withholding taxes on their employees. Once registred, the Tax Identification Number (TIN) is provided along with the VAT certificate.

Procedure 5.: Make a company seal
Time to complete:: 3 days
Cost to complete:: ETB 100
Name of Agency:
Comment:: While the law does not specifically require a company to have a seal, its required in practice.