Starting a Business in


Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Ethiopia. It examines the procedures, time and cost involved in launching a commercial or industrial firm with between 10 and 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed in June 2016.

Compare Ethiopia to 189 other economies.

  • No. Procedure Time to Complete Associated Costs

    Reserve a unique company name

    Agency: Ministry of Trade or Trade Bureau at sub-city level

    The entrepreneur can reserve the unique company name. According to the Commercial Code, the company name shall be as agreed but shall not. offend public policy nor the rights of third parties

    The entrepreneur completes a simple form and submits it to the agent at window No. 1. The service is partially computerized and the search is quick. A Letter of Recommendation (LR) will be given by the agent and must be attached to the Memorandum and Articles of Association for authentication.

    1 day ETB 27

    Authentication of the company documents and the lease agreement at the Documents Authentication and Registration Office (DARO)

    Agency: Documents Authentication and Registration Office (DARO)

    Article 11 (1) (e) of Commercial Registration and Business Licensing Proclamation No. 686/2010, the Memorandum and Articles of Associations must be authenticated. The entrepreneur deposits the documents at DARO and will be given an appointment for the next day. The Documents Authentication and Registration Office verifies the in-kind contribution stated in the Memorandum. The partners 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. All partners sign the documents before the notary public and pay a stamp duty flat fee of ETB 350, as well as a service charge of ETB 10 per copy for 4 copies of the Memorandum of Association. Payment is done in the same office where the documents are being registered in the books.

    2 days ETB 390

    Obtain a tax identification number (TIN)

    Agency: Ethiopian Revenue and Customs Authority

    Before incorporation, the company must obtain a tax identification number by completing and submitting an application form together with its memorandum and articles of association. A letter will then be issued to the company for submission at the sub-city along with its application for incorporation.

    1 day no charge

    Submit documents and obtain a letter from the Trade Bureau at the Sub-city level to open a bank account

    Agency: Commercial Register at the Ministry of Trade

    The applicant presents the Memorandum and Articles of Association, TIN number, relevant IDs and power of attorney (if done through one) in order to obtain a letter from the Trade Bureau at the Sub-city level addressed to a chosen commercial bank so that an account may be opened under the new company name.

    1 day no charge

    Open a bank account

    Agency: Bank

    A bank account has to be opened and the minimum capital requirement has to be deposited. Upon presentation of the letter from the Commercial Registry, the applicant opens a bank account under the new company name and deposits the capital. The bank provides the applicant with a confirmation letter stating that the deposit has been affected.

    1 day no charge

    Register and obtain the Commercial registration certificate

    Agency: Commercial Register

    Evidence of capital deposit is required for private limited companies. This requirement is imposed by the Article 11 (3) of the Commercial Registration and Business licensing Proclamation No. 686/2010, issued in 2010 and entered into force immediately after publication. Under this Article, the applicant needs to submit a bank statement that the capital of the business organization to be contributed in cash has been deposited and all appropriate documents relating to contribution in kind.
    Once the applicant submits the proof of deposit, a Commercial Registration Certificate (also commonly referred to as the ‘Principal Registration’) is issued to the applicant. The applicant registers the Memorandum and Articles of Association. After reviewing the documents, including the lease agreement, the Commercial register delivers a registration certificate. Payment is done at the same time.

    1 day ETB 102

    Make a company seal

    Agency: Seal maker

    While the law does not specifically require a company to have a seal, it is required and commonly used in practice. The seal maker is a private service provider thus, the pace of its service delivery depends on its cost, reputation and quality. The seal maker will require the business license and TIN of the company.

    1-3 days ETB 100
    * 8

    Register company and employees with the Private Organization Employees' Pension Fund

    Agency: Social Security Agency

    According to Article 4 of the Private Organization Employees Pension Proclamation No. 715/2011 enacted June 2011, any private organization shall, for the purpose of registration, submit to the Agency copies of its establishment law, personal data of its employees taken at the time of first employment, letter of employment issued to the employee and other particulars determined by the Agency within 60 days from the date of establishment of the company or employment. The pension contribution to be collected for July 2013 to June 2014 OR for 2006 Ethiopian budget year is 7 % of employee's gross salary and 9% from employer.

    1 day, simultaneous no charge

    Register with Ethiopian Revenue and Customs Authority for VAT

    Agency: Ethiopian Revenue and Customs Authority

    A newly established firm must register for VAT if its turnover is at least ETB 500,000 on the basis of VAT Proclamation No. 285/2002, Article 16. Once registered, the VAT certificate is obtained.

    1 day no charge

    Obtain a Certificate of Competence

    Agency: Relevant Government Agencies

    The Certificate of Competence is issued by the relevant government agency which has regulatory power over the particular commercial activity for which a business license is issued. The documents required vary depending on the type of business undertaken. The company must show its Certificate of Competence in order to retrieve its business license.

    1 day no cost

    Publish trade name in nationwide newspaper

    Agency: Journal

    As a prerequisite to registering the trade name, companies are required to publish the the trade name for 15 days in a national newspaper, if after 15 days no objection is lodged, the company may apply for the trade name registration certificate.

    15 days ETB 300

    Reserve a unique trade name

    Agency: Ministry of Trade or Trade Bureau at sub-city level

    After publication in the newspaper, the company can continue to register for the trade name and pay all relevant fees. Article 24 (1) of the 2010 Commercial Registration and Business Licensing Proclamation states that any person desiring to engage in a commercial activity shall register his trade name at the place where he is registering in the commercial register.

    Before the registration of a trade name in the commercial register and in the trade name register, it shall be verified that another business person has not got the trade name registered in the trade name register or in the commercial register.

    1 day ETB 27

    Obtain a business license

    Agency: Ministry of Trade or Trade Bureau at the sub-city level

    The applicant presents Principal Registration, proof of the new Tax Identification Number obtained, a certificate of competence in the field of commercial activity in which the applicant is seeking a business license (indicated under Article 32 Sub-article 8 of the Commercial Registration and Business Licensing Proclamation No. 686/2010), and pays the relevant fees. The Business License is usually issued on the same day these documents are submitted.

    1 day ETB 102

    Install a cash registration machine

    Agency: Ethiopian Revenue and Customs Authority, Point of sales software providers, and Cash register machine hardware providers

    Pursuant to the Council of Ministers Regulations No. 139/2007 ‘To Provide for the Obligatory Use of Sales Register Machines’, all businesses must purchase and install a sales register machine in order to comply with VAT tax obligations. The machines are available at certified supplier locations around Addis Ababa. Once the machine is brought to the company offices, it must be properly installed and set up so that it is linked to the Tax Administration system.

    7 days on average ETB 5,000-10,000

    * Takes place simultaneously with previous procedure.