Ethiopia

Starting a Business in

Ethiopia

Listed below is a detailed summary of the bureaucratic and legal hurdles an entrepreneur must overcome in order to incorporate and register a new firm, along with their associated time and set-up costs.  It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income (GNI).

The information appearing on this page 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 183 economies. The most recent round of data collection for the project was completed in June 2011.

  • Standardized Company

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

About This Topic

To see indicator data for all economies, see the Starting a Business page. To see how economies rank, see the Rankings page.

No. Procedure Time to Complete Associated Costs
1 Check the company name for uniqueness

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.

1 day no charge
2 Authentication of the company documents at the office of registration of Acts and documents

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).
2 days ETB 390
3 Register the company document at the Commercial Register and obtain the trade license

The applicant registers the Memorandum and Articles of Association and request a trade license. After reviewing the documents, including the lease agreement, 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.
1 day ETB 85
4 Register with Ethiopian Inland Revenue Authority and Customs for income tax and VAT

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.
2 days no charge
5 Make a company seal

While the law does not specifically require a company to have a seal, its required in practice.
3 days ETB 100
Explore Economy Data