Business entities in Ethiopia in 2022

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Since 2003, Healy Consultants provides our Clients with the best corporate structures for doing business in Ethiopia. There are different ways to start operations in Ethiopia, the most common being through the setup of an Ethiopian limited liability company (LLC). Alternatively, entrepreneurs may also establish a public limited company (SC) for larger investments. Foreign legal entities may also set up branch offices or representation in form of a liaison office.

The Ethiopia limited liability company (LLC)

  • The Ethiopia LLC is the preferred legal entity used by entrepreneurs setting up businesses in Ethiopia. A limited liability company requires at least 1 director and 2 shareholders who can either be individuals or legal entities. The director and shareholder can be of any nationality and must not be resident in Ethiopia. A minimum paid-up share capital of US$200,000 is also required to complete the incorporation process;
  • At least 3 auditors must be appointed if the limited liability company has more than 20 shareholders. The entity name must also include the words “Private Limited Company” at the end.

The Ethiopia public limited company (SC)

  • The Ethiopia SC requires at least 5 shareholder and 3 directors who can either be individuals or corporate bodies to be incorporated. The directors and shareholders can be of any nationality and must not be resident in Ethiopia. A public limited company requires a share capital of US$200,000 at incorporation;
  • A public limited company must appoint at least 1 statutory auditor at incorporation. The auditor can either be an individual or a legal entity.

The Ethiopia branch

The Ethiopia Commercial Law allows foreign companies looking to establish businesses in Ethiopia to open branch offices in the country. The branch office must seek approval from the Ethiopian Investment Commission before commencing operations in Ethiopia. At least 1 director of any nationality must be appointed to be the legal representative of the branch office in Ethiopia.

The Ethiopia liaison office

This entity must first seek approval from Ministry of Trade and Industry before establishment. An Ethiopia representative office is not considered a legal entity and is not allowed to conduct commercial activities in Ethiopia. A liaison office must appoint at least one director to represent the company in Ethiopia. This entity may only engage in i) promotional activities ii) marketing of products and services for their parent company within Ethiopia.

Comparison table between Ethiopia business entities

  LLC PLC Branch office Rep office
Also known as: PLC SC Branch Liaison office
How long to set the company up? 5 weeks 6 weeks 7 weeks 6 weeks
How long to open company bank account? 5 weeks 5 weeks 5 weeks 5 weeks
Legal liability? Limited Limited Unlimited Unlimited
Wholly foreign owned? Yes Yes Yes Yes
Minimum capital? US$200,000 US$200,000 US$200,000 US$100,000
File annual tax return? Yes Yes Yes No
Tax registration certificate required? Yes Yes Yes No
Recommended corporate bank account? United Bank Bank of Abyssinia Commercial Bank of Ethiopia Dashen Bank
Does our Client need to travel? No No No No
Resident director required? No No No No
Resident shareholder required? No No No No
Minimum directors allowed? 1 3 1 1
Minimum shareholders? 2 5 1 1
Tax identification code (TIN) needed? Yes Yes Yes No
Corporate shareholders allowed? Yes Yes Yes Yes
Corporate director(s) allowed? Yes Yes Yes Yes
Ethiopia corporate tax rate? 30% 30% 30% 0%
Annual financial statements required? Yes Yes Yes No
Statutory audit required? No Yes No No
Regulated by? Ministry of Trade Ministry of Trade Ministry of Trade Ministry of Trade
Allowed to issue sales invoices? Yes Yes Yes No
Allowed to sign contracts? Yes Yes Yes No
Allowed to import and export goods? Yes Yes Yes No
Can rent an office space in Ethiopia? Yes Yes Yes Yes
Can buy Ethiopia property? Yes Yes Yes No
Can own equity in other Ethiopia companies? Yes Yes Yes No
Total Ethiopia business setup costs in Yr. 1 US$16,800 US$18,800 US$17,000 US$16,050
Subsequent annual costs (incl. accounting and tax fee) US$7,200 US$9,200 US$7,200 US$1,400
Sample engagement invoice View invoice PDF View invoice PDF View invoice PDF View invoice PDF

Contact us

For additional information on our company setup services in Ethiopia, please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon
Ethiopia Chamber of Commerce & Sectoral Association Ethiopia government portal Ethiopia ministry of trade Ethiopian revenues and customs authority National bank of Ethiopia