Business entities in Ethiopia in 2023

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