In May 1992, the government issued a detailed proclamation on investment and established and Investment Authority accountable to the Board of Investment. This proclamation was further revised in June 1996. Ethiopia’s investment code provides incentives for development-related investments, reduces capital entry requirements for joint ventures, permits the duty free entry of capital goods (except computers and vehicles), opens the real estate sector to expatriate investors, extends the losses carried forward provision, cuts the capital gains tax from 40 to 10 percent, and gives priority to investors in obtaining land for lease.
The investment code identifies certain sectors that are reserved for the government retains the exclusive right to generate and supply electricity, other than from hydropower, above 25 megawatts. Other investment areas exclusively reserved for the government include air transport service using aircraft with a seating capacity of more than 20 passengers or with a cargo capacity greater than 2700 kilograms, rail transport services, and telecommunication services, including the internet, only in partnership with the government.
The investment areas reserved for Ethiopian nationals include banking and insurance, the generation and supply of electricity other than hydropower up to 25 megawatts, air transport services with seating capacity up to 20 passengers or cargo capacity up to 2700 kilograms, and forwarding and shipping agency services.
Ethiopia reserves many businesses in the service and trade sectors for domestic investors. These areas include: broadcasting, retail and wholesale trade (except in petroleum and locally produced goods), import trade, export trade of local agricultural products, small and medium-scale construction, bars and nightclubs, small hotels and restaurants, travel agencies, car and taxi services, bakery products, grinding mills, barber shops and beauty salons, goldsmith shops, tailoring services, building and vehicle maintenance services, saw milling, customs clearance, museums and theaters, and printing.
The Ethiopian government reviews investment proposals in a non-discriminatory manner; the screening process is not regarded as an impediment to investment, a limit to competition, or a means of protecting domestic interests.
Foreign firms are welcome to invest in privatization efforts of the Ethiopian government, although in some instances it promotes joint ventures with Ethiopian private concerns rather than outright sales. Foreign firms participate through consultancy services preparatory to privatization or through tendering on advertised privatization opportunities.
There are no discriminatory or excessively onerous visa, residence, or work permit requirements against foreign investors. Foreign investors do not face unfavorable tax treatment, denial of license, discriminatory import or export policies, tariff or non-tariff barriers, etc.