Executive Summary
Ethiopia has long offered tax holidays and other investment
incentives to attract capital, including income tax exemptions and
customs duty relief on capital goods. Building on that, the country
has introduced important reforms to its investment incentive regime
through two key legal instruments: Investment Incentive Amendment Regulation No.
566/2025 and Incentive Directive No. 1064/2025. Together,
these measures aim to update the way investors access tax breaks,
customs duty exemptions, and other privileges, while also
introducing clearer rules for how these benefits are granted,
monitored, and revoked.
The reforms present opportunities for well-structured, compliant
projects, especially in export-oriented manufacturing, mining,
petroleum, agriculture, construction, and tourism. However,
stricter eligibility criteria, a ban on transferring duty-free
privileges, and potential regulatory ambiguities must be navigated
with caution.
