Tag Archives: Ethiopian investment law

Investment Incentives and Investment Areas Reserved for Domestic Investors Council of Ministers Regulation No. 270-2012


COUNCIL OF MINISTERS REGULATION No. 270/2012         DOWNLOAD (.pdf)

COUNCIL OF MINISTERS REGULATION ON INVESTMENT INCENTIVES AND INVESTMENT AREAS RESERVED FOR DOMESTIC INVESTORS

This Regulation is issued by the Council of Ministers Pursuant to Article 5 of the Definition of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia Proclamation No. 691/2010 and Article 39 of the Investment Proclamation No.769/2012.

PART ONE GENERAL

1. Short Title

This Regulation may be cited as the “Investment Incentives and Investment Areas Reserved for Domestic Investors Council of Ministers Regulation No. 270/2012″.

2. Definitions
In this Regulation unless the context otherwise requires:

1/ “Proclamation” means the Investment Proclamation No. 769/2012;

2/ the definitions provided for in Article 2 of the Proclamation shall also apply to this Regulation;

3/ “Agency” means the Ethiopian Investment Agency re-established under the Council of Ministers Regulation No. 269/2012;

4/”Board” means the Investment Board referred to in

Article 6(1) of the Council of Ministers Regulation No. 269/2012;

5/”capital goods” means machinery, equipment and their accessories needed to produce goods or render services and include workshop and laboratory machinery and equipment necessary for same;

6/ “construction material” includes basic inputs necessary for the construction of investment projects;

7/ “customs duty” includes indirect taxes levied on imported goods;

8/ “income tax” means tax levied on profits from business and categorized as the revenue of the federal government, regional governments or as their joint revenue.

3. Investment Areas Reserved for Domestic Investors
1/ The following areas of investment are exclusively reserved for Ethiopian nationals:

a) banking, insurance and micro-credit and saving services;

b) packaging, forwarding and shipping agency services;

c) broadcasting service;

d) mass media services;

e) attorney and legal consultancy services;

f) preparation of indigenous traditional medicines;

g) advertisement, promotion and translation works;

h) air transport services using aircraft with a seating capacity up to 50 passengers.

2/ For the purpose of sub-article (1) of this Article, a business organization may have Ethiopian nationality, provided that its total capital is owned by Ethiopian nationals.

4. Investment Areas Allowed for Foreign Investors

1/A foreign investor shall be allowed to invest in areas of investment specified in the Schedule attached hereto, except those areas provided for in number 1.3.3, 1.4.2, 1.7, 1.11.3, 1.11.4, 5.3, 6.2, 8.2,9.2,9.3 and 12 of the Schedule.

2/ Notwithstanding the provisions of sub-article (1) of this Article, the Board may allow foreign investors to invest in areas other than those specified in the Schedule, except those areas provided for in Article 6 (1) and (2) of the Proclamation and Article 3(1) of this Regulation.

3/ A foreign investor who invests pursuant to sub-article (1) or (2) of this Article may acquire a private commercial road transport vehicle necessary for his business operations. Continue reading →

Proclamation No.769/2012 Investment Proclamation


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Proclamation No.769/2012 Investment Proclamation

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Preamble

PART ONE GENERAL

PART TWO INVESTMENT OBJECTIVES AND AREAS OF INVESTMENT

PART THREE FORMS OF INVESTMENT AND CAPITAL REQUIREMENT FOR FOREIGN INVESTORS

PART FOUR INVESTMENT PERMIT

PART FIVE REGISTRATION OF TECHNOLOGY TRANSFER AND COLLABORATION AGREEMENTS WITH DOMESTIC INVESTORS

PART SIX INVESTMENT INCENTIVES GUARANTEES AND PROTECTION

PART SEVEN INVESTMENT ADMINISTRATION

PART EIGHT INDUSTRIAL DEVELOPMENT ZONE

PART NINE MISCELLANEOUS PROVISIONS

Pages: 1 2 3 4 5 6 7 8 9 10 11

Compiled Administrattive Directives


Now You can easily get all directive in ONE.

Use Bookmark or Table of Contents to find a specific directive within the compilation.

Ethiopian Revenue and Customs Authority Consolidated Tax and Customs Directives

የተጠቃለሉ የቀረጥ ግብር እና ጉምሩክ መመሪያዎች

National Bank of Ethiopia

LICENSING AND SUPERVISION OF BANKING BUSINESS Consolidated National Bank Directives

LICENSING AND SUPERVISION OF INSURANCE BUSINESS Consolidated National Bank Directives

LICENSING AND SUPERVISION OF THE BUSINESS OF MICRO-FINANCING INSTITUTIONS Consolidated National Bank Directives

Consolidated Foreign Exchange Directives

National Election Board

Consolidated National Election Board Directives (English)

የኢትዮጵያ ብሔራዊ የምርጫ ቦርድ መመሪያዎች

Ethiopian Broadcasting Authority

Consolidated Ethiopian Broadcasting Authority Directives

የመንግስት ቤቶች ኤጄንሲ (Agency for Government Houses Directive)

(የመንግስት ቤቶች ኤጄንሲ በሚያስተዳድራቸው ቤቶች የተፈፀሙ ህገ-ወጥ ተግባራትን ስርዓት ለማስያዝ እንዲቻል ተሻሽሎ የተዘጋጀ መመሪያ)

Consolidated Ministry of Education Directives

ትምህርት ሚኒስቴር

  • በትምህርት ተቋማት የአምልኮ ሥርዓትን በሚመለከት የወጣ መመሪያ
  • የግል ከፍተኛ ትምህርት ተቋም የመጀመሪያ ዱግሪ ትምህርት የዕውቅና አሰጣጥ መመሪያ
  • ከቴክኒክና ሙያ ትምህርትና ሥልጠና መስክ ወደ ከፍተኛ ትምህርት ተቋም መሸጋገሪያ መመሪያ

Consolidated Ethiopian Investment Agency Directives

የተጠቃለሉ የኢትዮጵያ ኢንቨስትመንት ባለስልጣን መመሪዎች

Consolidated Charities and Societies Agency Directives

የተጠቃለሉ የበጎ አድራጎት ድርጅቶችና ማህበራት ኤጀንሲ መመሪያዎች

Consolidated Ethiopian Athletics Federation Directives

የተጠቃለሉ የኢትዮጵያ አትሌቲክስ ፌዴሬሽን መመሪያዎች

Consolidated Ministry of Construction and Urban Development Directives

የተጠቃለሉ የከተማ ልማትና ኮንስትራክሽን ሚኒስቴር መመሪያዎች

For list of Directives included in Each directives CLICK HERE

Pages: 1 2

Mizan Law Review Vol 5, No 2 (2011)


Mizan Law Review publishes peer reviewed scholarly articles that identify, examine, explore and analyze legal and related principles, stipulations and concepts based on research findings. Mizan’s articles aim at interpretation, description, exploration and diagnosis towards the solution of problems (or legal issues) including proactive critique and projection that assist the development of laws.(Source African Journals on-line   http://www.ajol.info)

BETWEEN ‘LAND GRABS AND AGRICULTURAL INVESTMENT: LAND RENT CONTRACTS WITH FOREIGN INVESTORS AND ETHIOPIAS NORMATIVE SETTING IN FOCUS

Elias N. Stebek

Abstract

This article examines whether the land rent contracts and the Ethiopian legal framework on rural land use rights can assure win-win mutual benefits expected from large-scale land transfers to foreign investors. The article further examines the challenges in the realization of the Seven Principles for Responsible Agricultural Investments prepared by FAO, IFAD, UNCTAD and the World Bank Group as a framework of standards for the current global dialogue on large-scale farmland acquisitions. I argue that land-use insecurity in the Ethiopian context results from the extensive powers of executive offices that are empowered to dispossess holders and reallocate land to investors. These powers can be even more discretionary where land transfers are made without prior mapping and demarcation of protected forests and wildlife, and where registration and the issuance of land-holding certificates to smallholder farmers and pastoralists have not yet been made. The article suggests the need to rectify the gaps in the land transfer contracts and most importantly, the need to render the government a custodian (and not owner) of land in conformity with the FDRE Constitution and to ensure that the termination of land use rights is decided by courts so that executive offices would not perform the dual functions of revoking and reallocating rural land use rights.

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THE POLITICS UNDERPINNING THE NON-REALISATION OF THE RIGHT TO DEVELOPMENT

Belachew Mekuria Fikre

Abstract

The right to development stands out as one of the controversial rights ever since its articulation in the 1970s. The adoption of the 1986 United Nations Declaration on the Right to Development underlines the importance of international cooperation for it to be realised. I argue that the emphasis on ‘development aid’ rather than the broader ‘development cooperation’ has contributed a great deal to the politicisation of the right and consequently undermined its materialisation. Indeed, there is the need for semantic and conceptual clarity in the use of the term ‘international assistance and cooperation’ that has deceptively supplanted ‘international cooperation.’ While the former is a term used under Article 2(1) of the International Covenant on Economic, Social and Cultural Rights with a view to laying down the broader States Parties’ obligations, the latter is what the Declaration on the Right to Development exclusively employs. I argue that even if development assistance is indispensable, taking it as the sole approach to the realisation of the right to development is both wrong and unhelpful.

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ETHIOPIAN LAW OF INTERNATIONAL CARRIAGE BY AIR: AN OVERVIEW

Hailegabriel G. Feyissa

Abstract

Ethiopia’s aviation history goes back to the late 1920s. And, carriage of goods and passengers by air dates at least as far back as the 1940s – the decade which witnessed the establishment of Ethiopian Air Lines Corporation (now Ethiopian Airlines). Despite Ethiopia’s relative success in commercial aviation, domestic literature on commercial air law has been scanty. Court decisions involving air carriage are rare, and one can seldom find a course on air law in the curricula of Ethiopian law schools. This article is an attempt to briefly address the gap in literature and encourage further academic discourse on Ethiopian law of air carriage with particular attention to the law and practice regarding international carriage by air.

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TO TAX OR NOT TO TAX: IS THAT REALLY THE QUESTION?  VAT, BANK FORECLOSURE SALES, AND THE SCOPE OF EXEMPTIONS FOR FINANCIAL SERVICES IN ETHIOPIA

Taddese Lencho

Abstract

The Ethiopian Value Added Tax of 2002 follows the standard approach of exempting financial services from VAT. Not all ‘financial services’ are, however, exempted from VAT. A number of services provided by the financial institutions are made taxable by the VAT laws of Ethiopia. No subject in this regard has probably attracted as much attention and controversy as that of sale by foreclosure of property held as security by banks. Both sides (i.e., members of the financial industry and the tax authorities) seemed locked in their conviction over the treatment of foreclosure sales in VAT. Members of the financial industry (in particular banks) are convinced that foreclosure sales enjoy the privilege of exemption in VAT while some within the Tax Authorities are equally convinced that foreclosure sales should be chargeable with VAT. These controversies have played out in the courtrooms, the press and a number of communications between the Tax Authorities and the members of the financial industry. This article examines these controversies and analyzes the scope of exemptions for financial institutions under Ethiopian VAT laws.

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Ethiopian Investment Laws


Investment Proclamations
Proc No. 37-1996 Investment  Proclamation

Proc No. 116-1998 Investment Proclamation (Amendment) 
Proc No. 168-1999 Investment Proclamation (Amendment)   

Proc No. 280-2002 Investment  Proclamation

Proc No. 375-2003 Investment Proclamation (Amendment

Export trade and capital goods leasing business

Proc No 543 2007 The Revised Export Trade  Duty Incentive Scheme Establishing  Proclamation 
Proc No. 103-1998 Capital Goods Leasing Business Proclamation

Bilateral agreements
Proc No. 70-1997 The Investment Promotion and Protection Agreement with the State of Kuwait Ratification

proclamationProc No. 324-2003 A Proclamation to Ratify the Investment Incentive Agreement between the Government of theFederal Democratic Republic of Ethiopia and the Government of the United States of America

Proc No. 404-2004Investment Encouragement and Reciprocal Protection Treaty with the Federal Republic of Germany Ratification
Proc No. 405-2004 Investment Reciprocal Encouragement and Protection Agreement with the Government of the Republic of  France Ratification
Proc No. 406-2004 Investment Encouragement and Reciprocal  Protection Treaty with  the Great Socialist People’s Libyan Arm, Jamahiriya Ratification
Proc No. 417-2004 Investment Reciprocal Promotion and Protection Agreement with  the Republic of Tunisia Ratification
Proc No. 436-2005 European Investment Bank Finance Contract  for financing small and medium sized private sector enterprises Ratification
Proc No. 460-2005 Investment Promotion and Protection Agreement with the Republic of Austria Ratification
Proc No. 461-2005 Investment Promotion and Reciprocal Protection Agreement with the Kingdom of Sweden Ratification
Proc No. 69-1997 The Investment Promotion and Protection Agreement with the Government of the Republic of Italy Ratification Proclamation

Investment incentives and investment areas reserved for domestic investors

Reg No. 7-1996 Investment Incentives Council of Ministers Regulations No. 7/1996]

Reg No. 9-1996 Investment Incentives (Amendment)

Reg No. 35-1998 Investment Areas Reserved for Domestic investors  
Reg No. 36-1998 Investment Incentives Council of Ministers (Amendment)
Reg No. 84-2003 Investment Incentives and Investment Areas Reserved for Domestic Investors 

Reg 146 Investment Incentives and Investment Areas Reserved for Domestic Investors

Ethiopia Investment Proclamation to be Amended | 2merkato.com


Ethiopia Investment Proclamation to be Amended | 2merkato.com.

Proclamation No.103/1998 Capital Goods Leasing Business Proclamation


Proclamation No.103/1998

Capital Goods Leasing Business Proclamation

WHEREAS, for those investors who have the desire, knowledge and profession to participate in various investment activities but could not act due to lack of capital it is necessary to create an enabling environment for the establishment of alternative sources of financing;

WHEREAS, it is believed that lessors of capital goods can fill the existing gap which is not addressed by the existing financial institutions;

WHEREAS, the existing laws concerning capital goods leasing business are found incomplete;

NOW, THEREFORE, in accordance with Article 55 (1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:-

 

PART ONE

General

1. Short Title

This Proclamation may be cited as the “Capital Goods Leasing Business Proclamation No.103/1998.”

2. Definitions

In this Proclamation, unless the context requires otherwise:

  1. “Leasing” means a financing in kind for production and service purpose by which a lessor provides a lessee with the use of specified capital goods on financial or operating lease or hire-purchase agreement basis, without requirement of collateral, for a specified period of time and collects in turn a certain amount of installment in periodical payments over the specified period;
  1. “Lease agreement” or “agreement” means financial lease, operating lease or hire-purchase agreement as defined in this Proclamation;
  1. “Financial lease” means a type of leasing by which a lessor provides a lessee against payment of mutually agreed installments over a specified period with the use of specified capital goods which is:

a.       either already acquired by the lessor; or

b.      purchased by the lessor from a third party, known as the supplier, chosen and specified by the lessee;

and under which the lessor shall retain full ownership right on the capital goods during the period of the lease agreement, and, subject to agreement between the two parties, the lessee may have an option to purchase the capital good outright after the termination of the lease period at an agreed price.

 

  1. “Hire-purchase” means a type of leasing by which a lessor provides a lessee with the use of a specified capital goods, against payment of mutually agreed installments over a specified period under which, with each lease payment, an equal percentage of the ownership is transferred to the lessee and, upon effecting of the last payment, the ownership of the capital goods shall automatically be transferred to the lessee;
  1. “Operating lease” means a type of leasing for a period of time not exceeding two years, by which a lessor provides a lessee against payment of mutually agreed rent with the use of specified capital goods that the lessor has at hand;
  1. “Lessee” means a person who, under a lease agreement, obtains capital goods from a lessor and has the right to use the capital goods, against payment of rent for an agreed period of time;
  1. “Lessor” means a person who, under a lease agreement, provides to a lessee the right to use the capital goods in return for rent for an agreed period of time;
  1. “Capital goods” means goods designated as such under the Investment law and directives issued by the Investment Board pursuant to the powers vested in it by the Investment Law;
  1. “Supplier” means a person, other than the lessor or the lessee, who is in the business of selling goods;
  1. “Investment Law” means either the Investment Proclamation No.37/1996, or the Investment Incentives Council of Ministers Regulations No.7/1996, or both;
  1. “Non-cancelable Agreement” means a lease agreement that is cancelable only by the operation of the law or by mutual agreement;
  1. “Person” means any natural or juridical person;
  1. “Ministry” means Ministry of Trade and Industry.

 

 

 

 

PART TWO

Licensing, Features of Lease Agreements and Rights and

Obligations of the Contracting Parties

3. Issuance of License

  1. capital goods leasing business shall be operated only by a lessor licensed by the Ministry.
  1. The Ministry shall issue directives concerning the criteria to be fulfilled to obtain leasing license.

4. General Features of Lease Agreements

Any lease agreement shall, among other things, contain:-

  1. a statement of the type of leasing;
  1. a description of the capital goods, sufficient to identify it, a statement of the full price of the capital good and the total lease rent payable under the lease agreement;
  1. the amount of each rent, the period within which the total rent is to be paid, the date or the mode of determining the date on which each installment is payable and a statement that the lessee shall pay the rent on the agreed date;
  2. a provision showing the responsibility of the lessee for repairing damages caused to the capital goods by third parties during the time the agreement is in force;
  3. a provision showing the right of the lessee to terminate the agreement and return the leased capital goods to the lessor, where, at the time of its transfer to him, the capital goods is found to have a defect which diminishes its usefulness to the lessee;
  4. a statement that the lessor undertakes to transfer to the lessee the rights and benefits deriving from the sales contract between the lessor and the supplier of the capital goods;
  5. a statement that the lessee shall have the right to enjoy quiet possession of the leased capital goods during the entire period of the lease as provided in the agreement;
  6. a statement that the lessor may not, in his capacity as a lessor, be liable for death, personal injury or damage to the property of third parties caused during the use of the capital goods by the lessee.

5. Specific Features of Lease Agreements

  1. In the case of a financial lease agreement:

a.       the lessee shall hold the capital goods as a mere bailee of the lessor and he shall not have any ownership right on the capital goods during the entire period of the lease;

a.       the agreement shall be a full pay-out and non-cancelable agreement;

a.       the lessee may, by mutual agreement, have an option to buy or return the capital goods to the lessor on the termination of the lease agreement;

a.       a statement that the lessee undertakes to insure and maintain the capital goods.

  1. In the case of an operating lease agreement:

a.       the capital goods leased shall remain the property of the lessor to whom the lessee shall return on the termination of the agreement, unless otherwise the parties agree that the lease be further renewed or the leased capital good be purchased by the lessee;

a.       the lessee or the lessor shall have the right to cancel the agreement provided that the party causing damage to the other by early termination of the agreement shall pay compensation;

a.       a statement that the lessor undertakes to insure and maintain the capital goods.

  1. In the case of a hire-purchase agreement:

a.       an equal percentage of the ownership, with each installment payment, shall be transferred to the lessee and, upon effecting of the last payment, the ownership of the capital goods shall automatically be transferred to the lessee;

a.       the parties shall provide, in the agreement, for the manner by which ownership rights and claims arising form the agreement shall be settled between the lessor and the lessee in case of early termination of the lease agreement by either party;

a.       a statement that the lessee undertakes to insure and maintain the capital goods.

 

 

6. Defaults in Payment of Rent and Others

  1. Where the lessee defaults in the payment of the rent, or commits another fault which may breach the agreement, the lessor shall grant him a period of 30 days for remedying the default so far as the default may be remedied.
  1. Where the lessee does not remedy the default within the period specified in sub-Article (1) of this Article, the lessor may rescind the agreement, repossess the leased capital goods and claim related damages.
  1. Where the lessee defaults in the payment of the rent, the lessor may recover accrued unpaid rent together with interest and damages, whether the default is remedied or not.

7. Defects on the Leased Capital Good

  1. The lessor may not warrant against a defect which was made known to the lessee on the making of the agreement.
  1. The lessor shall make good any damage which the lessee has suffered owing to the defect of the capital goods where the lessor knew or should have known of the defect on delivering the capital goods to the lessee and failed to inform the latter accordingly.
  1. Unless otherwise provided in the lease agreement, the lessor shall not be liable for defects in and for unfitness for intended use of the capital goods he purchases in conformity with the specifications given by the lessee.
  1. The lessor has the right to rescind the agreement, with prior notice, and to repossess the leased capital goods, where the lessee does not make use of the capital goods in accordance with the lease agreement or accepted norm or usage and such use entails risk of irreparable damage to the capital goods leased.

8. Bankruptcy

  1. The obligations and conditions of the agreement shall continue with an organ legally subrogated to the judicially bankrupt lessor as long as the lessee performs his obligations in accordance with the terms of the lease agreement.
  2. The lessor shall not lose his ownership right on the capital goods leased eventhough the lessee is judicially bankrupt.
  1. Damages
  1. Where the agreement is rescinded by the lessee, and the lessee does not deliver the capital goods after having been given due notice to surrender the capital goods to the lessor, the lessor has the right to repossess the leased capital goods immediately and claim damages.
  1. Where the lessor suffers any damage owing to default on the part of the lessee prior to the transfer of the leased capital goods from the lessor to the lessee, the latter shall make goods such damage to the former so long as the lessor acted in goods faith and costs were incurred by him for purchase of the capital goods at the request of the lessee.
  1. Where, in the case of financial lease or operating lease agreement, the lessee fails to return the capital goods on the expiry of the agreement, the lessor has the right to repossess the leased capital goods and claim related damages unless otherwise provided in the agreement.
  1. Transfer of Right

The lessor has the unilateral right to assign his rights under the lease agreement to third parties, but without infringement of the lessee’s right to the quiet enjoyment of the capital goods leased.

  1. Claim by Third Parties
  1. Any action by a third party claiming a right on the capital goods shall be brought against the lessor.
  1. The ownership right of the lessor on the capital goods leased under the lease agreement shall prevail at all times over claims by third parties including creditors of the lessee.
  1. The lessee shall inform the lessor of any impediments or disturbances by third parties to his quiet enjoyment of the capital goods.
  1. Where the lessee fails or delays to inform the lessor as provided under sub-Article (3) of this Article, he shall be responsible for any expenses or damages incurred by the lessor.
  1. Where the value of the capital goods has decreased as a result of legal proceedings instituted by a third party against the lessor, the lessee shall have the right to demand the reduction of the rent according to the new value or the cancellation of the agreement.
  1. Termination of Lease Agreement
  1. Any lease agreement shall terminate on the date agreed upon by the parties.
  1. Unless otherwise provided in the lease agreement, the agreement shall not be terminated by the death or incapacity of the lessee.
  1. Where, on the expiration of an operating lease, the lessee remains in possession of the capital goods leased and the lessor does not claim its return, the agreement shall be deemed to have extended until such time as one of the parties demand the termination of the agreement.
  1. Lessee not to Create Charges On Capital Goods
  1. The lessee shall not create any charge or encumbrance on the capital goods leased.
  1. Any charge or encumbrance created on the capital goods by the lessee shall be void.
  1. Encumbrances created by the lessor and taxes claimed on the leased capital goods shall be borne by the lessor.
  1. Custody and Preservation of the Capital Goods
  1. The lessee shall take care of and preserve the capital goods as long as it is in his custody.
  1. The lessee may not change the manner of utilization of the capital goods without the consent of the lessor.

 

PART THREE

Miscellaneous Provisions

  1. Incentives

The lessor shall be exempted from customs duties on capital goods he imports in accordance with the Investment Law and the directives issued by the Investment Board pursuant to the powers vested in it by the Investment Law.

 

  1. Depreciation Allowance and Income Tax
  1. In case of financial lease or operating lease, depreciation allowance for capital goods shall be deductible from the rental income received by the lessor, as legal owner of the leased capital goods. However, depreciation allowance shall be for the benefit of the lessee in case of a hire-purchase agreement.
  1. The rent received by the lessor through the lease agreement shall be treated as income.
  1. Rent paid by the lessee shall be treated as an operating expense of the lessee and is deductible from his income for the purpose of taxation.
  1. Powers and Duties of the Ministry

The Ministry shall:

  1. register lease agreements.
  1. take appropriate measures in order to ensure the return of the leased capital goods to the lessor, where the lessee has the obligation to return the leased capital goods to the lessor but fails to return it and may order the police to facilitate the execution.
  1. issue other directives required for the implementation of this Proclamation.
  1. Application of Other Laws

Unless otherwise expressly provided by this Proclamation, the relevant provisions of the Civil Code and the Commercial Code shall apply to lease agreement.

  1. Effective Date

This Proclamation shall come into force as of the 5th day of March, 1998.

Done at Addis Ababa, this 5th day of March, 1998.

 

PROCLAMATION NO. 375/2003 A PROCLAMATION TO AMEND THE INVESTMENT REENACTMENT PROCLAMATION NO. 280/2002


PROCLAMATION NO. 375/2003

A PROCLAMATION TO AMEND THE INVESTMENT

REENACTMENT PROCLAMATION NO. 280/2002

 

 

            WHEREAS, the system of administration of investment needs to be transparent and efficient;

 

            WHEREAS, to this end, it has become necessary to amend the existing law on investments;

 

NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:

 

      1.       Short Title

 

This Proclamation may be cited as the “Investment (Amendment) Proclamation No. 375/2003.”

 

2.                  Renaming

 

The Ethiopian Investment Authority, which has been re-established under Proclamation No.280/2002, is hereby renamed as the Ethiopian Investment Commission.

 

3.                  Amendment

 

The Investment Proclamation No.280/2002, is hereby amended as follows:

 

1/   Article 2 Sub-Articles (8) and (9)of the Proclamation are deleted and replaced by the following new Sub-Article (8) and (9).

 

“8. “Expansion /upgrading” means increasing in value, by more than 25%, the full production of service capacity of an existing enterprise, be it in variety, volume, or both.

 

“9. “Appropriate Investment Organ” means the Ethiopian Investment commission, (hereinafter referred to as the “Commission”), or the executive organ of a region empowered to issue investment permits.”

 

2/   The following new Sub-Article (14) is added under Article 2 of the proclamation.

 

“14.     “Transfer of technology” means the transfer of systematic knowledge for the manufacture of a product, for the application of improvement of a process or for the rendering of a service, including management and marketing technologies, but shall not extend to transactions involving the mere sale or lease of goods.”

 

3/   The following new item (c) is added under Article 5 Sub-Article (1) of the Proclamation.

 

“c.        Air transport services using aircraft with a seating capacity of more than 20 passengers.”

 

4/   Article 12 Sub-Article (2) of the Proclamation is deleted and replaced by the following new Sub-Article (2).

 

“2.       Notwithstanding the provision of Sub-Article (1) of this Article, a foreign investor intending to buy an existing enterprise in order to operate it as it stands or to buy shares of an existing enterprise shall obtain prior approval from the Ministry of Trade and Industry.”

 

5/   The following new Sub-Article (3) is added under Article 12 of the Proclamation and the previous Sub-Article (3) is renumbered as Sub-Article (4)

 

“3        Upon receipt of an application made in accordance with sub-Article (2) of this Article, the Ministry of Trade and Industry shall, after examining the matter in light of the relevant laws within two working days:

 

a)      register the share transfer or replace the business license upon receipt of the appropriate fee, where the application is found acceptable; or

 

b)      notify to the investor its decision and the reason thereof in writing, where the application is found unacceptable.”

 

6/   Article 13 of the Proclamation is deleted and replaced by the following new Articles 13,14 and 15. Accordingly, Articles 14-38 of the Proclamation are renumbered as Articles 16-40, respectively.

 

 

 

“13.  Application for Investment Permit by a Domestic Investor.

 

1/     An application for investment permit by a domestic investor shall be made in a form designed for such purpose and submitted to the appropriate investment organ together with the following documents:

 

a)      Where the application is signed by an agent, a photocopy of his power of attorney;

 

b)      Where the investment is to be made by an individual person, a photocopy of his identity card, or a photocopy of the certificate evidencing his domestic investor status and his recent two passport size photographs;

 

c)      Where the investment is to be made by a business organization, photocopies of its memorandum of association and articles of association; or where the business organization is to be newly established, in addition, it shall submit photocopies of the shareholders’ identity cards or photocopies of certificates evidencing there domestic investor status;

 

d)     Where the investment is to be made by a public enterprise, a photocopy of the Regulations under which it is established or a photocopy of its memorandum of association and Articles of association; and

 

e)      Where the investment is to be made by a cooperative society, a photocopy of its Articles of association.

 

2/         The application form and documents stipulate under sub-Article (1) of this Article shall be made:

 

a)      in two copies, where they are to be submitted to the Commission; or

 

b)      in one copy, where they are to be submitted to Regional Investment Organs.”

 

“14.  Application for Investment Permit by a Foreign Investor

 

Application for Investment Permit by a Foreign Investor shall be made in a form designed for such purpose and submitted to the commission together with the following documents in two copies:

 

a)          Where the application is signed by an agent, a photocopy of his power of attorney;

 

b)          Where the investment is to be made by an individual person, a photocopy of the pages of a valid passport showing his identity and his recent two passport size photographs;

 

c)          Where the investment is to be made by a business organization incorporated in Ethiopia, photocopies of its memorandum of association and Articles of association; or where it is to be newly established, in addition, it shall submit photocopies of the pages of a valid passport of each shareholder showing his identity;

d)         Where the investment is to be made by a branch of a foreign business organization in Ethiopia, photocopies of its memorandum of association and Articles of association or a similar document of the parent company; and

 

e)          Where it is a joint investment by domestic and foreign investors, in addition to the documents provided under (c) above, photocopies of identity cards or photocopies of certificates evidencing the domestic investor status of the domestic investors, as the case may be.”

 

“15.  Application for Investment Permit for Expansion of Upgrading.

 

1/         An application for investment permit to expand or upgrade an existing enterprise shall be made in a form designed for such purpose and submitted to the appropriate Investment Organ together with the following documents:

 

a)      Where the application is signed by an agent, a photocopy of his power of attorney;

 

b)      Where the investment is made by a business organization, photocopies of its memorandum of association and Articles of association; and

 

c)      Photocopy of a valid business license of the existing enterprise.

 

2/         The application form and documents stipulated under sub-Article (1) of this Article shall be made:

 

a)      in two copies, where they are to be submitted to the Commission; or

 

b)      in one copy, where they are to be submitted to Regional Investment Organs.”

 

7/         Article 14 Sub-Article (1) of the Proclamation is deleted and replaced by the following new sub-Article (1). Besides, the following new Sub-Article (2) is added and Sub-Articles (2) up to (5) are renumbered as Sub –Articles (3) up to (6) respectively.

 

“1.       Upon receipt of an application made in accordance with Article 13, 14 or 15 of this Proclamation, the appropriate investment organ shall, after examining the intended investment activity in light of the Proclamation, Regulations and directives issued thereunder within five working days:

 

a)      issue the investment permit upon receipt of the appropriate fee, where the application is found acceptable; or

 

b)      notify to the investor its decision and the reason thereof in writing, where the application is found unacceptable.

 

2/   The appropriate Investment Organ shall, after issuing the investment permit, notify the concerned government institutions so that the latter could conduct the necessary follow up.”

 

8/         The following new item (e) is added under Article 16 Sub-Article (2) of the Proclamation.

 

“e. If the investor is found engaged in a commercial activity without obtaining a business license.”

 

9/         Article 18 of the Proclamation is deleted and replaced by the following new Article 20.

 

“20.  Technology Transfer Agreement

 

1/         Where an investor concludes a technology transfer agreement related to his investment, he shall submit the same to the commission for approval and registration.

 

2/         Upon receipt of an application for registration as per sub-Article (1) of this Article, the Commission shall issue the registration certificate within two working days.

 

3/         A technology transfer agreement which is not registered in accordance with this Article shall have no legal effect.”

 

10/       Article 23 Sub-Article 1(b) of the Proclamation is deleted and replaced by the following new item (b)

 

“b.       Investment made by a foreign national permanently residing in Ethiopia taken for a domestic investor”

 

11/       The following new Sub-Article (2) is added under Article 23 of the Proclamation and the previous Sub-Articles (2) and (3) are renumbered as Sub-Articles (3) and (4) respectively. In addition, the previous sub-Article (4) of this Article is deleted.

 

“2.       Notwithstanding the provision of Sub-Article (1) of this Article, the issuance, renewal and cancellation of investment permits for air transport services and for generation or transmission or supply of electrical energy shall be carried out by the Ethiopian Civil Aviation Authority and the Ethiopian Electric Agency respectively, representing the Commission.”

 

12/       Article 24 Sub-Articles (1) and (4) of the Proclamation are deleted and replaced by the following new Sub-Article (1) and (4) respectively.

 

“1.       The Commission or Regional Investment Organs shall provide the following services, as required under the relevant laws, to investors they have given investment permits, representing the competent Federal or Regional executive bodies, as appropriate:

 

a)      notarization of memorandum of association and Articles of association;

 

b)      effecting commercial registration;

 

c)      issuance of work permits to expatriate employees;

 

d)     grading of construction contractors; and

 

e)      issuance of business licenses.”

 

“4. Upon receipt of an application for a business license in accordance with sub-Article (1) (e) of this Article, the appropriate investment organ shall, after examining the mater in light of the relevant laws within five working days:

 

a)      issue the business license upon receipt of the application fee, where the application is found acceptable; or

 

b)      notify to the investor its decision and the reason thereof in writing,

 

Where the application is found unacceptable.”

 

13/       The following new sub-Articles (5),(6),(7) and (8) are added under Article 24 of the Proclamation.

 

“5.       Notwithstanding the provision of Article 22 Sub-Article (2) (a) of Commercial Registration and Business Licensing Proclamation No. 67/1997, the appropriate investment organ shall issue the business license upon signing, by the investor, of an undertaking to respect the relevant laws of the land.

 

6.         Notwithstanding the provision of Sub-Article (1) of this Article, the Commission shall issue business licenses representing only the Ministry of Trade and Industry.

 

7.         Notwithstanding the provision of Sub-Article (1) of this Article, amendments, renewal, replacement or cancellation to be made in relation to documents stated therein shall be effected by the relevant Federal or Regional executive bodies.

 

8.         The appropriate Investment Organ shall, after rendering the services listed under Sub-Article (1) of this Article, notify the concerned government institutions so that the later could conduct the necessary follow up.”

 

14/       Article 30 item number (9) of the Proclamation is deleted and replaced by the following new item number (9).

 

“9. approve and register technology transfer agreements related to investments;”

 

15/       Article 31 of the Proclamation is deleted and replaced by the following new Article 33.

“33.  Organization of the commission

 

The Commission shall have:

 

a)                  a Commissioner to be appointed by the Government; and

 

b)                  the necessary staff.”

 

16/       Article 37 Sub-Article (2) of the Proclamation is deleted and replaced by the following new Sub-Article (2)

 

“2. A foreign national permanently residing in Ethiopia to be taken for a domestic investor shall fill a form designed for such purpose and submit it together with the following documents to the commission:

 

a)                  where the application is signed by an agent, his power of attorney;

 

b)                  a photocopy of his valid business license;

 

c)                  a photocopy of his principal registration certificate;

 

d)                 a photocopy of his valid residence permit;

 

e)                  where the business license is that of a business organization,  photocopies of its memorandum of association and Articles of association;

 

f)                   where the applicant is dependent or heir of a person taken for a domestic investor or otherwise eligible for the status, in addition to the above mentioned documents pertaining to the supporting person or the deceased, a  photocopy of the dependent’s valid residence permit or a court decision declaring his status as an heir; and

 

g)                  his recent three passport size photographs.”

 

17/       The following new Article 41 is added. Accordingly, Articles 39-42 of the Proclamation are renumbered as Articles 42-45, respectively.

 

“41. Power Delegated to the Ethiopian Civil Aviation Authority and the Ethiopian Electric Agency.

 

The Ethiopian Civil Aviation Authority and the Ethiopian Electric Agency shall:

 

a)      carry out functions pertaining to issuance of investment permits delegated to them under Article 25 Sub-Article (2) in compliance with this Proclamation and Regulations and directives issued thereunder.

 

b)      forward to the Commission photocopies of the investment permits they issued and the relevant documents.”

 

4.                  Power to Issue Regulations

 

The Council of Ministers may issue Regulations to amend the list documents stipulated under Articles 13,14,15 and 37 of this Proclamation.

 

5.                  Repealed Law

 

Transfer of Technology Council of Ministers Regulations No. 121/1993 is hereby repealed.

 

 

 

 

6.                  Effective Date

 

                  This Proclamation shall enter into force as of the 28th day of October, 2003.

 

Done at Addis Ababa, this 28th day of October, 2003.

 

GIRMA WOLDEGIORGIS

 

PRESIDENT OF THE FEDERAL

DEMOCRATIC REPUBLIC OF ETHIOPIA

 

 

 

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