Navigating the investment landscape in Ethiopia requires a clear understanding of the step-by-step process for obtaining the necessary licenses and registrations. This guide provides a precise overview of the procedures involved, from initial company name reservation to final tax registration, to help investors successfully establish their business operations.

Step 1: Initial Registration & Unique Company Name Reservation

The first step is to secure a unique name for your business. The business owner (or representative for a PLC/share company) must submit three potential names to the relevant authority for verification and approval.

Location:

  • Ministry of Trade or the Trade Bureau at the sub-city level.

Process Overview:

  • Complete and submit the physical application forms with three company name options.
  • Pay the required registration fees.
  • The government officer will check the digital system for name availability and assign an approved company name.
  • You will receive an official letter confirming your registered company name, which is required for the next steps.

Step 2: Authenticate Company Documents (Memorandum & Articles of Association)

For PLCs and Share Companies, the foundational legal documents—the Memorandum of Association and Articles of Association—must be drafted and authenticated. Sole proprietors do not need these documents and can proceed with their ID. This step also involves authenticating the physical address of the business.

Location:

  • Document Authentication and Registration Agency (DARA).

Process Overview:

  • Draft the Memorandum and Articles of Association, including shareholder agreements.
  • Submit the physical forms along with the company name reservation letter and proof of the company's physical address (e.g., a lease agreement).
  • Pay the authentication fees and receive a receipt with an appointment for the following day.
  • All business owners/shareholders and the company manager must appear in person with their ID documents. If using a lease agreement, the landlord's presence is also required.
  • The DARA officer verifies all documents and identities before the official signing and authentication of the company's formation documents.

Step 3: Obtain a Taxpayer Identification Number (TIN)

A TIN is mandatory for all tax purposes. The company is liable for tax declarations (monthly, quarterly, or yearly) from this point forward, even if not yet operational. The company manager must register in person, as biometric data is required.

Location:

  • Sub-city small taxpayers office.

Process Overview:

  • The company manager visits the appropriate sub-city office to fill out the physical application form.
  • Submit the completed form.
  • The manager's biometric data (photo, fingerprints) is captured for digital registration.
  • Upon successful registration, a TIN and certificate are issued for the business.

Step 4: Obtain Commercial Registration Certificate

This certificate is mandatory before commencing any commercial activity. After receiving it, a business has one year to acquire its trade/business license.

Location:

  • Ministry of Trade or the Trade Bureau at the sub-city level.

Process Overview:

  • Fill out the physical forms and submit them along with the authenticated Memorandum/Articles of Association, proof of address, and TIN certificate.
  • For Share Companies, proof of capital deposit is also required.
  • Pay the required fees.
  • An officer reviews the documents and, upon successful verification, issues the commercial registration certificate.

Step 5: Apply for Competency Certificate (If Applicable)

Certain business sectors require a Competency Certificate to prove that the business has the necessary equipment, expertise, and facilities to operate. This is a prerequisite for obtaining a business license in those sectors.

Location:

  • Multiple sector-specific government agencies.

Process Overview:

  • Fulfill all sector-specific requirements for proving competency.
  • The relevant agency will conduct an on-site examination of your business premises and equipment.
  • A competency certificate is issued upon successful verification.

Step 6: Apply for Trade/Business License

This license makes the company commercially operational. It must be renewed every six months within the fiscal year.

Location:

  • Ministry of Trade or the Trade Bureau at the sub-city level.

Process Overview:

  • Fill out the physical form and submit it with the commercial registration certificate, TIN certificate, and competency certificate (if applicable).
  • Pay the license fees.
  • The officer reviews the documents and issues the official trade/business license.

Step 7: Register for Taxes (VAT/TOT)

The business must register for either Value Added Tax (VAT) or Turnover Tax (TOT), unless operating in an exempt sector like health or education.

Location:

  • Relevant tax office based on company type and turnover (e.g., Federal Ministry of Revenue, Regional Revenue Authority, Large/Medium Taxpayers Office).

Process Overview:

  • Register for TOT if turnover is below 1 million ETB.
  • Register for VAT if turnover is above 1 million ETB or if 75% of your clients are VAT-registered.
  • Provide your trade license and TIN certificate.
  • The case officer registers you in the SIGTAS tax system.
  • Receive your VAT/TOT certificate and verbal instructions on tax requirements.
  • Apply for permission to print invoices and procure a cash register from a government-approved supplier.