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The Ethiopian Investment Agency (EIA) revised its regulation on importing capital goods in favor of investors. The revision states that they can import capital goods tax free after obtaining a business license and starting production, according to Getahun Negash, Director of Public Relations at the EIA.
“We are waiting for approval from the cabinet of ministers on the matter,” says Getahun.
According to Regulation No.270/2012 the EIA considers capital goods to be machines, equipment and their accessories used to make products or deliver services.
Getahun says that they created the resolution to address the concerns of investors.
“Some of them started production when they were not at full capacity,” he continued. “Then there are instruments which need to be replaced constantly like laboratory equipment. Investors had to pay value added tax for the replacements. The revision allows them to import tax free,” he said.
This isn’t the first time that the proclamation has been revised.
The first Ethiopia investment laws were written in 1992 after the fall of the Derg regime. They were revised three times, twice in 1996 and once more in 2002. Each time the law was revised the name of the office changed. It became an authority and a commission until finally settling on being an agency.
The amendments were concerned with adding more sectors for foreign investments, developing labor laws, addressing land access and enhancing conflict resolution systems.
The first investment laws allowed duty-free import of spare parts for capital goods. Then over time the laws were changed and the investors turned business people were required to pay taxes for them.
The Ethiopian Investment Agency also welcomed seven new organizations to its Bole office. These organizations will allow the number of services given at the EIA to rise from 29 to 36, according to Getahun.
The Development Bank of Ethiopia, Commercial Bank of Ethiopia, and Addis Ababa City Land Administration Office are three of the organizations that opened their offices at the EIA.
The other four include: the Ethiopian Electric Power Corporation, Federal Security and Immigration Authority of Ethiopia, Environmental Protection Authority and Addis Ababa Water and Sewerage Authority.
With the opening of EEPCo and AAWSA offices, the Agency will finally be able to fulfill clients’ requests to sart water and electricity services. They will also be able to apply for loans, acquire land and obtain environmental impact assessments.
“Each investment project will have a responsible person from the Agency who will follow its execution,” says Getahun.
The proclamation to provide the services was approved by parliament on July, 2012. It requires EIA to do what other federal offices had been doing and to help investors complete all the tasks they need to actually open their business.
“We can now help them register a name for the business, get a TIN number and their business licence, says Getahun.
While the proclamation was passed in 2012 it is just recently that the offices have been able to open in EIA.
“It is not as easy as it sounds to open a branch,” says Berhanu Tola Manager of Business Promotion and Communication at DBE. “You have to think about hiring experienced personnel, buying furniture and a myriad of other issues before doing it.
The DBE desk at the agency is now fully operational, Berhanu says. It can give the same services they provide at the head quarters.
The DBE has a policy that says all services to clients must be completed within 32 days. But this law is very rarely observed due to mistakes made on the part of clients.
“We require clients to deposit 30pct of the money they plan to invest,” says Berhanu. “We also need them to rent, buy or lease land for the site of their projects. Background checks on investors are also a must. All of this and more could be accomplished in the given timeframe were it not for the tendency of clients to overlook the inclusion of key documents,” he said.
Getahun finished by saying that an investor previously had to go to at least ten different offices to start operating in the Ethiopian market. Now the Agency’s initial plan of having a one stop shop is well on its’ way to completion.
The Ethiopian Investment Agency was founded in 1992. More than 90pct of its client base consists of non-Ethiopian investors. Foreign investors are required to invest a minimum USD 200,000, while foreign and domestic joint ventures require an investment of USD 150,000