Adopts Special Economic Zone Law

18 Apr 2024

On 18 April 2024, the Parliament of Ethiopia approved Proclamation No. 1322/2024 to regulate Special Economic Zones (SEZs). This law supports SEZs through policies that foster investment, trade facilitation, and infrastructure development. Incentives include customs exemptions, zero-rate VAT for goods and services in SEZs, exemptions from domestic indirect taxes, duty-free imports for construction materials, and tax exemptions on dividend income and salaries of foreign nationals employed by export-oriented enterprises for five years.

Applicants must commit at least $75 million, funded through equity, debt, or both, and allocate a minimum of 75 hectares of land. The Industrial Parks Development Corporation may auction land for housing and infrastructure, while the Ethiopian Investment Commission can designate public lands as SEZs.

The law expands permissible activities in SEZs to include agriculture, services, and other industries aligned with Ethiopia's development goals. Foreign banks are allowed to establish branches, and SEZ-based exporters gain preferential access to multiple foreign currencies.

Various zone types are envisioned, including industrial parks, free trade zones, science and technology parks, service parks, and agriculture and livestock zones. Prospective investors must apply to the Ethiopian Investment Commission for permits.