Company Formation in Ethiopia

Entity types, capital and incorporation

• Incorporation overview - The most common vehicle is the Private Limited Company (PLC) under the 2021 Commercial Code, including a one-member PLC. Incorporation runs through name reservation, notarised constitutive documents, TIN registration, commercial registration and a business licence.
• Common entity types - Private Limited Company (PLC), One-Member PLC, Share Company (S.C.), branch of a foreign company, sole proprietorship, partnership (Commercial Code of Ethiopia Proclamation No. 1243/2021 (unverified))
• PLC membership limits - Minimum 1 (one-member PLC) or 2 members; maximum 50 members (Commercial Code of Ethiopia Proclamation No. 1243/2021 (unverified))
• PLC minimum capital - ETB 15,000, fully subscribed and paid up at incorporation (Commercial Code of Ethiopia Proclamation No. 1243/2021 (unverified))
• Share Company minimum capital - ETB 50,000 with a minimum of 5 shareholders (unverified) (Commercial Code of Ethiopia Proclamation No. 1243/2021 (unverified))
• Minimum capital for foreign investors - Generally USD 200,000 per investment project (USD 150,000 for joint ventures); lower thresholds for certain sectors (unverified) (Investment Proclamation No. 1180/2020 and Investment Regulation (unverified))
• Step 1 - Name reservation - Reserve a company name (submit several options); approval reserves the name for ~30 days (Commercial Registration and Business Licensing Proclamation (unverified))
• Step 2 - Constitutive documents - Prepare and notarise the Memorandum of Association (MOA) and Articles of Association (AOA), in Amharic or English (Commercial Code of Ethiopia Proclamation No. 1243/2021 (unverified))
• Step 3 - Tax Identification Number - Obtain a Taxpayer Identification Number (TIN) from the Ministry of Revenues (Tax Administration Proclamation No. 983/2016 (unverified))
• Step 4 - Commercial registration and licence - File for commercial registration and obtain a business licence specifying authorised activities (Ministry of Trade and Regional Integration or Ethiopian Investment Commission for foreign investors) (Commercial Registration and Business Licensing Proclamation (unverified))
• Typical incorporation timeline - Roughly 2–4 weeks for a domestic PLC once documents are ready (unverified) (Commercial Registration and Business Licensing Proclamation (unverified))
• Core annual compliance - Annual business-licence renewal, annual income tax return within 4 months of year-end, monthly VAT and payroll filings, and statutory bookkeeping (Commercial Registration and Business Licensing Proclamation; Tax Administration Proclamation No. 983/2016 (unverified))

Two worked examples that recompute

Simple case: a new company with sales of ETB 180,000 a month passes the ETB 2,000,000 VAT registration threshold over 12 months (Proc. 1341/2024 art. 12).

name: VAT registration test
inputs:
  m: 180000
steps:
  - annual: m * 12
  - over: annual - 2000000
expected:
  annual: 2160000.00
  over: 160000.00

Edge case: the first employee at a salary of ETB 10,000 a month, employer pension 11% (Proc. 1268/2022 art. 10).

name: First employee cost
inputs:
  s: 10000
steps:
  - pension: s * 0.11
  - cost: s + pension
expected:
  pension: 1100.00
  cost: 11100.00

Sources

Source	URL	Read on	What was read
Federal Income Tax Proclamation 979/2016, Amharic consolidated print	https://www.lawethiopia.com/images/federal_proclamation/proclamations_by_number/979.pdf	2026-11-01	Declaration, payment, withholding and exemption articles read in Amharic; article numbers are those before the 1395/2025 renumbering
Federal Tax Administration Proclamation 983/2016, Amharic consolidated print	https://www.lawethiopia.com/images/federal_proclamation/proclamations_by_number/983.pdf	2026-11-01	Penalty articles and art. 37 read in Amharic
Value Added Tax Proclamation 1341/2024, Federal Negarit Gazette, 21 August 2024	https://www.hopr.gov.et/Resources/ViewFiles?path=%2Fadmin%2FFiles%2F2026%5C1%5C21%5C237b0abc-d9d2-4749-96a8-7cf2ae7dbcf91341-2016%20%E1%8B%A8%E1%89%B0%E1%8C%A8%E1%88%9B%E1%88%AA%20%E1%8A%A5%E1%88%B4%E1%89%B5%20%E1%89%B3%E1%8A%AD%E1%88%B5%20%E1%8A%A0%E1%8B%8B%E1%8C%85.pdf	2026-11-01	Arts 2, 6, 8 to 13, 29, 30, 47 to 49, 58, 59, 62, 64 to 66, 71 to 75 read; the copy has no Schedules
Private Organization Employees Pension Proclamation 1268/2022	https://www.hopr.gov.et/Resources/ViewFiles?path=%2Fadmin%2FFiles%2F2026%2F2%2F25%2Ffc53f560-b228-4314-b372-da2b26ef4b53_Upploads_04012023090127_%E1%8B%A8%E1%8C%8D%E1%88%8D%20%E1%8B%B5%E1%88%AD%E1%8C%85%E1%89%B5%20%E1%88%A0%E1%88%AB%E1%89%B0%E1%8A%9E%E1%89%BD%20%E1%8C%A1%E1%88%A8%E1%89%B3%20%E1%8A%A0%E1%8B%8B%E1%8C%85%20%E1%89%81%E1%8C%A5%E1%88%AD%201268%20(1).pdf	2026-11-01	Arts 2, 10 to 12 read

Not yet confirmed: every company law figure and step above: the Commercial Code 1243/2021 and the registration and investment rules were not opened, so each stays unverified.

General reference only. This document does not constitute tax, legal, or financial advice. Verify figures against the cited primary sources or with a licensed professional before relying on them.