Addis Ababa, Ethiopia (30 January 2023)
The Ministry of Finance in Ethiopia has recently announced new guidelines for tax-free imported vehicles for development projects. The new guidelines, named “Guidelines for Determining Tax-Free Imported Vehicles for Development Projects,” include a list of industries that will benefit from the incentives, including:
- Manufacturing,
- Agriculture,
- Logistics,
- Construction, and
- Investment in star hotels.
The permitted vehicles include dry, liquid or refrigerated trucks or specially designed buses, minibuses, midibuses, and covered cargo transporter vehicles and motorcycles.
The guidelines state that investors engaged in manufacturing, industrial park development, agriculture, logistics, construction, star hotels, railway infrastructure, motels, restaurants, lodges, information and communication technology, tourism, electric power generation, transmission and production, education, and health services will be able to import vehicles tax-free. Additionally, investors in architecture and engineering, technical examination and analysis services, and trade who establish new projects or expand existing ones will also benefit from the incentives.
Investors in the food and beverage, textile, leather, wood, paper, chemical, and basic medicine industries, as well as plastic products, non-metallic mineral products, basic metal, metal products used for structures, electrical appliances, transportation vehicles, industrial park development, and leasing activities, will be able to import vehicles tax-free once they provide evidence of land use permission or commencing practical activities (land preparation, infrastructure, warehouse, road, etc.).
The type and number of vehicles that agricultural development investors can import tax-free will be determined based on the size of the land to be cultivated, the number of livestock, the number of hives, and the size of the land used for the project. Star-level hotel, motel, restaurant, and lodge investors who meet the standards set by the Ministry of Tourism and provide the necessary evidence will also be able to import vehicles tax-free.
The directive also states that if a user who is allowed to import a vehicle tax-free buys a vehicle from a domestic vehicle assembly factory, the duty paid on the imported and domestically purchased vehicle inputs will be calculated and refunded. However, if any person or organization is found to be using the tax-free vehicle for purposes other than what it was granted for, they will have to pay the tax on the vehicle and face the necessary action of the customs law.
DISCLAIMER
