In Ethiopia, the ministry of trade and industry is the legal authority concerning business registration. Any business action is forbidden unless your company is registered in a commercial register. A business license is required to run a business in Ethiopia. This is according to the proclamation of commercial registration and business license. To make the registration procedure easier, the ministry of trade and industry uses an online system called the Online trade registration and licensing system.
Company Registration Procedure in Ethiopia
Company registration in Ethiopia involves the following steps:
Set aside a distinct company and trade name
Examine whether the firm’s name meets the standards of Ethiopian company legislation. The investigation is being carried out by the Ministry of Trade and Industry. The entrepreneur fills out a basic form and presents it to the agent at window No. 1 with five possible company names. The service is computerized in part, and the search is speedy. The agent will issue a Letter of Recommendation (LR), which must be attached to the Memorandum and Articles of Association for authentication. At the same time, the company is reserving a trading name. This procedure will cost ETB 27.
Authenticate the firm documents and the lease agreement
Authentication of the Memorandum and Articles of Association is required. The entrepreneur submits the documents to the Documents Authentication and Registration Office (DARO) and is scheduled for the following day. The Memorandum’s in-kind donation is verified by the Documents Authentication and Registration Office. At the specified time, the partners arrive in person with an original copy of their letter of appointment (power of attorney) and a valid identity card. The officer verifies the documents’ legitimacy, the signatures’ authenticity, and the identity cards’ authenticity. All partners sign the documents in front of a notary public and pay a stamp duty flat cost of ETB 350, plus a service charge of ETB 10 per copy for a total of four copies of the Memorandum of Association. Payment is made at the same location as the documents are entered into the system.
Obtain a federal tax ID number (TIN)
The company must first receive a tax identification number from the Ethiopian Revenue and Customs Authority by filling out an application form and submitting it along with its memorandum and articles of formation. The company will subsequently receive a letter to submit along with its incorporation application to the sub-city.
To open a bank account, submit paperwork and acquire a letter from the Trade Bureau at the Sub-city level.
The applicant delivers the Memorandum and Articles of Association, TIN, required IDs, and power of attorney (if done through one) to acquire a letter from the Trade Bureau at the Sub-city level addressed to a chosen commercial bank to open an account in the new company name.
Establish a bank account
A bank account must be opened, and the required minimum capital must be deposited. The applicant opens a bank account in the new company’s name and deposits the capital after presenting the letter from the Commercial Registry. The applicant receives a confirmation letter from the bank saying that the deposit has been effected.
Register and acquire a certificate of commercial registration
For private limited corporations, proof of capital deposit is necessary. The applicant must present a bank statement indicating that the capital of the business organization to be contributed in cash has been deposited, as well as the necessary documentation for a contribution in kind. A Commercial Registration Certificate (also known as the ‘Principal Registration’) is granted to the applicant once the evidence of deposit is submitted. The Memorandum and Articles of Association are registered by the applicant. The Commercial Register issues a registration certificate and the relevant license after analyzing the paperwork, including the lease agreement. Payment is made simultaneously. ETB 102 is the payment.
Create a business seal
While the law does not require a firm to have a seal, it is necessary for practice and widely used. It takes 1-3 days to complete and costs ETB 100.
Register for VAT with the Ethiopian Revenue and Customs Authority
If a company’s turnover is at least ETB 500,000, it must register for VAT. The VAT certificate is obtained after registration.
Obtain a Competency Certificate
The Ministry of Trade and Industry issues the Certificate of Competence, which has regulatory authority over the commercial activity for which a business license is issued. Depending on the sort of business, different documentation is required. To reclaim its business license, the corporation must demonstrate its Certificate of Competence.
Apply for a business license
The applicant must produce Principal Registration, proof of obtaining a new Tax Identification Number, a certificate of competence in the commercial activity for which the applicant is seeking a business license, and pay the appropriate fees at the commercial register. The Business License is often issued the same day that these documents are filed. This procedure will cost ETB 102.
Install a sales register machine
To comply with VAT tax duties, all firms must purchase and install a sales register machine. The machines can be found at authorized supplier locations across Addis Ababa. When the equipment arrives at the company’s premises, it must be correctly installed and configured to connect to the Tax Administration system. It costs between ETB 5,000 and 10,000.
