The import export trade has been growing steadily in Ethiopia. However, for successive years the import trade has outweighed the export trade. One can find import and export regulations in this article.
One can find here information on import regulations in Ethiopia: who can import, what the foreign exchange requirements are, and what import ban or restrictions exist.
Who can import to Ethiopia? According to Regulations No. 270/2012 or 270/2005 EC (Download), Import trade (excluding LPG, bitumen, and raw materials imported by foreign investors who are in the manufacturing industry) in Ethiopia is exclusively reserved for domestic investors.
A businessperson who wants to engage in import trade in Ethiopia must be registered with the Ministry of Trade, which regulates imports, and obtain a trading license. Obtaining a trading license is easy and takes a much lesser time than it used to some years ago. The necessary regulations and procedures to obtain a trading license are found in our starting a business section.
Importers should get licenses to secure the necessary foreign currency. Any purchase worth more than USD 5000 should be processed either through letter of credit (LC) or Cash Against Document (CAD). Click the link to find out more on how an importer can secure foreign currency: foreign exchange directive
Importers who secured foreign currency should use Ethiopian Shipping and Logistics Services Enterprise (for Sea Transport) or Ethiopian Air Lines (in case of Air Transport) to transport their cargo. If these carriers do not call a specific port, the carriers give the importers a waiver. However, the Ministry of Industry has recently sent a list of manufacturers to the National Bank of Ethiopia who are exempted from the requirement to use ESLSE.
Import Ban or Quantitative Import Restrictions
Except for items which are socially and morally harmful (e.g. drugs, weapons and pornographic materials), no import ban or quantitative import restrictions exist. (Source: Foreign Affairs and International Trade Canada - www.international.gc.ca)
- Some imports must meet the standards of the previous Quality and Standards Authority of Ethiopia (QSAE) who split into four entities. Now the regulatory body is named as Ethiopian Standards Agency. Details are available on the Agency's Web site: ethiostandards.org. Goods which have standards which are considered mandatory/compulsory Ethiopian Standards should be inspected before shipment by an internationally recognised third party inspection body.
- Medicines and medical supplies must be registered with the Drug Administration and Control Authority (DACA) of Ethiopia. No drug, whether produced locally or imported, shall be put into use unless it is duly registered by the Authority. DACA has banned the importation of drugs from some foreign drug manufacturing companies who do not follow Good Manufacturing Practice.
- No person shall import into Ethiopia any plant or plant product, including seeds as legally specified, not duly authorized for import by the Minister of Agriculture. All imported plants and other articles liable to be infested or infected with plant pests are subject to quarantine.
According to Regulations No. 270/2012 or 270/2005 EC (Download), export trade of raw coffee, chat, oil seeds, pulses, hides and skins bought from the market and live sheep, goats and cattle not raised or fattened by the investor is exclusively reserved for domestic investors. Foreign investors cannot be involved in export trade of these items from Ethiopia.
Businesses that wish to export from Ethiopia should know the export procedures needed to obtain export permit by commercial banks; should prepare Application for Quality Testing and Certification to obtain Export Authorization Certificate from the Quality and Standards Authority of Ethiopia; should fill the Customs declaration. We have included all these export procedures in Ethiopia and also the VAT registration for exporters from Ethiopia and VAT rate applied on goods exported from Ethiopia.
Export permit by commercial banks
Documents required for Export Permit Approval:
(taken From Dahsen Bank)
- Duly signed contract by seller & buyer
- Undertaking letter of our customer that consignment will be settled within a maximum of 90 days from date of the Foreign Exchange Permit for Cash Against Document (CAD) mode of payment and Authenticated message of L/C opened for Letter Credit mode of Payment.
- Seller's invoice
- Export License Valid for the year
- Tax registration certificate (TIN certificate)
- Export permit application form duly filled, signed & stamped (as appropriate) by the customer.
- NBE (National Bank of Ethiopia) issues delinquent list of exporters periodically. Customer’s name should not appear in the delinquent exporters list of NBE for the period. If the name appears, there should be subsequent list indicating the given customer has cleared all outstanding items at NBE.
In regards to payment, the exporters should:
- Know thoroughly the foreign counterpart’s (buyer’s) financial soundness, reliability, integrity, full address, etc.
- Sales/Purchase contract should exist between the two parties (importer and exporter).
- (LC Mode of Payment) Go through text of L/C opened in their favor and make sure that compliance can be met without doubt. Otherwise, amendments need to be requested from opener as soon as L/C has been received or at the earliest - long before shipment of consignments.
- (CAD Mode of Payment) Follow up the payment, as nonpayment or even delay of remittance above 90 days will put name of exporter in delinquent list freezing further exports until proceeds are received.
Application for Quality Testing and Certification:
When export products are ready, make arrangements for suitable packaging and apply to the Quality and Standards Authority of Ethiopia for quality testing, and acquire the Export Authorization Certificate.
To avoid costly delays, the exporter declares all facts about the export consignment, and all supporting original documents should be forwarded to the Customs Clearing Agents to enable customs formalities and authorization of the dispatch of the export goods. Accordingly, the exporter must hand over the Export Permit, the copy of the Customs Declaration Annex form, the Ethiopian Customs Declaration form, the Certificate of Origin, and the special movement forms/certificates (the EURI Movement Certificate and the GSP form A) to the clearing agents.
Exporters, VAT and VAT Registartion
According to the Value Added Tax Proclamation (285/2002) and the Regulation by the Council of Ministers on VAT (Regulation 79/2002), all exports of goods and services are liable to VAT at the zero rate. This means that VAT is charged at 0% (or no VAT has to be charged). However, more importantly an exporter is entitled to reclaim the VAT on all the goods and services purchased to produce the exports.
But since this still means an exporter is still making taxable supplies even at a zero rate, the law requires the exporter to register if the turnover exceeds the registration limits.