Ethiopia to allow some tax, forex rule changes to lure startups

Ethiopia has given the green light for a wide array of policy adjustments to attract startups in the latest reforms aimed at opening up the once-socialist economy to foreign investment.

The changes include removing a 30% capital-gains tax on share transfers and new share issuance, the freedom to retain all foreign currency earned from service exports, and introducing both tax incentives and tax holidays, Ethiopian Capital Market Authority Director-General Brook Taye said by phone.

In recent years, the nation has seen a surge in startups such as Ride, a taxi-hailing company that’s expanded into neighboring Djibouti, digital payment-solutions provider Arifpay, and Kubik, which converts hard-to-recycle plastic waste into low-carbon, low-cost building materials.

The Office of the Prime Minister has approved the modifications and respective authorities will now revise relevant laws to pave the for implementation.

Recent reforms introduced by Prime Minister Abiy Ahmed’s government include issuing investment-banking licenses and opening a stock exchange, and authorities are now toying with the idea of allowing foreigners to own property.