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13
April

Income Tax Exemption

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Investment Activities Eligible for Income Tax Exemption

1. Where an investor engaged in manufacturing or agro-industrial activities, or investment areas of information and communication technology development or the production of agricultural products to be determined by directives to be issued by the Investment Board;

• Exports 50% /(fifty percent) of his/her products or services; or

• Supplies 75% (seventy five percent) of his/her product to an exporter as a production or service input; he/she shall be eligible for income tax exemption for 5 years.
 
2. Not withstanding the provisions of list 1 above the Board may, under special circumstances, grant income tax exemption for a period not longer than 7 years. However, the granting of income tax exemption for a period longer than 7 years requires the decision of the Council of Ministers.

3. An investor engaged in activities mentioned in list 1 above who exports less than 50% (fifty percent) of his products or services, supplies his products or services only to the domestic market shall be
eligible for income tax exemption for 2 years.

4. Notwithstanding the provision of list 1 above, the Board may, under special circumstances, grant income tax exemption for a period not longer than 5 years.

5. Notwithstanding the provision of list 3 above, directives issued by the Board may prohibit exemption from income tax with respect to an investor who supplies his products or services only to the domestic market.

6. Notwithstanding the provisions of lists 1 and 3 above, an investor who exports hides and skins after processing up to crust level may not be entitled to incentives provided therewith.

7. Notwithstanding the provisions of the above lists, where the investment is in relatively under-developed  regions such as Gambella, Benishangul and Gumz, South Omo, in Afar Zones to be determined by the Board, Somali and other regions to be determined by the Board, the investor shall be eligible for income tax exemption for an additional 1 year period.

8. The income tax exemption under the provisions of the above lists shall be effective when the investor provides the information for the relevant revenue collecting institution and its validity is ascertained for each income tax period.

Income Tax Exemption for Expansion or Upgrading of an Existing Enterprise:
An investor engaged in activities mentioned under the provisions of list 1 above who exports at least 50% (fifty percent) of his products and services and increases, in value, his/her products or services by 25% shall be eligible for income tax exemption for 2 years.

Commencement of Period of Exemption from Income Tax
The period of exemption from income tax shall begin from the date of commencement of production or the date of provision of services, as the cas may be.

Carry Forward of Losses
An investor who has incurred loss within the period of income tax exemption shall be allowed to carry forward his/her loss for half of the income tax exemption period, after the expiry of such period.



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