Ethiopia Investment Eligibility Criteria

Ethiopia has significantly revised its investment incentive regime with the replacement of Investment Incentive Regulation No. 517/2022 by the new Regulation No. 586/2026. This reform shifts the system from multi-year tax holidays and broad customs exemptions to a performance-based framework with targeted incentives. In essence, blanket income tax holidays are eliminated, replaced by reduced tax rates tied to priority sectors and performance, and new incentive categories (such as Special Economic Zones, start-ups, and green investments) have been introduced. The core customs duty benefits are largely retained but with refined conditions. This legal update outlines the key changes between the two regulations across five dimensions: tax incentives, customs duty incentives, administrative procedures, eligibility criteria, and sectoral priorities, and concludes with implications for investors and practitioners.