--- name: et-company-formation description: "Source-cited draft: company formation & entity choice for Ethiopia (tax year 2025) — rates, thresholds and rules with primary-source citations. Unverified; pending local-accountant review." license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)" metadata: source: openaccountants openaccountants_url: "https://www.openaccountants.com/skills/et-company-formation" jurisdiction: "ET" tax_year: "2025" last_updated: "2026-07-13" review_status: "pending_review" --- # Ethiopia Company Formation & Entity Choice ## Entity types, capital and incorporation - **Incorporation overview** — The most common vehicle is the Private Limited Company (PLC) under the 2021 Commercial Code, including a one-member PLC. Incorporation runs through name reservation, notarised constitutive documents, TIN registration, commercial registration and a business licence. - **Common entity types** — Private Limited Company (PLC), One-Member PLC, Share Company (S.C.), branch of a foreign company, sole proprietorship, partnership _(Commercial Code of Ethiopia Proclamation No. 1243/2021 (https://ysalawoffice.com/2025/03/20/company-law-in-ethiopia-a-comprehensive-guide/))_ - **PLC membership limits** — Minimum 1 (one-member PLC) or 2 members; maximum 50 members _(Commercial Code of Ethiopia Proclamation No. 1243/2021 (https://www.apexhab.com/2025/08/15/one-person-plc-procedures-and-requirements-in-ethiopia/))_ - **PLC minimum capital** — ETB 15,000, fully subscribed and paid up at incorporation ETB _(Commercial Code of Ethiopia Proclamation No. 1243/2021 (https://hulunem.com/ethiopia-business-guides/how-to-start-a-plc/))_ - **Share Company minimum capital** — ETB 50,000 with a minimum of 5 shareholders (approx — confirm under 2021 Code) ETB (approx — confirm under 2021 Code) _(Commercial Code of Ethiopia Proclamation No. 1243/2021 (https://ysalawoffice.com/2025/03/20/company-law-in-ethiopia-a-comprehensive-guide/))_ - **Minimum capital for foreign investors** — Generally USD 200,000 per investment project (USD 150,000 for joint ventures); lower thresholds for certain sectors (approx — confirm current Investment Regulation) USD (approx — confirm current Investment Regulation) _(Investment Proclamation No. 1180/2020 and Investment Regulation (https://www.healyconsultants.com/ethiopia-company-registration/setup-llc/))_ - **Step 1 — Name reservation** — Reserve a company name (submit several options); approval reserves the name for ~30 days _(Commercial Registration and Business Licensing Proclamation (https://www.2merkato.com/articles/starting-a-business/82-how-to-start-a-plc-private-limited-company-in-ethiopia-particularly-in-addis-ababa))_ - **Step 2 — Constitutive documents** — Prepare and notarise the Memorandum of Association (MOA) and Articles of Association (AOA), in Amharic or English _(Commercial Code of Ethiopia Proclamation No. 1243/2021 (https://hulunem.com/ethiopia-business-guides/how-to-start-a-plc/))_ - **Step 3 — Tax Identification Number** — Obtain a Taxpayer Identification Number (TIN) from the Ministry of Revenues _(Tax Administration Proclamation No. 983/2016 (https://hulunem.com/ethiopia-business-guides/how-to-start-a-plc/))_ - **Step 4 — Commercial registration and licence** — File for commercial registration and obtain a business licence specifying authorised activities (Ministry of Trade and Regional Integration or Ethiopian Investment Commission for foreign investors) _(Commercial Registration and Business Licensing Proclamation (https://www.2merkato.com/articles/starting-a-business/82-how-to-start-a-plc-private-limited-company-in-ethiopia-particularly-in-addis-ababa))_ - **Typical incorporation timeline** — Roughly 2–4 weeks for a domestic PLC once documents are ready (approx — confirm) (approx — confirm) _(Commercial Registration and Business Licensing Proclamation (https://www.healyconsultants.com/ethiopia-company-registration/setup-llc/))_ - **Core annual compliance** — Annual business-licence renewal, annual income tax return within 4 months of year-end, monthly VAT and payroll filings, and statutory bookkeeping _(Commercial Registration and Business Licensing Proclamation; Tax Administration Proclamation No. 983/2016 (https://hulunem.com/ethiopia-business-guides/tax-regulations/))_ --- ## Talk to a verified accountant This guide is maintained by the OpenAccountants network — accountants who put their name behind the tax answers AI gives people. The live, always-current version (and the professional behind it) is at [openaccountants.com](https://www.openaccountants.com). - Use it in your AI: https://www.openaccountants.com/connect - Meet the accountants: https://www.openaccountants.com/network > **General reference only.** This document does not constitute tax, legal, or > financial advice. Verify figures against the cited primary sources or with a > licensed professional before relying on them. ## Today's figures and who stands behind this skill This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-07-13. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `et-company-formation` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/et-company-formation. If neither is available, confirm every figure against the official source pages cited above before relying on it.