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A Directive to provide for the Type and Quantity of Vehicles allowed to be Imported Duty-Free for Development Projects (Directive No. 942/2023)

Ministry of Finance942/2023

Summary

This directive outlines the types and quantities of vehicles eligible for duty-free importation by various investment sectors, public bodies, and civil society organizations in Ethiopia. It specifies conditions, required documentation, and definitions related to vehicles and eligible entities.

Who's affected

Investors in manufacturing, industry park development, agriculture, logistics, construction, star-ranked hotels, motels, restaurants, lodges, railway infrastructure, ICT, tour operators, electricity generation/transmission/distribution, technical inspection/analysis, education/training, health services, architecture/engineering works, and mining operations. It also affects public bodies and civil society organizations involved in development projects.

Action required

Businesses and organizations seeking duty-free vehicle imports must review the directive to understand eligibility criteria, specific vehicle types and quantities allowed for their sector, and gather the required documentation for application.

Key points

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  • The directive defines various types of vehicles and eligible investment sectors.
  • Specific quantities and types of vehicles are permitted for duty-free import based on the sector and investment details.
  • Comprehensive documentation is required to apply for duty-free vehicle importation.
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    • Misuse of duty-free vehicles will result in penalties and payment of applicable duties and taxes.
    • Previously issued directives concerning duty-free vehicle importation are repealed, with certain transitional provisions.

Requirements

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  • Acquisition of land or legally executed lease agreement for leased factory buildings or business premises.
  • Evidence from the relevant investment office showing project commencement (e.g., land preparation, infrastructure).
  • Bill of lading, airway bill, truck way bill, and invoice for vehicles purchased from abroad, or purchase contract for local purchases.
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    • If vehicles are purchased using a bank loan, the loan agreement.
    • If purchased using own funds, a bank statement showing sufficient balance three months prior to application.
    • For manufacturing investors, evidence of starting test production after investment completion.
    • For agricultural investors, evidence of land acquisition, project commencement, and proof that developed land/livestock/beehives/ponds meet schedule requirements upon production commencement.
    • For construction investors, evidence of investment permit and purchased vehicles.
    • For hotel/motel/restaurant/lodge investors, evidence of investment permit, meeting Ministry of Tourism criteria, and building completion or lease agreement.
    • For ICT investors, evidence of investment permit and purchased vehicles.
    • For tourism service investors, tour operator license, evidence of new vehicles, undertaking to use for tour operations, and purchased vehicles.
    • For electricity investors, evidence of investment and purchased vehicles.
    • For logistics investors, license and purchased vehicles.
    • For education/health/architecture/engineering investors, license and purchased vehicles.
    • For transport of workers, evidence of land acquisition/lease, purchased vehicles, project commencement of production/service, and payroll with employment tax evidence.
    • For mining investors, copy of license, evidence of project implementation commencement, and purchased vehicles.
    • Public bodies must submit an application letter, budget, purchase documents, donation certificate (if applicable), and approved project document.
    • Civil Society Organizations must submit an agreement with a public body, project proposal, renewed registration certificate, purchase documents, donation certificate (if applicable), and a support letter from a supervising organ.

Rights and permissions

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  • Right to import specified types and quantities of vehicles duty-free under certain conditions.
  • Right to purchase domestically produced vehicles duty-free, with reimbursement of taxes and duties paid on inputs.
  • Investors expanding existing enterprises may import additional vehicles.
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    • Right to import special purpose vehicles (refrigerated, waste disposal, ambulances) under specific circumstances.
    • Public bodies and Civil Society Organizations have the right to import or purchase vehicles duty-free as specified in project documents.

Restrictions

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  • Vehicles imported duty-free shall not be used for purposes other than those for which the exemption was granted.
  • Double cabin and station wagon vehicles are excluded from duty-free importation under this directive.
  • Tour operators shall not rent or use duty-free vehicles for purposes other than tour operations.
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    • A mark prescribed by the Ministry of Tourism shall be affixed on vehicles imported duty-free for tour operators.
    • Transfer of duty-free vehicles by Civil Society Organizations is subject to specific procedures and approvals.
    • Reconnaissance license or artisanal mining license holders are not entitled to import vehicles duty-free.
    • Provisions of this directive inconsistent with existing directives or customary practices are not applicable.

Penalties

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  • Liability to pay duties and taxes on vehicles used for purposes other than those for which the exemption was granted.
  • Penalties under the Customs laws in addition to paying duties and taxes for misuse of duty-free vehicles.
  • Agricultural investors failing to submit required evidence or whose volume is less than required will be liable to pay taxes and duties on imported vehicles.

Objectives

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  • To provide for the type and quantity of vehicles allowed to be imported duty-free for development projects.
  • To regulate duty-free importation of vehicles for specific investment sectors, mining operations, public bodies, and civil society organizations.
  • To ensure that duty-free vehicles are used for their intended purposes and that compliance is maintained.

Organizations

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  • Ministry of Finance
  • Ethiopian Investment Board
  • Ministry of Mines and Energy
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    • Ministry of Tourism
    • Customs Commission
    • Authority for Civil Societies Organizations
    • Relevant investment offices (regional and federal)
    • Appropriate licensing authorities

Legal references

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  • Article 129 of the Customs Proclamation No. 859/2014 (as amended)
  • Article 13 of the Council of Ministers Investment Incentives Regulation No 517/2022
  • Article 15 of this Directive
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    • Industry Park Proclamation No. 886/2015
    • Mining and Geothermal Resource Development Proclamation
    • Organizations of Civil Societies Proclamation No. 1113/2019
    • Investment Proclamation No. 1180/2020
    • Customs Regulations No. 89/1995
    • Directive No. 4/2012 on Granting of Duty-Free Privilege for Importation of Vehicles (repealed)
    • Directive No. 4/2009 on granting of duty-free privilege for importation of vehicles (repealed)
    • Directive No.79/2003 to provide Duty and Tax Exemption for Goods imported by Public Bodies and Civil Society Organizations (partially not applicable)
Original sourcehttps://justice.gov.et/en/directives/a-directive-to-provide-for-the-type-and-quantity-of-vehicles-allowed-to-be-imported-duty-free-for-development-projects-directive-no-942-2023/
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