1. Core Objective and Legal Basis
The primary goal of this directive is to encourage, coordinate, and expand investment in the tourism sector as part of the government’s broader economic strategy. It provides a structured framework for granting customs duty exemptions on capital goods to specific classes of tourist service providers. The directive is issued under the authority of Investment Proclamation No. 769/2004 and aligns with Regulation No. 270/2005, which governs investment incentives and areas reserved for domestic investors.
2. Scope of Eligibility
The directive specifically defines which entities qualify as “tourist service providers”:
- Qualifying Entities: Star-rated hotels (including resort hotels), motels, lodges, and restaurants.
- Exclusions: The incentives do not apply to pensions or any hotels, motels, lodges, or restaurants that fall below a one-star rating.
- Investment Type: Incentives are available for the establishment of new projects or the expansion and upgrading of existing ones.
3. Eligibility Criteria for Investors
To access the duty-free import privileges, a developer must meet the following thresholds:
- Minimum Investment: The investor must have a valid investment permit and invest at least $200,000 USD (or the equivalent in Ethiopian Birr).
- Employment: The project must employ at least 50 permanent workers.
- Duration: The right to import these goods duty-free extends for up to five years from the date the business license is issued.
4. Categories of Permitted Capital Goods
Article 4 of the directive provides an exhaustive list of capital goods that can be imported duty-free, categorized by functional area within the establishment:
- Reception and Guest Areas: Includes furniture, currency checking machines, passport scanners, luggage carts, and electronic door locks.
- Dining and Bar Facilities: Covers kitchen equipment, coffee machines, industrial mixers, wine coolers, and buffet displays.
- Guest Rooms and Bathrooms: Includes beds, mattresses, air conditioning units, mini-fridges, safes, and specialized bathroom fixtures like Jacuzzis.
- Housekeeping and Laundry: Permits industrial-grade washing machines, dryers, floor polishers, and cleaning carts.
- Kitchen and Food Preparation: Includes industrial stoves, ovens, meat grinders, ice cream machines, and specialized food processors.
- Specialized Services: Extends to gym equipment, sauna/steam bath units, swimming pool pumps, translation equipment for conference halls, and security systems (CCTV, metal detectors, fingerprint readers).
5. Determination of Quantity
The amount of equipment allowed is not unlimited and is determined based on the project’s scale and capacity:
- Room items are permitted based on the specific number of rooms in the approved project plan.
- Other facilities (like seating in a meeting hall) are determined by the establishment’s designed capacity to host guests.
6. Administrative and Procedural Requirements
Investors must submit several documents to the relevant authority to claim exemptions:
- Construction Progress: Proof of land acquisition or evidence that building construction is at least 80% complete.
- Implementation Status: Certification from federal or regional investment offices that the project is actively being implemented (e.g., infrastructure or warehouse construction).
- Financial and Purchase Proof: Valid purchase documents such as a Bill of Lading or Commercial Invoice, and proof of funding via bank loan agreements or bank statements.
- Regulatory Support: A mandatory support letter from the Ministry of Culture and Tourism confirming that the establishment meets or will meet the required star-rating standards.