Ethiopia Cuts Textile, Garment Import Duties

by Lorys Charalambous, Tax-News.com, Cyprus

03 January 2013

To help the country’s textile and garment industry, Ethiopia’s Ministry of Finance and Economic Development (MOFED) has announced that reductions have been made to the duties on its imported materials and spare parts.

From December 28, 2012, garment manufacturers will benefit from a duty on imported textiles that has been cut from 35% to 20%, while the duty on spare parts imported for businesses in the textile sector has been eliminated, as long as they cannot be produced locally.

However, MOFED has decided not to cancel completely the 10% excise duty charged on garment production in the country. That duty will, instead, be levied as a sales tax, when garments are distributed internally.

While the local industry welcomed the tax reductions, it had been hoping for a larger cut in import duties, which, it said, negatively affect the industry’s competitiveness in comparison with other African countries. It is hoped that the government’s loss in tax revenue from the reduced duties will be more than made up by additional corporate income tax receipts.

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