Although there are many kinds of businesses in Ethiopia, the following are the most common types of businesses, a PLC being the most dominant.
Sole Proprietor: a business which is owned by one person.
- It's advantageous because it is easy to start and easy to close.
- The annual income tax for this kind of business ranges from 10% - 35% depending on the taxable revenue.
Private Limited Company (PLC): The most common type of business which can be formed by a minimum of 2 and a maximum of 50 people.
- It is advantageous because you can run the company in an organized manner. But closing the company is not an easy task; it will take quite some time.
- The annual income tax for this kind of business is 30% from the company and 10% from the dividend, which makes it a total of 37%.
Share Company: Requires a minimum of 5 people and an initial capital of at least 50,000 birr.
- The annual income tax for this kind of business is the same as a private limited company.