1. Legislation charts the path towards new chambers for manufacturers

The government is set to introduce new legislation aimed at fostering the growth of the manufacturing sector. This legislation will facilitate the creation of dedicated chambers of commerce specifically for manufacturing industries. It will also establish clear criteria and requirements to support the expansion of these industries.

Under the proposed bill, chambers of manufacturing industries and sectoral associations can be formed at both district and city levels. This marks a significant departure from the traditional model, which combined trade businesses and manufacturing industries within a single chamber.

One of the notable features of the new legislation is the provision for manufacturing industries to ‘graduate’ in size annually, provided they meet certain criteria. For a small manufacturing industry to attain medium status, it must raise its capital to at least 10 million Birr, employ a minimum of 51 people, and hold at least 40% of its assets in permanent property.

This legislative move is expected to provide a structured pathway for the growth and development of the manufacturing sector, encouraging businesses to expand and contribute more significantly to the economy.

2. In the coming months, Ethiopia is expected to introduce legislative moves aimed at enhancing its legal framework. Those Frameworks are approved by Council of Ministers, these updates will likely focus on ensuring peace, security, and economic stability in the country.

• Amendment to Electoral Law: Allows registration of political groups operating outside the legal framework as legal political parties if they commit to peaceful operations.

• Property Return Proclamation: Provides a legal framework for the seizure, freezing, confiscation, or administration of properties and money obtained through crimes.

• Anti-Money Laundering Law: Aims to prevent and control money laundering and financing of terrorism, recognising them as security threats and economic destabilisers.

• Petroleum Trading Regulation: Aims to control supply, distribution, pricing, quality, and safety of petroleum products, establishing a modern and transparent supply chain.

3. Government Plans New Taxes to Boost Revenue by 16.8 million dollars

Ethiopia is scheduled to present its budget proposal for the fiscal year 2024/25 to lawmakers on June 11, 2024. The proposed budget is estimated to be 8 million dollars, with significant allocations planned for various sectors: capital expenditure, recurrent spending, subsidies for regional states, and Sustainable Development Goal projects.

To cover the additional 16.8 million dollars needed, the government plans to amend VAT and excise tax laws and introduce new taxes such as property and green levies.

The government aims to finance the budget primarily through tax revenue, targeting 8.7 million dollar. Non-tax revenue is expected to contribute 1.063 billion dollars, while 848.6 million dollars is anticipated from grants.

With a budget deficit of 6.209 billion dollars, the government plans to cover 90% through local borrowing and the remainder through external loans.

Tax revenue is expected to be the main income source, constituting 51.7% of the total budget for the fiscal year 2024/25.

4. Electronic signature proclamation

The E-signature Proclamation states that in any legal proceeding, neither an electronic message nor an electronic signature shall be denied legal effect, validity, or admissibility as evidence solely because it is in electronic form. The proclamation was adopted by the Council of Ministers and has been moved to the House of Representatives.

5. Council of Ministers approves property tax bill

The Council of Ministers unanimously approved a draft property tax bill on 14 June, 2024. The bill now heads to the House of Peoples’ Representatives for final endorsement.

According to the Office of the Prime Minister of Ethiopia, the new law aims to achieve two key goals: fairer wealth distribution in urban areas and increased government revenue for ongoing infrastructure improvements. The tax burden will rise in proportion to property value growth. If approved by legislators, the law will apply nationwide. Regional states and city municipalities will have the authority to issue specific implementation directives.

6. The Council Of Ministers Approved The Draft NBE Proclamation And Banking Business Proclamation 

The Council of Ministers today approved the draft NBE Proclamation and Banking Business Proclamation, which will soon be referred to the House of Peoples Representatives for review, comment, and final ratification. These legislations represent a significant step in enhancing the credibility, accountability, transparency, and governance of the National Bank of Ethiopia (NBE).

The NBE has prepared these proclamations considering current and future development levels, policy directions, rapid technological advancements, international principles, and best practices of peer central banks. These proclamations are part of the NBE reform agenda as outlined in the Bank’s strategic plan.

The NBE looks forward to the review of these draft legislations by the members of the House of Peoples Representatives.

7. Council Of Ministers Passes Decisions On CBE reform and capital raise :- CBE reform and capital raise
   

Council deliberated on the reform and capital enhancement plan of the Commercial Bank of Ethiopia (CBE), which includes enhancing the bank’s administrative efficiency, making the financial statements sound and acceptable, and improving the government’s financial provision to help increase the bank’s capital.

After extensive deliberation, the Council unanimously approved CBE’s reform plan to be implemented and take effect since its date of approval.

8. The Council discussed Environment and Social Protection Proclamation

The Council discussed a bill pertaining to environmental and social impact assessment of development projects, which stipulates the activities that must be implemented to avoid or reduce negative effects by predicting the effects before implementation of development projects.

After extensive discussion on the above five draft bills, the Council unanimously decided to forward to the House of People’s Representatives for further consideration and endorsement.

9. The Council of Ministers approved the draft VAT proclamation and passed it to HPR for ratification.

A draft proclamation to replace the two-decade-old legislation maintains the 15% VAT rate on taxable goods and services. The government is considering tax reform to broaden the tax base and increase tax revenue. The draft proclamation states that the VAT on taxable goods and services and imports will be 15% unless they are zero-rated. Since the implementation of VAT in Ethiopia’s tax system 20 years ago, this has been the percentile that has been in use. The tax base, on the other hand, is expanded as the government adds new categories of businesses to the list of those that pay VAT. E-commerce, fees on public services, private transportation, and other sectors are added to the VAT tax base.