Tax

The three main taxes and fees imposed on companies operating in the mining sector include income tax schedule C (mining), customs duties and signature bonuses. The Ethiopian Revenues and Customs Authority (ERCA) is the main body responsible for collecting and managing taxes paid to the central government. The Ministry of Mines levies sector-specific fees while state governments collect their shares of royalties, excise tax and various other fees directly. No petroleum or mining contract has been disclosed.

Licenses

Oil and gas licenses are awarded on the basis of competitive tender, while mining licenses are awarded on a ‘first come first served’ basis.

Objectives of beneficial ownership transparency in Ethiopia

• To foster transparency and accountability in the extractive sector;
• To deter corruption, prevent collusion between companies and Government;
• To reduce tax evasion by operating companies; and
• To promote the economic benefit gained from the nation’s natural resources.

Progress on implementing beneficial ownership disclosure

For their first report (2014), Ethiopia EITI requested beneficial ownership data for companies selected in the scope (unless publicly listed or wholly owned subsidiaries). Of the 35 reporting companies, 26 provided details on legal ownership. Due to the significance of the small-scale mining sector in Ethiopia, coverage of the companies with exploration licenses and small scale mining license holders will be one of the main challenges. A 2017 scoping study suggests a high level of enthusiasm among Ethiopian stakeholders on beneficial ownership. The main challenge will be to combine a significant awareness and training programme with work to build new systems and processes to collect and share the beneficial ownership information.

Ethiopia EITI plans to organize, among other things, a workshop for relevant Government and non-Government entities on BO disclosure. Read Ethiopia's beneficial ownership roadmap below for more information.

Ethiopia is a leading producer of mineral commodities such as gold, which accounts for over 80% of output, but also produces limestone, salt, pumice and tantalum. There is also significant informal production, with around 350,000 artisanal gold miners estimated to support a population of up to five to seven million. Ongoing exploration is taking place for oil and gas, although no commercially viable discoveries have yet been found.

The latest EITI disclosures (2014) show that Ethiopia received USD 148 million from extractive industry taxation. Two fifths of these revenues came from gold production and another two fifths from cement manufacturing. Hydrocarbons accounted for only around 9% of total revenues. Revenues were mainly collected through income tax schedule C (mining) (33%), customs duties (7%) and signature bonuses (7%).

State governments collect and manage their shares of royalties, excise tax, land rentals, license fees and ‘Pay As You Earn” personal income tax in addition to their budget allocations from the Ministry of Finance.

Although Ethiopia has a history of mining, the sector is still small in terms of contribution to the sector, although mining contributes to 14% of total export values.

According to the EITI 2013-14 Report, there are no figures available on how many people are employed by the mining sector, though figures submitted by the companies suggest that at least 10,550 (or 2% of the total employed population) formally work in the sector. The scope of people dependent on the mining sector is however much larger if one also considers artisanal and small-scale mining. Between 300,000 and 350,000 people are engaged in artisanal and small-scale gold mining, while five to seven million people are believed to depend on mining for their livelihood.

Ethiopia's Validation against the Standard will commence on 1 April 2018. The country was admitted as EITI candidate in 2014.