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

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's latest report (2015/16) requested beneficial ownership data for selected companies. 40% (9) companies provided names of natural persons as beneficial owners the others (14) companies provided names of legal ownership. Other details such as level of ownership and nationalities of the owners were provided. 

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 90% 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. Per the 2015/16  EITI Report, more than half (52%) of Ethiopia's mineral production came from the ASM Sector. Ongoing exploration is taking place for oil and gas, although no commercially viable discoveries have yet been found.

The latest EITI disclosures show that total revenues received from the extractive sector amounted to ETB 1,701 million (USD 59 million) in 2015/16. Ethiopian Revenue and Customs Authority accounted for 78% of the total revenue stream generated by the sector, followed by Ministry of Mines Petroleum and Natural Gas and Ministry of Finance and Economic Cooperation, accounting respectively for 14% and 2% of total extractive industry revenues. Regional governments received 4% while 2 % went to social contributions. 

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.

The Petroleum Training Fund is a separate bank fund which is managed by MMPNG and aims to fund capacity building activities in the oil and gas sector. Training fees from oil and gas companies are paid directly to the Petroleum Training Fund account.

The mining and quarrying sector is still under-developed, contributing only 0.7% to GDP in the year 2015/16 from 1.2 in 2013/14. In accordance with the Strategic Assessment of the Minerals Sector commissioned by MMPNG and the World Bank in 2014, the aim of the Government of Ethiopia is to increase the minerals sector contribution to 10% of GDP by 2020. The oil and gas sector is still at the exploration phase in Ethiopia.

According to the EITI 2015/16 Report, there is limited data on how many people are employed by the extractive sector. Figures submitted from a few (6) major companies suggest that the mining sector provided employment of less than 4,000 in 2015/16. 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. There are no figures on how many people are employed by the oil and gas sector in the country, but from the few companies that reported there were 196 employees representing 5% of total employment.

Ethiopia was admitted as an EITI candidate in 2014. Ethiopia's first Validation against the Standard commenced on 1 April 2018. On 27 February 2019, Ethiopia was found to have made meaningful progress in implementing the EITI Standard.

Ethiopia's second Validation will commence on 27 August 2020.