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 (2017) requested beneficial ownership data for selected companies. Not all companies provided provided names of natural persons as beneficial owners although other details such as level of ownership and nationalities of the owners were provided. The benecifical ownership data was requested from 7 companies.

Ethiopia EITI plans to organize, among other things, a workshop for relevant Government and non-Government entities on beneficial 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 83% 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. According to the 2017 EITI Report, more than half (59%) of Ethiopia's gold 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 2,244 million (USD 64 million) in 2016/17. Ethiopian Revenue and Customs Authority accounted for 86% of the total revenue stream generated by the sector, followed  by the Ministry of Mines and Petroleum (MoMP) accounting for 9%. Regional governments received 4% while 1 % went to social contributions. 

State governments receive their shares of royalties, and collect and manage 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 Ministry of Mines and Petroleum 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 0.3% to GDP  and 0.9% to governemnt revenues in the year 2016/17. The oil and gas sector is still at the exploration phase in Ethiopia.

According to the EITI 2016/17 Report, there is limited data on how many people are employed by the extractive sector. Figures submitted from a few major companies suggest that the mining sector provided employment of less than 4,000 in 2016/17. The scope of people dependent on the mining sector is however much larger if one also considers artisanal and small-scale mining. It is estimated that 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 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 1 January 2022.