+291
Eritrea
We have a team of experienced professionals dedicated to supporting all your business requirements—ensuring smooth operations and full regulatory compliance. This strong foundation enables you to confidently establish and grow your business in Eritrea with efficiency and assurance.
WHY ERITREA?
Eritrea, officially the State of Eritrea, is a country in the Horn of Africa region of East Africa. Its capital and largest city is Asmara. The country is bordered by Ethiopia to the south, Sudan to the west, and Djibouti to the southeast. The northeastern and eastern parts of Eritrea have an extensive coastline along the Red Sea. The country has a total area of approximately 117,600 km2 (45,406 sq mi), and includes the Dahlak Archipelago and several of the Hanish Islands.Contemporary Eritrea is a multi-ethnic country with nine recognized ethnic groups, each of which has a distinct language. The most widely spoken language is Tigrinya. The others are Tigre, Saho, Kunama, Nara, Afar, Beja, Bilen and Arabic. Tigrinya, Arabic and English serve as the three working languages. Most residents speak languages from the Afroasiatic family, either from the Ethiopian Semitic languages or Cushitic branches. In Eritrea, ethnic Tigrinyas make up about 50% of the population, with the Tigre people constituting around 30% of inhabitants. In addition, there are several Nilo-Saharan-speaking Nilotic ethnic groups.
In 2020, the IMF estimated Eritrea’s GDP at $2.1 billion, or $6.4 billion on a PPP basis.Between 2016 and 2019, Eritrea had a GDP growth between 7.6% and 10.2%, down from the peak at 30.9% in 2014. The country’s economy is expecting a steady growth in coming years.In 2021, mining and agriculture accounted for 20% of the GDP. As of 2020, remittances from abroad were estimated to account for 12% of GDP.The government has started a twenty-year tourism development plan entitled “the 2020 Eritrea Tourism Development Plan” to develop the country’s tourist industry, aiming to enhance the rich cultural and natural resources of the country. The country participates in many trade fairs to promote its tourist industry.
ADVANTAGES
Strategic Geographic Location:
Eritrea’s extensive coastline along the Red Sea provides a strategic position with access to international shipping routes and proximity to Middle Eastern and European markets, facilitating trade opportunities.
Abundant Natural Resources:
The country is rich in mineral deposits, including gold, copper, zinc, potash, and likely oil and gas reserves, offering high potential for returns in the mining and energy sectors.
Untapped Potential and First-Mover Advantage:
Many sectors such as agriculture, fisheries, tourism, and renewable energy are underdeveloped. This presents opportunities for early investors to play a key role in transforming these industries and establishing market dominance with less competition.
Government Incentives:
The government offers pro-investment policies, including up to 100% income tax exemptions for a period of up to three years for investments in priority sectors and customs duty exemptions on imported capital goods and machinery.
Access to Regional Markets:
Membership in the Common Market for Eastern and Southern Africa (COMESA) provides potential access to a large market of over 500 million people.
Emerging Workforce:
Eritrea has a young workforce with a growing level of technical skills, particularly in fields like engineering and mining services, which is supported by government investment in education.
Investment Protections:
Legal frameworks exist to ensure the protection and equal treatment of foreign investors, with guarantees against expropriation without fair compensation and the right to repatriate profits and capital.
TAX REGIME
Personal Income Tax:
Employment income tax is progressive, typically ranging from 2% to 30%, though some sources indicate lower 2-3% ranges for certain income brackets.
Corporate Income Tax (CIT):
Standard corporate tax rates are progressive, generally ranging between 25% and 35%, with special rates for mining activities. Corporate profits designated for reinvestment are taxed at a lower rate of 20%.
Sales Tax/VAT:
A sales tax is applied to goods and services, typically at 5% for items like dairy, petroleum, and pharmaceuticals, but can range from 5% to 12% for other goods and services.
Capital Gains Tax:
Taxes on profits from selling assets like real estate or investments can range from 0% to 30%. However, some sources suggest the rate may be 0% in specific contexts.
Rental Income Tax:
Tax on rental income ranges from 1% to 48%, according to older FAO documentation.
Diaspora Tax:
The Eritrean government mandates a 2% income tax on all Eritreans living abroad, a key feature of its revenue collection from citizens.
Loss Carry-forward:
Businesses may carry forward losses for three consecutive years.
ERITREA COMPANIES
Limited Liability Company (LLC/Private Limited Company):
The most popular structure, requiring at least one director and one shareholder, with a minimum capital requirement of US$1,500.
Public Limited Company (PLC/Share Company):
Suitable for investors intending to trade shares publicly, requiring higher capital, often around US$3,500.
Branch Office:
Foreign companies can set up branches to conduct operations, which must be registered with the Commercial Registry.
Sole Proprietorship:
A simple business structure owned by an individual.
Joint Venture:
Partnerships, sometimes involving government entities, notably in sectors like mining and construction (e.g., Bisha Mining Share Company).
RELATED BLOGS
Azerbaijan is a country located in the South Caucasus region of Eurasia. It is bordered by Russia to the north, Georgia to the northwest, Armenia to the west, Iran to the south, and the Caspian Sea to the east. The capital and largest city of Azerbaijan is Baku.
Author: Chandrawat & Partners
Topic: Doing Business in East Azerbaijan
Contact Us
Get in touch with the right people to get the right help in setting up your business in Eritrea.
enquiries@chandrawatpartners.com.