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Working with administrative authorities clarifying grey areas

Pursuant to the Federal Administrative Procedure Proclamation No. 1183/2020, administrative organs have the duty to provide information and clarification to the public on matters related to their mandate, functions, and activities. This Proclamation, a cornerstone legal reform, seeks to enhance the accountability and responsiveness of the Ethiopian administrative system, promoting the rule of law and good governance in the country.

In alignment with this legal framework, MTA strategically approached different Ministries, to seek clarifications and guide administrative decisions on different matters. This not only aligns with the spirit of the law but also optimally serves the interests of our clients. We are noting these developments here for others in the business community, especially foreign investors, to update themselves and benefit from clarifications described below as long as their transactions qualify.

1. Stamp Duty for Unsecured Loan Agreements

In a legal labyrinth, clarity is paramount. The recent explanatory note issued by the Ministry of Revenue on the Directive for Keeping of Books of Accounts for Tax Purposes stirred confusion, suggesting that stamp duty for loan agreements aligns with bonds, demanding 1% of the value. However, a closer look at the Stamp Duty Proclamation No. 110/1998 under Article 3 reveals a distinct classification. This provision provides the list of instruments chargeable with stamp duty and contracts and agreements are only chargeable with a flat rate of ETB 5. Security deeds and bonds are treated separately under sub-articles 6 and 3 and are chargeable at the rate of 1% of value.

However, it was not clear to determine whether loan agreements should be subject to a flat rate of birr 5 or should be regarded as a security deed or bond and subjected to 1% of the value. The ambiguity also influenced the practice, as applicants were required to pay 1% of the loan amount as stamp duty. We approached the Ministry of Finance seeking clarification on how unsecured loan agreements are classified under the Stamp Duty Proclamation.

Our position was that, without security, stamp duty for loan agreements should adhere to the flat rate of ETB 5 applicable for contracts and agreements. The Ministry of Finance concurred validating our understanding in its explanatory note dated November 13, 2023. According to the explanatory note, the Ministry made it clear that unsecured loan contracts will be subject to stamp duty at a flat rate of 5 birr. We have implemented this in our recent two major transactions.

2. Simplifying Merger Filings

Our second experience worth nothing here revolves around the requirement of merger filings with the Ministry of Trade and Regional Integration (MoTRI), where our client, in alignment with COMESA regulations, had already obtained approval from the COMESA Competition Commission (CCC). Previously, applicants for a merger approval had to pass through double filing procedures both at COMESA and MoTRI regarding share transfers occurring within COMESA’s jurisdiction. This was causing issues and slowed down the merger approval process. Facing a regulatory gray area, MTA took the initiative seeking clarity from MoTRI on a case where our client was planning a merger through share transfer falling under the jurisdiction of the COMESA region and having already secured CCC’s approval in accordance with COMESA Competition Regulations. We asked for an insight into whether separate approval from MoTRI is required.

MoTRI clarified that any businessperson proposing a merger, and which secured COMESA approval shall only notify the Ministry. A separate filing with MoTRI is not required. This response will be expected to resolve the challenges and help to expedite the merger approval process.

3. Exemptions for Cross Border Financing

In the ever-expanding landscape of international finance, certainty becomes the bedrock of successful deals. MTA's effort is worth nothing here, revolves around external loans from offshore financial institutions. A letter from the Ministry of Finance on October 29, 2004, was a beacon for investors, granting stamp duty exemptions for security deeds during their investment phase.

However, a critical question lingered: does this exemption extend to external loans obtained from financial institutions abroad? "Are investors recognized under the investment law, securing external loans for their initial investments from offshore financial institutions qualify for the stamp duty exemption?" Committed to dispelling ambiguity, MTA approached the Ministry of Finance to illuminate this nuanced landscape. The inquiry was sought to ensure that our clients' global financial undertakings are aligned with local exemptions.

The Ministry affirmed that, as long as all other requirements provided under the law are adhered to, the stamp duty exemption also applies for external loans secured from abroad.

The timely response from the relevant Ministries and their adherence to the Federal Administrative Procedure Proclamation is worth appreciation. At MTA, we always strive to provide clarity and certainty in collaboration with the relevant government offices and secure the best outcome for our clients.

MTA NEWS POST ON LINKEDIN OF 2023-2024

  • MTA to take part in the 11TH EAST AFRICA INTERNATIONAL ARBITRATION Conference (September 2024)

The theme of the conference to take place in Addis Ababa, Ethiopia venue at Sheraton Addis Hotel is “International Arbitration in Africa: Arbitrating in a New Age”. At this conference MTA will be represented by Haymanot Belay; a Principal Associate at MTA and Wossenyeleh Tigu; Attorney and Consultant at law. The conference will take place for two consecutive days from September 19 to 20, 2024. With extensive experience in high-stakes arbitration across Africa and beyond, MTA has been involved in significant cases at venues such as the PCA, ICC, and AACCSA Arbitration Institute, covering jurisdictions including South Africa, Switzerland, Netherlands and Ethiopia. At this conference, MTA looks forward to engaging with fellow professionals and upholding our activity in the field of international arbitration.

  • Recognition (March 2024)

Our Founder and Principal Attorney, Mesfin Tafesse has earned a well-deserved spot as a leading regional M&A practitioner on the prestigious Legal 500 M&A Power List -Africa!
This recognition is a testament to his track record of proven experience spanning over thirty years and dedication to excellence in the legal field. Join us in celebrating this remarkable achievement as we continue to excel in setting higher standards to offer the right solutions to clients' Legal needs and challenges.

  • Band 1 Law Firm for 13 Years in a Row (April 2024)

We are thrilled to announce that MTA has once again been recognized as a Band 1 Law Firm in Ethiopia by Chambers Global for an incredible 13 years in a row! The longest ranked law office in the country with consistency in quality and timeliness!


Chambers Global has hailed MTA as a pre-eminent Ethiopian law office and member of the African Legal Network, delivering a comprehensive corporate and commercial offering to clients. Our strengths, as highlighted by Chambers, lie in our ability to provide the standards and duty of care expected by global clients while adeptly navigating Ethiopia’s legal framework and regulatory commitment to delivering timely and high-quality responses to our clients’ needs. We also extend our heartfelt congratulations to our founder and Principal Attorney, Mesfin Tafesse for his exceptional achievement as Band 1 Lawyer for all these years. Mesfin’s expertise have been instrumental in assisting Ethiopian and overseas clients with a multitude of corporate issues.

As highlighted by Chambers Mesfin Tafesse is willing to go above and beyond to provide high-quality advice and facilitate creative models to ensure his clients are able to both pursue and achieve their commercial goals and business activity sustainably."

  • ETHIOPIAN CHRISTMSS CELEBRATION (February 2024)

Ethiopian Christmas celebration was a heartwarming experience for MTA this year. On the eve of the holiday, our team came together for a festive celebration, fostering comradeship among our staff. What made this season special was our subsequent visit to Tesfa Addis Parents Childhood Cancer Organization (TAPCCO). Our team is honored to share a meal with the children and their parents at the facility. We were deeply moved by the resilience and strength displayed by these families facing the challenges of childhood cancer. TAPCCO, a Non-Profit Organization founded in 2012, provides crucial support to children with cancer during treatment and throughout follow-up together with their families at their facility. They collaborate with Tikur Anbessa General Specialized Hospital and St. Paul Millennium Hospital in Addis Ababa to offer their support. This experience has inspired us to embrace the spirit of making a positive difference in the lives of others and made this holiday season at our office truly meaningful.

  • MTA Consistently Ranked as Tier 1 Law Firm by Legal 500

Throughout our journey for almost two decades, we have remained persistent in keeping our value of pursuing excellence to provide high-quality advice and innovative solutions to our clients. Our founder and Principal Attorney, Mesfin Tafesse, epitomizes our commitment to excellence, consistently going above and beyond to ensure that our clients receive legal services of the highest calibre. His deep familiarity with the many nuanced challenges that clients face and his dedication to explore creative models have earned him accolades from clients who recognize his unwavering commitment to their success. Furthermore, our Principal Associate, Haymanot Belay Zeleke, has been recognized as a rising star by Legal500 for the high-quality advice she provides and her extreme responsiveness.

 
As we reflect on our achievements, we are immensely honored and grateful of the trust and confidence that our clients and partners have placed in us over the years. Looking ahead, we remain committed to upholding the highest standards of excellence and justifying the trust through the quality of our work and the success of our clients.

  • MTA Recognized as loyal Gold Level Taxpayer (February 2024)

We are pleased to announce that Mesfin Tafesse and Associates Law Office has been recognized as loyal Gold Level taxpayer by the Ministry of Revenue. This recognition signifies our commitment to fulfilling our tax obligations with the accountability and transparency. It affirms our resolve to maintain the highest standards of integrity and fiscal responsibility. We express our gratitude to everyone who has contributed to this milestone and look forward to making a positive impact in every step we take.

  • ALN Ready Business Roadshow is Today (October 2024)

Ethiopia has succeeded in becoming one of the fastest-growing economies in the region. Its robust growth rate continues a sustained trend over the last decade, during which the nation's economy expanded at an average annual rate of nearly 10 percent, ranking among the highest globally. It is anticipated that comprehensive reforms, external debt treatment, resumption of external financing, and greater domestic stability will raise growth in the coming years.


At Ethiopia edition of the ALN Ready Business Roadshow, we explore the country's business opportunities focusing on key economic reforms shaping the country's economy.

Announcement of Topics at the ALN Ready Business Roadshow Ethiopia Edition

  • Exploring Business Opportunities in Ethiopia.
  • Government Support, Initiatives and Recent Reforms for Investors.
  • Developments in Ethiopia’s Capital Market.
  • Banking Sector and Financial Services Reforms.
  • Investing with Government Entities and EIH subsidiaries.
  • Ethiopia’s Role in Regional Integration and the AfCFTA.
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