Wha is New Under the Investment Incentives Regulation No. 586/2026

On 20 January 2026, the Council of Ministers approved a new legal framework governing investment incentive as part of broader reforms aimed at strengthening fiscal discipline, customs administration, and private sector development. The enactment of Investment Incentives Regulation No. 586/2026 repeals and replaces the prior regime under Investment Incentive Regulation No. 517/2022, marking a fundamental restructuring of Ethiopia’s tax and customs incentive architecture.

The Regulation introduces a performance-based incentive model that directly links tax and customs benefits to measurable economic contributions, including capital deployment, employment creation, technology transfer, export generation, and value addition. The most significant reform under the new Regulation is the shift from a broadly entitlement-oriented system to a conditional and contract-based regime. Incentives are no longer automatically secured upon sector qualification; rather, they are contingent upon demonstrable performance and subject to continuous oversight.

This approach reflects a policy objective of ensuring that tax expenditures translate into tangible economic outcomes while preserving fiscal sustainability.