Customs duties, tariffs, and taxes are governed by a multitude of laws within Ethiopia’s existing legal framework, including national legislation and international bilateral treaties to which Ethiopia is a party.
To this aim, Ethiopia’s customs duty, tariff, and tax regulations are laid out in the Customs Proclamation No. 859/2014 (hence, “the proclamation”). Following the proclamation, some of the key issues relating to customs charges and taxes are discussed below. (Although briefly, other pertinent legislation will also be covered.)
Unless specifically specified by law or decided by the Ministry of Revenue, tariffs and taxes must be paid for all imported and exported products under the present Ethiopian legal system. According to Article 110 of the Proclamation, a declarant is responsible for paying all duties, taxes, penalties, and interest that are levied on the items. If a customs clearing agent makes a mistake that results in unpaid duties and taxes, they are jointly and severally accountable to the declarant for the payment of the unpaid duties and taxes, as well as any fines or interest incurred as a result of the mistake.
Taxes and customs fees
- Deadlines for assessing and paying customs duties and taxes (article 111 of the proclamation)
Unless specifically stated otherwise, the law in effect on the date of acceptance of the goods declaration or the date of rectification under Article 93 of the Proclamation is used to determine the duties and taxes that apply to imports and exports of goods (deductive value method). When it is impossible to pinpoint the date of submission or acceptance of the goods declaration, the duties and taxes are calculated by the legislation in effect on the Authority’s chosen date.
However, be aware that, under existing law, duty and tax payments must be completed before submitting a declaration following the Customs Regulation (ERCA, Ethiopian Customs Guide, March 2017, retrieved from www.erca.gov.et).
- Customs duty and tariff rates
At the rates outlined in the Customs Tariff Regulation, duties are paid on products brought into the customs territory. As a result, there are six duty tax rates (0%, 5%, 10%, 20%, 30%, and 35%) that depend on the type of imported commodity that is being taxed. The desire to encourage the importation of some items by imposing a 0% tax rate while at the same time discouraging the importation of some commodities by applying a higher tax rate is the driving force behind the difference in duty tax rates.
To figure out the applicable tax rates, there are two schedules. The first schedule includes imports of goods for general use as well as raw materials and semi-finished products. Noting that the imported article improves domestic manufacturing or is for public use, such as ambulances, the tax rate for this category is lower. Therefore, although it may go up to 10%, raw materials and producer items are largely tax-free, and the tax rates for semi-finished goods are 10% and 20%. On the other hand, consumer or completed items imported for non-commercial use or personal consumption are listed in the second schedule. Typically, higher duty tax rates only apply to consumer products like cars for personal use.
Determination of Dutiable Value
According to Article 89 of the Proclamation,
- The real total cost of the items up to the first entry point into Ethiopia’s customs area is the dutiable value for imported commodities; and
- The actual complete cost of the items up to the time of final withdrawal from Ethiopian customs territory constitutes the dutiable value for export commodities.
The entire cost in both cases refers to the price of the item as well as any applicable insurance, freight, and other fees. Because of this, the Customs Commission (formerly ERCA) typically levies customs duty and tax as a percentage of the duty-paying value of goods, which is the total sums paid for goods that are imported or exported up until the point of entry into or exit from the customs territory, i.e. the cost of the good, insurance, freight, and other charges.
Customs valuation is a crucial process that establishes the worth of an imported commodity to calculate the appropriate import charge.
