Who examine the goods?

Transcription

1 IMPORTER How can I Declare goods? Who examine the goods? When do I Release the Goods? EXPORTER 1

2 Table of Content 1. Introduction a. What importing mean? b. What is export? c. What custom refers? 2. Custom a. custom regulation b. custom procedures i. export procedures ii. import procedures 3. Taxation a. introduction i. definition ii. types of tax b. HS c. Tariff calculation 4. Annex 5. Reference 2

3 1. Introduction a. What importing mean? Importing is the process of bring in foreign goods or service for different purposes. Depend on the reason why the good or service are tend to bring, importing can be classified. Type of Import 1. Entry for home use: as the name explained the importing focused on home use goods or services. 2. Temporary Importation: Goods provide for re-exporting, goods necessary for trade promotion, technology transfer, tourism and cultural exchange, development works and consultancy service may temporarily be imported, and for other reasons 3. Re-Importation: importing from direct export or Temporary Export for return in an unaltered state or and likes 4. Entry for Warehousing(suspense): goods imported for suspension purpose of goods in warehouse and for other reasons 5. Import Transit: are goods imported for other country but they transited here and will export or transfer to the distinct place. 6. Other Imports b. What is export? Exporting is nothing but sell or send goods or service to other country. According to the reason that the goods or service exported, exporting can classify as follows: Type of Export 1. Direct Exportation : selling or sending goods after home entry or finishing good which are made in land and others 2. Temporary Export :capital goods of NGO or donation for the sender country institution and others 3. Re- Export :re-export after temporary import or others 4. Transit to Export: goods in outward transit 5. Other Export 3

4 c. What custom refers? Custom is a duty for import or export goods or service. Except legal exemption for custom all import and export type of goods or and service are favor to pay duty as tariff schedules. It is the legal obligation and responsibility. Custom in Ethiopia are declared as model or type of import or export. All the above imports and exports are charged for duty, which mean they are declared to be costumed. Custom has its own procedures and the procedures are treated separately for each type of import and export in their procedure codes (CPC). But there is also extended procedure code (EPC) and additional procedure code (APC). 2. Customs in Ethiopia a. custom regulation Those who engage in the import and export business in Ethiopia have to know the customs regulation in Ethiopia. We have compiled the existing regulations regarding customs and transit in Ethiopia from the various proclamations, regulations and their amendments on Customs in Ethiopia. One may visit the Ethiopian Revenue and Customs Authority Website: 1. Customs Authority The Ethiopian Customs Authority (now reorganized as The Ethiopian Revenues and Customs Authority Proclamation No. 587/2008 or 587/2000 EC) is a Federal Government Organ with its own juridical personality and enforces customs laws. Its head office is in Addis Ababa, located very near to the Addis Ababa Stadium. 2. Customs Control 2.1. Import and Export For the implementation of the objectives of customs, the following goods shall be under the supervision and control of customs: Imported goods from the time they get at Customs port until the completion of customs formalities and received by the importer; goods under drawback procedure from the time of draw back claim until exportation; 4

5 goods, entered into customs warehouse until removed from the warehouse; goods of export from the time they entered in to customs port until the completion of customs formalities and be exported; goods in transit, from the time their movement is allowed until the completion of transit procedure; Goods found without owner, abandoned, forfeited or contraband goods until they are sold or disposed otherwise. The Authority shall be responsible for the damage on goods under its control and supervision caused by its employees while discharging their official duties Postal consignment Goods imported or exported through post office shall not be released without accomplishing customs formalities. The goods imported or exported through post office shall accomplish customs formalities under the control and supervision of customs officer Prohibited Goods Any goods the importation, exportation or transit is prohibited by laws or international agreements to which Ethiopia is a party shall be seized and legal action shall be taken in accordance with this Proclamation and other relevant laws Restricted Goods Goods, the importation or exportation of which is restricted by law, unless they fulfilled specific formalities or conditions, shall be detained in customs port until a decision is passed upon. Goods detained shall be barred of departing from Ethiopia or shall be re-exported to the country from which it is imported, unless permission is given to it, within 30 days, by the office controlling its importation or exportation. Where restricted goods are not re-exported within 30 days from the date of notification it shall be considered as abandoned to the customs. 3. Means of Transport 3.1. Obligations of the Master of Means of Transport Any master of the means of transport engaged in the importation or exportation of goods shall: 5

6 arrive or depart the means of transport, load or unload goods, embark or disembark passengers only at customs port; In case of force major, he may land or stop the means of transport in any place other than a customs port; provided, however, the master of the means of transport shall immediately report the incident to the nearest customs and administration office of the region; submit documents, to the appropriate customs officer, to the effect that the means of transport is duly licensed to transport cargo's or passengers; Submit a manifest that show the list of goods loaded, discharged, stay on board or continue in transit, and a manifest that shows the name of persons to be embarked, disembarked, stay on board or continue in transit to a proper customs officer within 24 hours after the arrival or before departure of the means of transport; refrain from embarking or disembarking passengers; or loading or unloading goods unless authorized by the Authority and in the absence of Customs officer; never allow any unauthorized person to reach about or enter into the means of transport; report to the customs and discharge the cargo for customs control, where the time for departure of the means of transport is cancelled or delayed for more than 24 hours, after it is authorized to move; Not attach, connect or prepare any additional room, which serves as a hiding place for contraband goods, on the external or internal part of the means of transport Goods Declaration The master of the means of transport shall provide information regarding the loaded goods, identifying its purpose either for home consumption, warehousing, temporary admission, transiting or Transshipment and deliver it to customs warehouse or shall accomplish the necessary transit customs formalities. Goods without declaration shall be presumed to have been imported for home consumption and therefore, enter into a register accordingly. Goods requiring passing quarantine examination shall, as soon as they are discharged from the means of transport, be stored in a separate zone until the accomplishment of quarantine examination. Inflammable or dangerous goods shall be notified by the master of the means of transport before they are discharged so that the goods be stored in a separate warehouse or be removed urgently form the port. 6

7 Where incomplete or erroneous goods declaration is presented to customs and if ascertained that it is due to inadvertent error, amendment shall be allowed by furnishing supplementary report Goods for Consumption and for sale on Board The following goods shall enter into the means of transport without duty and taxes. Where the customs officers are satisfied that the goods are intended for consumption or sale on board during the voyage; fuel, lubricants, spare parts and other goods necessary from the operation of the means of transport; food staff, drinks, and articles for gift and sales to passengers and employees on board of the means of transport; The master of the means of transport who received the goods specified in list no. 1 above shall present a declaration to the customs officer, about the goods consumed, sold, disposed and remained on board upon return to the initial loading customs port. Goods not declared by the master of the means of transport shall be deemed consumed locally and be subject to the duties and taxes left unpaid. 4. Goods in Transit 4.1. Condition for the Movement of Goods in transit Any goods in transit shall: Accomplish transit formalities at the customs port of departure before the commencement of transit operation. The details shall be specified in directives issued by the Authority; start the operation under the cover of guarantee prescribed by the Authority; Move only by a clearing agent licensed by the Authority Arrival of Transit Goods All transit goods shall arrive at the port of customs destination in the condition prescribed and within the period specified by the customs Customs Port and Transit Routes Goods in Transit shall be imported in prescribed customs ports and be transported through allowed transit routes. 7

8 Customs ports and transit routes shall be determined by the Board and prescribed in public notice issued by the Board. 5. Temporary Import of Goods Goods necessary for trade promotion, technology transfer, tourism and cultural exchange, development works and consultancy service may temporarily be imported without payment of duties and taxes subject to be re-exported on the completion of its objectives. A person who imports goods temporarily, without payment of duties and taxes shall submit security equivalent to the duties and taxes in accordance with the provisions of chapter 7 of the Proclamation. It is prohibited to use goods imported on temporary basis other than the purposes for which they are imported or to use out of the localities where the activities are carried out. 5.1 Temporary Import: time Limit Temporarily imported goods shall be re-exported within six months or within the time specified in the project agreement or in agreement entered with the Government. The Authority may extend the time limit for a period of not more than one month where the importer proves on acceptable ground that the goods imported temporarily cannot be re-exported within the time specified in list no. 1 above. Goods for trade promotion, technology transfer, tourism and cultural exchange may, upon request, be sold or remain within the country upon payment of taxes and duties based on their value at the time of request, where the request is made within the period prescribed for their stay and authorized by appropriate offices to remain in the country. Goods for development work and consultancy services may remain within the country upon payment of taxes and duties based on their value at the time when the goods are imported; where it is requested within the period prescribed and authorized by appropriate offices to remain in the country. Where temporarily imported goods, are destroyed or irrecoverably lost by force major and where it is proved with sufficient evidence, the goods may remain in the country upon payment of duties and taxes based on the value of goods less the amount of damage. 6. Temporary Export of Goods 8

9 Goods exported temporarily by accomplishing customs formalities may be allowed to reenter into the country without payment of duties and taxes, on the following conditions; imported goods sent abroad for repair and maintenance without repayment of duties and taxes; temporarily imported goods sent abroad for repair and maintenance without cancellation of the guarantee given at the time of their importation; personal effects, automobiles for personal use, machinery and other equipment necessary for his work abroad; Goods exported for trade fair, exhibition or cultural show. Goods may be eligible for exemption from duties only if returned from abroad within six months, unless a greater period is specified in the agreement approved by the government. b. custom procedures Declaration, Examination and Release of Goods: 1. Lodgment of Customs Declaration Except exempted by directives all goods entered shall forthwith lodged for clearance in aspect copies of customs declaration. Goods exempted from clearance shall be determined by directives issued by the Customs Board Where customs clearing agent applies for hold function and fulfils supporting documents pre lodgment of customs declaration may be allowed for and five days before the arrival of the goods at customs port. However, if the goods do not arrive within the five days, a new declaration shall be lodged at the time of arrival of the goods. The Authority may allow goods to be cleared urgently due to their nature or the reason they are required for. The details and the reasons that justify this procedure shall be prescribed in the directives issued by the authority. All information supplied in the customs declaration shall be filled and signed by the customs clearing agent. Any imported goods registered for home consumption shall be identified and declared in Customs declaration. Goods entered for an outright exports or temporary export shall be declared in Customs declaration. Customs declaration accepted by the entry reception shall immediately be registered for the accomplishment of customs formalities. 9

10 Customs declaration may be lodged orally, by bodily action or electronically. The ministry may issue directives as to the goods and conditions of lodging Customs declaration orally, by bodily action or electronically. 2. Supporting Documents of Customs Declaration On the lodgment of customs declaration and declaration of facts the following original documents in support shall be supplied to customs in a number of copies fixed by the Authority: Transportation document Price document (commercial invoice) Bank permit Packing list Certificate of origin, and Other necessary documents to be prescribed in the directives issued by the Authority Transportation document that is required in support of export goods shall be a document that is used as evidence for the transpiration of goods up to the customs port of exit. The Authority may require any document to be presented in an Amharic translation made by official translators. Customs declaration shall be acceptable where the necessary documents which are prescribed under this Article are presented and approved by the customs officer. 3. Verification of Documents and Examination of Goods The proper customs officer shall verify documents and examine goods to assure the accuracy of information supplied in the document. The owner of the goods or his authorized agent shall attend during examination of the goods. Where the owner or his agent fails to appear at the time of examination, the proper Customs Officer shall open and examine the goods in the presence of relevant officials. Procedure of goods examination shall be prescribed by directives issued by the Authority. 4. Examination at the request of Importer 10

11 If any importer or his agent believes that the goods have suffered damage, short or pilfered in route may request for prior examination of the goods before the lodgment of goods declaration. Where the request made & its reason are justified by the Authority; goods examination may be carried out upon payment of service charge. Customs declaration shall, therefore, be filled in accordance with the examination report. Service charges for prior examination of goods shall be prescribed by directives issued by the Authority 5. Delivery of Goods All goods listed in customs declaration shall be removed from the warehouse by the owner or his agent immediately upon the accomplishment of customs formalities. Goods which are not removed from the warehouse with in the period shall be sold or disposed otherwise as deemed abandoned to the customs. N: B anybody can get the information on how to fill custom declaration on i. export procedures Once an exporting company is legally established, the various procedures that it regularly needs to follow in order to make exports are the following. Order Acknowledgement to the Buyer this involves the production of internal instructions by the exporter on the works, production and preparation of the goods for export order. Finalization of Export Contract Finalize the export contract stipulating the method of payment for the export consignment, and submit a copy to the respective Commercial Bank by any of such methods as hand delivery, fax, telex or post. Commercial Banks require six copies of letter of credit, and five copies of advance payment, cash against documents, and consignment note each. Application to Export Register the export order with a Commercial Bank who will in turn issue the export permit for the particular consignment. All sorts of exports except coffee have to be registered with any of the Commercial Banks, only the registration for coffee remains at the National Bank of Ethiopia. 11

12 Registration of Export Consignment Fill in the Customs Declaration Annex form issued by the Commercial Bank and submit to the International/Foreign Business Department of the Bank. Application for Quality Testing and Certification When export products are ready, make arrangements for suitable packaging and apply to the Quality and Standards Authority of Ethiopia for quality testing, and acquire the Export Authorization Certificate. Compliance with Movement Requirements Compliance with Rules of Origin Fill in the certificate of origin issued by the Ethiopian or the Dire Dawa Chambers of Commerce in order to qualify under the preferential tariff treatments. Compliance with Tariff Schemes Fill in the special movement forms or certificates issued by the Customs Authority. Currently, the special movement certificates include the EURI movement certificate that is required by the European Union Countries, and the form A for the Generalized System of Preferences-GSP Form A required by its member countries. Insurance of Export Cargo insure the export cargo and acquire the insurance certificate or policy document issued by an insurance company. Customs Declaration to avoid costly delays, the exporter declares all facts about the export consignment, and all supporting original documents should be forwarded to the Customs Clearing Agents to enable customs formalities and authorization of the dispatch of the export goods. Accordingly, the exporter must hand over the Export Permit, the copy of the Customs Declaration Annex form, the Ethiopian Customs Declaration form, the Certificate of Origin, and the special movement forms/certificates (the EURI Movement Certificate and the GSP form A) to the clearing agents. Movement of Export Cargo To facilitate the movement of goods, transport documents should be acquired from the respective carrier. Although the type of transport documents depends on the mode of transport, the documents should be completed and signed by the carrier or its representatives. 12

13 ii. import procedures The procedure for importing is more similar with the export procedure discussed above. But let as explain the free, prohibited and restricted goods for importing. Free import 200 Cigarettes 50 cigars 1/2 LB of tobacco 1 l of alcoholic beverages Two bottles of perfume Prohibited Illegal drugs Pornographic material Explosives, weapons and ammunition Restricted All electronic items including DVD Players, recorders, computers and cell phones must be declared upon entering and leaving the country. Dogs and other animals will require a veterinarian good health certificate before being allowed entry into the country. Visitors to Ethiopia must complete a customs declaration form if bringing in large sums of cash. Travelers departing Ethiopia in possession of more than $3000 or equivalent in foreign currency must present a bank advice notice to customs officials if the currency was purchased from a local bank. 3. Taxation in Ethiopia a. Introduction It's imperative that one knows the existing tax regulations in Ethiopia when one plans to start business in the country and while doing business in Ethiopia. What types of taxes are there in Ethiopia? What are the tax rates in Ethiopia? What are the tax exemptions in Ethiopia (if applicable)? How are taxes filed in Ethiopia? These are important questions and have provided information below. 13

14 i. Definition Taxes are important sources of public revenue. The existence of collective consumption of goods and services necessitates putting some of our income into government hands. Such public goods like roads, power, municipal services, and other public infrastructures have favorable results on many families, business enterprises, industries and the general public. Public goods are normally supplied by public agencies due to their natures of non-rivalry and non-excludability. The nature of consumption of public goods is such that consumption by one does not reduce consumption for others. Besides, consumption of public goods by an agent does not exclude others from doing same. Such nature of public goods therefore makes them impossible for private suppliers to avail them at market prices like other commodities. Government intervention in the supply of public goods is therefore inevitable and can only be done if the public pays taxes for the production and supply of such goods. ii. types of tax The principal types of taxes are profit tax on business (both incorporated and un-incorporated), sales tax, excise tax, customs duties, income tax from employment. There are also other types of taxes such as income tax from dividend, royalties and stamp duties. Corporate Income Tax The corporate income tax in Ethiopia is 35 percent. Sales and Excise Taxes Sales and excise tax Proclamation No. 68/1993 sets a legal basis for imposition of sales and excise taxes on goods produced locally; goods imported from abroad; and Services rendered locally. Sales Tax Rates The rate of sales tax is 4 percent for selected list of agricultural and essential goods such as live animals and products vegetables and fruits and unprocessed cereals food, pharmaceuticals, books and printed materials, hides and skins, and cotton when either produced locally or imported while it is 12 percent for all other products. Sales tax is paid by the producer, importer or the person rendering services as the case may be. Excise tax Excise tax is levied on selected items when produced locally or imported from abroad. The tax 14

15 rate ranges from 10 in the case of textile and television broadcasting receiver to 200 percent in case of all types of alcohol. Excise tax is payable on: a) goods produced locally by the producer within a period of 3 days from the date of production; b) goods imported from abroad by the importer at the time of clearing the goods from the customs area. Income Tax from Employment Personal income tax is payable as per Proc. No. 107/1994. According to the said law, the first one hundred twenty Birr /120 Birr/ monthly personal income is exempted from payment of income tax. For monthly income of Birr 121 and above the marginal tax rates range from 10 percent to 50 percent with 6 income brackets as shown hereunder. Export Taxes There are no taxes on export products and services from Ethiopia except on coffee. Dividend Income Dividends distributed to share holders are taxable at the rate of 10 percent withholding tax. Tax Treaties Ethiopia has concluded tax treaties with a number of countries and is also ready to conclude similar treaties with other developed and developing countries for the purpose of avoidance of double taxation. Types of Taxes in Ethiopia and their rate in percentage: Direct Taxes 15

16 1. Personal Income Tax: progressive and ranges from 10% to 35%. 2. Rental tax: progressive for persons and ranges from 10% to 35% and 30% flat rate on bodies. 3. Business Profit Tax: progressive for unincorporated businesses and ranges from 10% to 35% and 30% flat rate on incorporated businesses (eg. PLC, Share Company). 4. Withholding Tax: On imported goods at 3% of the sum of cost, insurance and freight (CIF). On payments made to taxpayers at 2% on cost of supply goods involving more than Birr 10,000 in any one transaction or contract and services involving more than Birr 500 in one transaction or service. 5. Other Taxes (Taxes from Royalties, Income from Rendering Technical service, Income from Games of chance, Dividends, Income from Rental of property, Interest Income on deposits gain on trainer of certain In-properly) 1. Direct Taxes 1.1 Tax on Income from Employment / Personal Income Tax Every person deriving income from employment is liable to pay tax on that income at the rate specified in Schedule as follows: Taxable monthly income in Birr Tax Rate (in %) Nil Deduction (in Birr) Exempt threshold % % % % % over % Business Profit Tax This is the tax imposed on the taxable business income / net profit realized from entrepreneurial activity. Taxable business income would be determined per tax period on the basis of the profit and loss account or income statement, which shall be drawn in compliance with the generally to pay 30% flat rate of business income tax. For unincorporated or individual businesses the business income tax ranges from 10% - 35%. 1.3 Tax on Income from Rental of Buildings 16

17 1.4 Tax on Interest Income on Deposits Every person deriving income from interest on deposits shall pay tax at the rate of 5%. 1.5 Dividend Income Tax Every person deriving income from dividends 1.6 Tax on Income from Royalties Royalty income means a payment of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematography films, and films or tapes for radio or television broadcasting. Royalties income shall be liable to tax at a flat rate of 5%. 1.7 Tax on Income from Games of Chance Every person deriving income from winning of games of chance (e.g. lotteries, tombola s, and other similar activities) shall be subject to tax at the rate of 15%, except for winning of less than 100 Birr. 1.8 Tax on Gains of Transfer of Certain Investment Property This is the tax payable on gains obtained from the transfer (sale or gift) of building held for business, factory, office, and shares of companies. Such income is taxable has rate of 15 to 30%. 1.9 Tax on Income from Rental of Property 1.10 Rendering of Technical Services outside Ethiopia All payments made in consideration of any kind of technical services rendered outside Ethiopia to resident persons in any form shall be liable to tax at a flat rate of 10% 1.11 Agricultural Income Tax 1.12 Land Use Tax 2. Indirect Taxes 2.1 Turnover Tax The Turnover Tax would be payable on goods sold and services rendered by persons not registered for Value Added Tax. The rate of Turnover Tax is 2% on goods sold locally; for services rendered locally: 2% on contractors, grain mills, tractors and combine-harvesters; 10% on others. 2.2 Excise Tax It is believed that this tax should be imposed on luxury goods and basic goods, which are demand inelastic. It is also believed that imposing the tax on goods that are hazardous to health and which are causes to social problems will reduce the consumption thereof. Excise tax in Ethiopia is imposed and payable on selected goods, such as, luxury goods and basic goods which are demand inelastic. Moreover, it is believed that imposing the tax on goods that are hazardous to health and which are cause to social problem, will 17

18 reduce the consumption of such goods. We have included in this page the rate of excise in Ethiopia, base of computation of excise tax in Ethiopia and payment of and time of payment of excise tax in Ethiopia. Base of computation of excise Tax: 1. In respect of goods, produced locally, the cost of production; 2. In respect of goods imported, cost, insurance and freight (CIF value) Rate of Excise tax: The excise tax would be imposed on goods imported or either produced locally. For detailed tax rate you can get through WWW. Erca.org 2.3 Value Added Tax (VAT) VAT is a tax on consumer expenditure. It is collected on business transactions and imports. A taxable person can be an individual, firm, company, as long as such a person is required to be registered for VAT. The rate of VAT is 15% Customs Duty Customs duties are payable on imports by all persons and entities which have no duty free privileges. Any good imported or exported would be subject to: Payment of duties and taxes according to the tariff of Harmonized Commodity Description and coding system (HS); The rate of customs duty ranges from 0-50%. Duty Paying Value The duty paying value of any import or export goods shall be the actual total costs of the goods. Duty Paying Value of Imports: 1) For the purpose of customs the duty paying value for imported goods would be the sum of the transaction value, freight cost and insurance premium that is paid to deliver the goods up to a prescribed customs port; 2) Transaction value and other related costs given by a supplier who is associated in business with the importer shall be considered genuine unless the given price is influenced by their relationship; 3) Where a document which show the correct freight cost up to the first customs port is not produced or the document produced is rejected by the Authority; the freight cost of identical goods transported at or about the same time with the same means of transport would be taken to calculate the cost of freight; 18

19 4) Goods imported without insurance coverage or transported under insurance coverage but the bill produced is rejected by customs, the insurance cost paid for identical goods transported at or about the same time with the same means of transport would be taken to calculate the cost of insurance; 5) To determine the accurate value of the goods the following additional costs shall be considered A. commission and brokerage costs incurred by the buyer; B. cost of container and cost of packing the goods is it for labor or material; C. value of goods and services supplied by the buyer free of charge or at reduced cost, to the extent that such value has not been included in the price actually paid or payable; D. royalties and license fees related to the goods that are paid directly or indirectly by the buyer; E. loading, unloading and handling charges paid up to the port of importation. 6) Where documents necessary to determine duty paying value of the goods are not presented, or rejected by the Authority, the transaction value of identical goods imported from the same country at or about the same time shall be taken to determine the value of the goods; 7) Where the value of the goods cannot be determined the transaction value of similar goods imported from the same country at or about the same time shall be taken to determine the value of the goods. Deductibles from Import Value: 1) The following adjustment costs shall be deducted from import values a) Costs for damages in routes; b) Costs for damages in customs warehouse. 2) When it is requested and agreed upon by the customs office to destroy or dispose any dangerous goods deposited in the warehouse, the goods shall be destroyed or disposed at the presence of customs officer and other officials concerned, and the value of the goods destroyed or disposed should be deducted proportionally from the duty paying value of the goods. For customs purpose the value of export goods shall be the transaction value of the goods and the cost of transaction up to the port of exit. 1.3 Stamp Duty The following instruments shall be chargeable with stamp duty: Memorandum and articles of association of any business organization, cooperative or any other form of association; Award; Bonds; Warehouse bond; Contract and agreements and memoranda; Security deeds; Collective agreement; Contract of employment; Lease, including sub-lease and transfer of similar rights; Notaries acts; 19

20 Power of attorney; Documents of title to property. 1.4 Withholding Tax Withholding tax is the current payments of income tax at time of goods imported and payments made on account of goods and certain services. Rates of withholding tax On imported goods at 3% of the sum of cost, insurance and freight (CIF). On payments made to taxpayers at 2% on cost of supply goods involving more than Birr 10,000 in any one transaction or contract and services involving more than Birr 500 in one transaction or service. In addition, a withholding agent who makes a payment to a person who has not supplied a TIN (Taxpayer Identification Number) is required to withholding 30% of the amount of the payment. A taxpayer who has not supplied the TIN to the withholding agent, in addition to the above 30% is liable to pay a fine of Birr or the amount of the payment whichever is less. When the tax is due? On imported goods at customs clearing time; During payments made for goods & services; b. HS Code The Harmonized System Codes (HS Code) is a standard issued by the World Customs Organization (WCO) to unify the classification of the goods. These are six digit codes for identifying different products across the world. The country using these HS codes can suffix additional digits to the existing six digits according to their needs. One can use HS code to search the tariff for imported goods at the customs website; or one can enter the key word of the goods (for example steel for hot rolled steel sheets) and locate the correct tariff and HS Code. The link is The HS Code books prepared by the customs authority can be bought at Customs Authority Office. 20

21 One can also locate HS Codes at: c. Tariff calculation Importers to Ethiopia are required to pay Import (Customs) duty, Withholding Tax (a fixed rate of 3%), Excise Tax (if applicable), VAT (a fixed rate of 15%) and Surtax (a fixed rate of 10%). Tariff Calculator: Total Cost of the goods = FOB Cost + Insurance + Freight Total Cost of the goods x Import Customs Duty = A (Total Cost of the goods + A) x Excise Tax Rate (If applicable) = B (Total Cost of the goods + A + B) x VAT = C (Total Cost of the goods + A + B + C) x Surtax = D Total Cost of the goods x Withholding Tax = E TOTAL PAYABLE at THE TIME OF IMPORT = A+B+C+D+E N: B Ethiopia applies the Common Market for Eastern and Southern Africa s Common External Tariff of 0% for capital goods and raw materials, 10% for intermediate products, and 25% for finished products. 4. Annex 5. Reference Ethiopian Business Chamber of Commerce, 2005 Taxation in Ethiopia: Direct and Indirect Taxes - Categories of Tax Payers Declaration of Income and Assessment of Taxes Tax Incentives, Addis Ababa Ministry of Foreign Affairs Diaspora Engagement Affairs General Directorate, 2011 Basic Information for Ethiopian in the Diaspora, Addis Ababa 21

22 WebPages: Ministry of Revenue Ethiopian Customs Authority Ethiopian Investment Commission Ethiopian Export Promotion Agency Addis Ababa Chamber of Commerce ETHIOPIA COUNTRY AND BUSINESS GUIDE Bank/databases/ethiopia/guide.htm #1 Ethiopian Export Promotion Agency (EEPA) 22