Addis Fortune (Addis Ababa)

Ethiopia: Airport Customs Branch Asks for More From Importers

Imports through the customs branch at Bole International Airport are being charged deposits that are 25pc to 100pc beyond normal import tax rates based on accompanying invoices, if the items' market values are not already catalogued, until the correct amounts are figured out.

Import tax is normally determined by the Ethiopian Revenues and Customs Authority (ERCA) based on a database of prices for different items. There are 12 CDs worth of data so far.

Customarily, the ERCA undertakes an update every three months. Now, this task is six months overdue, forcing importers to wait a long time after depositing substantial sums at the branch office until ERCA comes up with appropriate figures.

Importers normally present their invoices to the authority, which compares the prices with those of the database and computes the tax based on the higher figure.

Lately, importers have been facing problems because of the incompleteness of the authority's database. If they do not pay the extra deposits required when tax is computed solely by invoice, the imported goods are taken to the airport warehouse.

If importers fail to clear their goods within seven days, their cargo is transferred to a warehouse owned by the ERCA near the airport around Gerji to eventually face being auctioned.

In order to avoid such scenarios, importers pay the extra deposit until the ERCA figures out the exact price of the imported goods, which can take more than a month in some instances. Importers feel frustrated with the inconvenience of the whole process.

"The amount that the authority demands for the extra deposit is unreasonably high, and the money stays with them, on many occasions for more than a month," Dereje Walelign, managing director of Lydetco Plc, told Fortune.

However, this is necessary, those in the authority think.

"The need for an extra deposit in such scenarios is to prevent the loss of revenue that the government gets from the taxation of such imported items," Mamo Senbete, coordinator of the Import Goods and Customs Clearance Procedure Team at the Addis Abeba Airport Customs Branch, told Fortune.

The authority's attempt to find the prices of goods on the Internet when they do not have them on their list is also another area of concern.

"In case the database does not provide the price of the imported item, the authorities look to the Internet for an answer, which is not a reliable source in most cases," Dereje said. "It is almost impossible to know the exact price of all goods imported, so the authority should concentrate on the prices shown in the invoice provided by the importer, which is chamberised or stamped from the specific country it came from."

The unreliability of data found on the Internet is also agreed upon by those in the authority.

"All data that is collected from the Internet is of course unreliable, but there are some reliable sources that the authority uses including ebay.com, amazon.com, alibaba.com, and nextag.com," Abebaw Alemayehu, Document Scrutinising and Verification senior officer at the customs branch, told Fortune. "When there are multiple prices listed on these websites, we choose the lowest one. Sometimes, we even allow the importer to come up with the website that shows the lowest price for their goods."

For Dereje, the ERCA is simply making importers pay more than they should for its inefficiency in handling the situation, according to Dereje.

That matter the most when calculating the extra deposits required from importers include the capital of the importing company, the prices of substitute products of the imported item, documents attached to the invoice like bank permits, and the country of origin of the imported goods, according to Abebaw.

The invoices of goods that come from the US as well as most countries in Europe are reliable since their control mechanisms are strong, whereas the invoices of goods imported from other countries like Dubai, India, China, Turkey, and even Italy are easily susceptible to manipulation, he told Fortune.

One importer, who requested anonymity, was told to pay an additional deposit of over 100pc of the import tax that he had paid for 280 imported printers, he told Fortune. The rate was finally reduced to 50pc, which he was still very dissatisfied with, he said. His company will appeal to the ERCA for the extra 400,000 Br that he was requested to deposit, he said.

"The reason for the repetition of incidents of delay is due to the ERCA's limited resources to find the exact prices of each and every imported item to update the database," Abebaw said.

The Addis Abeba Airport Customs Branch of the ERCA collected 1.2 billion Br from tax on imported goods in 2009/10, exceeding its expectations by 26pc.


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