27 January 2013

Ethiopia: ERCA Introduces Web-Based Price Valuation

The Ethiopian Revenues & Customs Authority (ERCA) introduced a web-based customs valuation database last week, replacing its previous CD-based valuation for the price of commodities.

The new database, set up by the Centre for Development of Advanced Computing (C-DAC), a software maker owned by the Indian-government, for 3.5 million Br, will resolve the shortcomings of the CD-based valuation system and enable the Ethiopian customs valuation system (ECVS) to comply with the World Trade Organisation's (WTO) own, which has an average price list of commodities, with a total of 97 chapters.

The ERCA chose the Indian company, because India's Price Valuation System is recognised, both by the World Customs Organisation and the WTO, said Kaidaki Gezahegn, deputy director of operation programs for design & development at the ERCA.

The new ECVS will be accessible to ERCA officials and customers with passwords. It will provide more information and more frequently updated commodity prices for items imported into Ethiopia than the system it is replacing.

"Since prices increase and decrease even within a day's interval, the CD system is very old," said Beferdu Messeret, deputy director of price valuation for the ERCA.

The old way also led to customers having to pay different amounts of taxes for the same goods, which is not only unfair, but also illegal, according to Beferdu.

"We do not want businesses to compete by the different taxes they pay, but solely by the operation of their businesses," he added.

The new system compares new and old prices and exchanges data with the Automated System for Customs & Data (ASYCUDA++), according to Beferdu. The ASYCUDA checks whether the necessary taxes and duties are paid and generates statistical data for economic analysis.

The Authority is testing the new system at the airport and the Kaliti customs site, its two busiest centres. These sites were also selected due to the ease of management, related to their proximity to the head office, Kaidaki said.

The new system will also enable the Authority to finally apply its own directive, requiring six valuation methods, which it was unable to do under the old CD system.

The six valuation methods include; transaction value method, identical goods valuation method, similar goods valuation method, deductive valuation method, computed valuation method and fallback method.

The Authority is currently collecting prices from Orbis and Router, American based companies, and Obricum of India, who keep updated international prices. The ERCA will pay annual fees to these companies for their services.

FAB Transit, a company that transfers goods in and out of the country, began operations 40 years ago, when there were only 49 items on the customs list, according to its manager Fesseha Belay. He says that ERCA officials often fail to identify not only the prices, but even the goods themselves. His customers have previously denied him payment, because it took too long to clear their imported goods at customs.

"I wish ERCA trained every official in the branch offices with the new technology."

Other African countries, such as Uganda, Kenya and Tanzania, are already using the new web-based technology, after taking their cue from India.

The CD-system carries nearly eight million commodity prices. The ERCA is spending 162 million Br to update the existing ASYCUDA++.

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