The Ministry of Industry (MoI) is preparing a standard for raw material inputs used in metals, chemicals, horticulture, foods, beverage and pharmaceutical products, according to Capital.

MoI used similar raw material consumption standard on 360 leather and 44 textile products a month ago.
The standard prescribes the amount of raw materials consumed per unit of a product and also indicates an estimate of waste material left behind when using raw materials.

This allows the customs office to charge reasonable tax by listing in detail what amount of raw materials are used in the products.

For many years, importers import raw materials free of duty. The cost of these inputs is deducted from the annual profit taxes manufacturers have to pay. The deducted sum is calculated based on the raw materials consumption declaration the traders give to the customs authority. This self declaration method has been creating an argument between traders and the customs authority when the latter calculates the annual profit taxes traders have to pay.

Girma Gelelcha, Sectoral Relation and Incentive Director at the Ministry told Capital, “Productions must be done with the right calculation. Manufacturers misuse their duty free privilege they have when importing raw materials. They over state their demand and usually use fewer amount of the imported inputs to produce a unit of product.”

Importers in the sector are pleased with the unit rate preparation but suggested to be updated with time, it was learnt.

Source: Capital