The Ethiopian Revenues and Customs Authority issued a new directive which allows manufacturing companies importing raw materials into Ethiopia to be taxed on the basis of their transaction costs. 
The customs authority will conduct a post clearance audit within 15 days to reclaim the balance should there exist discrepancies between the transaction values on the invoices and ERCA’s data.
This directive aims to alleviate delays in production due to the time it takes for raw materials being processed by customs according to Fekadu Bekele, Customs Valuation Directorate.
The directive, however, does not apply to imports for the manufacture of batteries, shoes, umbrellas, semi-finished blankets and bed covers. The customs authority has identified these sectors as prone to under invoicing and hence liable to abuse the new system according to an expert at ERCA.The Ethiopian Manufacturing Industries Association has been discussing factors that affect the speed of production with ERCA according to Fasil Tadesse President of the association who declined to further comment on the directive.
The directive is part of efforts by ERCA to support the industrial sector. The authority has introduced an Authorized Economic Operators system for selected manufacturers who passed a tax compliance evaluation process undertaken by ERCA auditors last month.
It is to be remembered that the Ethiopian Revenues and Customs Authority is in the process of automating its customs valuation system. The new system will allow the customs system in Ethiopia to transition to a transaction cost system as per the World Trade Organization Agreement in Customs Valuation from a minimum price setting system.
Source: Addis Fortune
