Customs operations in Ethiopia

A brief overview
2.1 Overview of Customs Functions
The World Customs Organization (WCO) defines Customs as “the government service which is responsible for the
administration of Customs law and the collection of import and export duties and
taxes and which also has responsibility for the application of other
laws and regulations relating, inter alia, to the importation, transit
and exportation of goods.”
In Ethiopia, ERCA’s functions include the enforcement of the
Customs Proclamation provisions governing the import and export
of cargo, baggage and postal articles; the arrival and departure of
vessels, aircrafts, and other means of transport; goods in transit; and
the governance of any goods subject to customs control, including
rights and obligations of persons taking part in customs formalities.
2.2 Principles of Customs Operations in Ethiopia
Customs operations involve the administration of customs law
relating to the importation, exportation, movement or storage of
goods and the collection of duties and taxes. In this regard, customs
operations are a key factor for trade facilitation and economic
development of a country. For such a crucial sector to function
soundly it should stand on principles that guide its course to
worthwhile goals.
Accordingly, the Ethiopian customs law contains provisions that
clearly prescribe the basic guiding principles that have to be applied
on customs operations. These guiding principles, which have
important implications for the roles of all stakeholders, including the
traders themselves, are the following ones:

1. Self-assessment: It is the responsibility of importers and

exporters or their agents to assess and submit the value of goods
to the customs office, which then determines the appropriate
duties and taxes to be paid based on the information provided
by traders.
2. Risk management: ERCA steers its activities through assessing,
directing and controlling risks which emanate from the import
and export of goods. The purpose is to strike a balance between
trade facilitation and controls. Successful implementation of the
risk management principle helps to avoid unnecessary delays
and wastage of resources by concentrating customs control on
high risk consignments and expediting the release of low risk
consignments.
3. Transparency: Under this principle, ERCA provides relevant
information about trade – including the rates of duties and
taxes, fees and charges, customs laws and procedures, appeal
procedures, etc. – through publications and other means. This
guide is one example of ERCA’s commitment to enhancing the
transparency of its operations.
4. Accountability: ERCA clearly defines the duties and
responsibilities of each actor in customs operations.
5. Service orientation: As a result of the preceding principles,
ERCA is committed to creating a conducive environment to
provide equitable, expeditious, predictable and reliable services.
6. Prevention of illegal practices by promoting self-compliance:
Under this principle, which is related to risk management and
self-assessment, ERCA will seek to prevent illegal practices such
as commercial fraud (under-or over-invoicing, wrong description
and classification of goods, etc.), smuggling of prohibited and
restricted goods, and others, by taking measures that promote
self-compliance. Examples of such measures are the provision of
information and advice to traders, advance rulings for customs
classification, customs valuation and preferential origin, the
implementation of post clearance audits, or the use of simplified
procedures for authorized traders.
7. Promotion of priority sectors and economic development:
This principle is aimed at the Authority to play its vital role
in expediting the economic development of the country
by providing special service to priority sectors, such as
manufacturing. 
To uphold these principles, a vital system that informs all the
functions of customs operations is the customs approved treatment
or use of goods. Under this system, in keeping with the standards
that are set by the customs law all the goods that pass customs are
treated without any discrimination as to the nature, quantity, origin,
and destination or shipment conditions. However, the application
of this system is precluded in situations where it would conflict with
measures put in place for public morality, protection of health and
life of humans and animals and plants, the protection of cultural
heritages, or other specific treatment or use of goods provided by
law.
The national import and export procedures and laws provide special
privileges and schemes for foreign direct investments, exporters and
industry park participants.
The Ethiopian Revenue and Customs Authority is currently
developing different modern technologies. These include; Electronic
Single Window System (eSW), Electronic Customs Management
System (eCMS) and Cargo Trucking. In addition ERCA is using
modern cargo scanning technologies to facilitate the international
trade and to support foreign direct investment.
2.3 Prohibited or restricted imports and exports While Ethiopia, as a general rule, allows any
commodity to betraded freely, this is not true for two categories of goods: Someare “prohibited goods,” according
to Article 4 of the CustomsProclamation, which must not be imported into, exported from, or transited through
Ethiopia. Examples are illicit narcotics and drugs or worn clothes.
Secondly, restricted goods are not allowed to be imported, exported or transited unless in compliance with the
requirements of the specific restriction. Normally, restricted goods are administered
by specific regulatory agencies (see chapter 3). Examples of restricted goods are medicines and pharmaceutical
products, foods and beverages, communication equipment, fertilizers, seeds, live
animals, etc. The lists of prohibited and restricted goods are available from ERCA as well as included in ERCA’s
Customs Management System.
3 How to import goods into Ethiopia -
step by step read on customs guide…..

3. Arrange payment issues

An important step early in the process – after the pre-import permitis secured, if required – is to prepare for the
payment of importedgoods, which might be through a bank or franco-valuta. Payment through a bank requires two
tasks. First, a foreign currency approval must be obtained. This approval is necessary due to the foreign exchange
controls in place and will allow the importer to pay for the imported goods in foreign currency. 7 Second, the
payment arrangements have to be agreed with the importer’s bank. Foreign currency approvals must be requested
through the bank at which the importer has the account which is to be used for the import. 8 As part of the request, the
importer must present his/her
valid business license9 and a pro-forma invoice from the supplier. The pro-forma invoice should describe the
imported goods, state the unit price, quantity and total price, as well as list additional charges
that may be applied on the transaction. Currently, foreign currency approvals are issued by Commercial
banks and are processed manually; the time required for the approval depends on the availability of foreign currency
requested. The second task within the payment issues is to arrange with the bank for the method of payment and
obtain a bank permit. In this regard, the methods of payment for imports used in Ethiopia are the following:
• Letter of credit (L/C), in which the bank undertakes to pay the supplier a stated sum of money within a prescribed
time limit and against the hand-over of the documents needed for the release of goods from customs;
• Cash against document (CAD), where the importer’s bank hands over to the importer the documents needed for
the release of goods from customs against full payment;
• Advance payment, i.e. the importer orders the bank to pay the seller via SWIFT transfer prior to shipment or
rendering the service.
4. Collect documents
Once the payment issues have been completed and the supplier has been informed, the goods will be shipped to
Ethiopia. Upon arrival of the goods at the port of entry in Ethiopia, they will be placed
in a customs warehouse,12 and the importer must accomplish the necessary customs formalities. For this, the first
step is to collect the necessary commercial documents from his/her bank (in case of L/C or CAD) or directly from
the supplier (in case of advance payment).
The following documents are necessary for the preparation of a customs declaration: 13
• Transportation document such as bill of lading, air way bill or truck way bill;
• Invoice which describes the value of imported goods;
• Bank document, i.e. L/C, CAD, confirmation of advance payment/TT;
• Packing list which describes how the goods are packed during transport;
• Certificate of origin which describes where the goods were originally produced;
• Other documents as required, such as pre-import permits issued by regulatory agencies and duty free permits for
investment goods.
5. Prepare customs declaration
The importer or his/her agent is required to fill in the clearance customs declaration, indicating the type of import
regime, detailed data or information about the imported goods, and also tariff classification and customs valuation,
which leads to determining the import duties and taxes.
According to the Ethiopian tax laws the following duties and taxes are levied on imported goods:
• Customs duty is normally calculated as a percentage of the duty paying value, also known as CIF value. This is
the sum of the transaction value (cost of goods), transport charges paid totransport the good from the original port of
loading to the port of entry in Ethiopia, the transport insurance paid and other charges such as loading and unloading
charges, port charges, etc. The duty rate varies depending on the type of imported goods and ranges from 0-35%.
• Excise tax is charged on selective goods such as luxury goods, basic goods demand for which is hardly affected by
price changes, goods that are hazardous to health, etc. The excise tax is computed on the basis of the CIF value plus
the amount of the customs duty payable. The rate of the excise tax varies depending on the type of imported goods,
from 10%-100%.
• Value added tax (VAT) is levied at a flat percentage rate of 15% on the sum of CIF value, customs duty, and
excise tax. Some types of supplies of goods, services and imports are exempted from payment of VAT.
• Surtax of 10% is levied on all goods imported to Ethiopia with some exceptions, such as fertilizers, petroleum and
lubricants, etc. The amount payable is calculated on the sum of CIF value, customs duty, excise tax, and VAT.
• Withholding tax is collected on goods imported for commercial use, at a level of 3% on the CIF. The collected
amount is creditable against the taxpayer’s income tax liability for the year. Thus, it is not a tax in itself but rather a
(partial) guarantee on the payment of income taxes. The calculation of the duties and taxes on imports to be paid to
ERCA is the responsibility of the importer. This requires the
following steps. • First, the goods must be classified in order to determine the applicable import duty (tariff
classification).
Calculation of duties and taxes read on customs guide
6. Submit the customs declaration
To obtain clearance of imported goods from ERCA, two different procedures exist, depending on the type of
transport used for the goods, i.e. whether it is multi-modal or unimodal. Under multimodal transport, goods are
transported under a single contract with the logistics company but using different means of transport (e.g., sea and
road transport). Conversely, unimodal transport only uses one means of transportation.
Multimodal transport
In the case of multimodal transport, the importer or his/her agent must complete the customs declaration and submit
it, in hard copy, at the ERCA office of destination together with the entire documentation necessary for clearance. 19
In addition, the importer must pay the amount of duty and taxes, on the basis of the self-assessment undertaken (see
above), before submitting the declaration. Payments made through a bank can be proven by a cash payment order
(C.P.O.) from the bank, and ERCA will issue a
payment receipt. Declaration forms can be obtained from ERCA’s website20 or from the customs offices. More
details about customs declarations are provided in section 5 of this guide.
Unimodal transport
In the case of unimodal transport, as per ERCA’s current practice the importer or his/her agent must pay the duty
and taxes, and register and submit a transit declaration with the ERCA office of destination
together with the necessary documentation for clearance, prior to the start of the transit.21 Once the transit goods
arrive at the customs office of destination in Ethiopia, the importer or his/her agent is required to submit the transit
documents together with the clearance declaration and supporting documents to initiate the clearance processes.
The examination of the declaration includes the verification of the correctness of data information, tariff
classification, valuation and payment of duties and taxes registered and supporting documents
attached to declaration. The verification process may also include the fulfillment of legislative requirements
administered by other regulatory agencies, such as veterinary, health.
The physical examination of goods is performed to satisfy that the origin, country of export, nature, condition,
quality, quantity, tariff classification and value of the goods are in accordance with the information furnished in the
goods declaration.
4 How to export goods from Ethiopia
step by step read on the customs guide
3. Collect documents
Similarly to the case of imports, an exporter has to prepare a custom declaration to ERCA, accompanied by
documents. The exporter should therefore collect the documents prior to filing the
declaration. The following documents are necessary: 27
• Transportation document such as bill of lading, air way bill or truck way bill;
• Invoice which describes the value of the goods to be exported;
• Bank document, i.e. L/C, CAD, confirmation of advance • payment/telegraphic transfer;
• Packing list which describes how the goods are packed during transport;
• Certificate of origin which describes where the goods were originally produced.

5 Goods declarations
5.1 Introduction
A goods declaration is a statement made in accordance with theprovisions of the Customs Proclamation, by which
the declarant indicates the customs procedure to be applied to import, export or transit goods and furnishes the
particulars which the customs administration requires for its application. It is a very crucial initial step for the
smooth flow of the good through customs procedures. Since careless handling of the declaration can carry penalties,
filling this document and its handling should be cautiously done.
5.2 Declarant
A declarant is normally the importer or exporter;28 it can also be a legal person.29 The declarant can be represented by
a customs agent. The declarant is responsible for the comprehensiveness,
clarity, and authenticity of the information provided in the declaration, as well as for the provision of any other
required supporting documents.

5.3 Goods to Be Declared

In principle, all import, export, or transit goods need to be declared. Any goods in respect of which goods
declaration is presented shall, in the declaration, be identified as any of the following:
a) Dutiable or duty free (e.g., if imported for home use or under the duty draw back import regime);
b) For outright export or temporary export;
c) Exported for outward processing; or
d) Imported for inward processing and whether it is duty free; or
e) Imported temporarily without payment of duties and taxes.
Some goods are exempted from requiring a goods declaration depending on their nature or use.
These include:30
a) Non-commercial goods imported or exported for personal and home use;
b) Goods for commercial advertising and samples, valued under USD 1,000;
c) Gifts for government, NGOs and religious institutions that do not have commercial amount and character, as per
the directive issued by the Ministry of Finance and Economic Cooperation
and produce donation certificate and invoice value for customs purposes
d) Goods related with the security and defense of the country as per Directive No. 47/2000 EC;
e) Goods exported as samples or gifts, the size and number
of which are permitted to be exported without getting foreign exchange in return as per the National Bank of
Ethiopia or a bank authorized by the National Bank to do the same.
f) Ethiopian Birr and foreign currency for outgoing passengers with the permission of the NBE
g) Goods for consumption of the staff of Ethiopian foreign Missions with the permission of MFA
h) Other goods exported for special purpose by government organizations. Furthermore, the declarant is allowed to
inspect the goods and take samples before submitting a customs declaration. A separate declaration for the sample is
not required to be submitted.
5.4 Forms and Preparation of Goods Declaration
The declaration can either be made in writing, electronically, orally, or by bodily action (the latter two are usually
reserved for travelers). Bodily action is when a traveler passes either through the green or red channel, whereby the
former denotes that no taxable good is carried. A traveler’s verbal declaration to a customs officer is accepted as an
oral declaration. However, when the good has a commercial nature, a written or electronic declaration must be
made. Traders can complete and register electronic declarations into ERCA’s customs management system either
from their own computers (remote Direct Trader Input, DTI) or at the ERCA offices (bureau DTI). The process for
preparing goods declarations is as follows:
a) Collect the necessary documents (invoice, packing list, certificate of origin, transportation document, bank permit,
etc.
b) Complete and register electronic declaration into ERCA’s customs management system.
c) Review the registered declaration data and produce assessment notice;
d) Prepare Cash Payment Order, if tax is payable;
e) Pay duties and taxes; and
f) Submit the declaration to customs to accomplish the customs procedures. Additionally, the submission of a hard
copy of the original declaration and supporting documents is at present still required. There are nine types of written
and electronic declaration forms that can be produced from ERCA’s customs management system. These are:
• EX-1 for outright export of goods; EX-2 for temporary export of
goods; EX-3 for re-exportation of goods;
• IM-4 for home consumption of goods;
• IM-5 for temporary importation of goods;
• IM-6 for re-importation of goods;
• IM-7/EX-7 for import warehouse/for partial exportation of domestic products from ideal export warehouse;
• IM-8/EX-8 for transit of import or export of goods; and
• IM-9/EX-9 for other import and export goods.
5.5 Supporting Documents of Goods Declaration
Supporting documents and goods declaration shall constitute a single indivisible legal instrument upon acceptance
of the declaration. Supporting documents must be submitted in English or Amharic. If they are in another language,
they may need to be translated by a licensed translator to be processed during the goods declaration. The following
supporting documents shall be submitted with presentation of the goods declarations of imported and exported
goods:
• transportation document; invoice;
• bank permit;
• packing list;
• certificate of origin; and
• other documents demanded by ERCA and relevant for compliance, e.g. letters from regulatory bodies. In
principle, originals of supporting documents shall be submitted to customs. However, where there are adequate
reasons, the declarant may submit, and ERCA may accept, copies of the necessary
supporting documents. The declarant is required to present a guarantee to use copies of supporting documents. The
types of guarantee and time limits are the following:
a) Letter of guarantee for government organizations administered through budget and Insurance guarantee or cash
for others;
b) Where the guarantee is needed to get duty exemption letter or the use of export incentive scheme, the amount
must cover the duties and taxes;
c) The amount of the guarantee for international airport customs users is based on the tax or duty
• In case of telegram transfers, 50% of the total duties and taxes payable;
• In case of credit or cash against documents, 25% of the total duties and taxes payable;
d) The amount of the guarantee for other customs branch users is:
• In case of a telegram transfer, 5% of the total duties and taxes payable;
• In case of credit or cash against document, 2.5% of the total duties and taxes payable;
5.8 Cancellation of Declaration
A declaration may be cancelled if any of the following conditions are present:
a) When the declarant fails to follow-up with customs formalities with ERCA within five days
after submission the declaration or after the conclusion of the preparation of an assessment
notice;
b) Where it is proved that the declaration has been presented contrary to the provisions of the
Customs Proclamation or any appropriate customs procedure and payment has not yet been
effected;
c) When the declarant is unable to pay the duty and tax and import the good and applies for re-
exportation;
d) When the declarant reports within ten days of the date of approval that the declared goods are not
imported or exported, the declaration can be cancelled; but if the application is received more than ten
days after the date of approval (and within one year), the declaration can be cancelled with administrative
penalty;
e) When goods are imported under one transport document and registered with more than two or more
customs branch offices;
f) When goods are imported under one transport document and registered twice by the same declarant;
g) When the declaration is registered with incorrect declaration model or office code;
h) When the consignor/consignee name or tax identification number is incorrectly registered;
i) When there is a mistake in registering a warehouse declaration;
j) If there is a dispute between the declarant and the clearing agent and one of them applies to the
cancellation of goods declaration before the goods are imported or exported;
k) When a restricted good did not get the necessary authorization in 30 days and when the good is
prohibited from export or ordered to be exported.;
l) A declaration may also be cancelled upon the request of the declarant before payment has been
made.34 The cancellation of a declaration is no longer possible once the goods are released.

6 Customs transit
6.1 Introduction
Customs transit refers to customs procedures under which goods are transported under customs control from one
customs office to the other. The Revised Kyoto Convention (RKC) provides standards for
the application, formalities at the office of departure, customs seals, formalities en route and termination of customs
transit.35 In line with this, the Customs Proclamation contains provisions related to the application of customs transit
operation in Ethiopia. This includes the basic transit terms and concepts such as goods declaration for customs
transit, sealing and identification of consignments, customs
seal, procedures en route, termination of customs transit, etc.