Radar | Apr 15,2023
Mar 25 , 2023
By Eden Sahle ( Eden Sahle is founder and CEO of Yada Technology Plc. She has studied law with a focus on international economic law. She can be reached at email@example.com. )
Last week there was an exhibition organized by the Addis Abeba University Institute of Architecture compound. The much-anticipated event united the students and their teachers who tirelessly worked in unison. There were also international participants from universities including Harvard.
All progressed well until the international students who built a model of Addis Abeba city to showcase it at the Architecture exhibition were denied access to it by the customs often referred to as gatekeepers.
They were required to pay three million Birr to take the model from the customs warehouse. The academic and practical importance of this project to the architecture students in Ethiopia and the fact that it was temporary was meaningless to the customs officers.
The students could not pay the demanded amount. Hence the customs administrators stored it at the warehouse until their return.
The Addis Abeba city model took a lot of effort to create only to be returned abroad without meeting its purpose. The local students never got the chance to see the much-anticipated model of the capital city.
The students are not the only victims. Importers and individuals who bought items for their own households have many perplexing stories to tell. Many have been forced to let go of products they have imported due to unjustifiably high tax duties.
Trade taxes are significant sources of revenue. Nevertheless, it is not justifiable when it becomes a rip-off.
Taxes should be levied, in a way that does the least collateral damage to international trade flows, traders and customers. Ensuring that customs administrations perform their core revenue functions with minimal adverse impact on trade activities and the allocation of resources must be the focus of the government.
Often documents and receipts of imported products are rejected by officers. Individuals are presumed to be dishonest despite presenting legal documents of their purchase. Officers rely on a wild guess to levy high taxes on imported products giving a take-it-or-leave-it attitude.
In Ethiopia, one of the greatest disappointments of having a business is dealing with unprofessional customs officers. Traders are susceptible to unfair tax duties just because the customs officers feel like it.
The exaggerated high trade taxes create a significant risk of corruption and smuggling. The lack of a system that would facilitate business by making customs valuation as simple and predictable as possible has created chaos. This system enabled valuation from being misused as a method of assessing custom duties on an arbitrary and discriminatory basis.
Customs officers have not had a good public image. Relationship with the private sector is adversarial as customs administration is an impediment to smooth trade flow.
Trade facilitation and customs regulatory control are key for both the state and the business community in pursuing national and international trade in the competitive globalized economy. However, an enormous amount of time and money is wasted due to irregularities and long delays at customs.
Traders seek certainty, flexibility, and timeliness while dealing with customs offices which are practically missing.
The contemporary places massive demands on the customs administrations of Ethiopia which has a long way to go in catching up to technologies to process and record shipments.
Goods spend months in a warehouse due to old and manual-based clearance procedures where not much effort has been made to simplify the compliance burden on the private sector.
Modernizing customs administration to cope with the rapid changes in international trade is necessary. It is not simply a matter of cutting taxes but requires fundamental changes in both the environment and its activities.
It requires customs to understand globalization, the dynamics of international trade, the technicalities of the trade supply chain, emerging trade directions and the complexities of the global landscape.
Having a standard and tax duty that is consistent with the price of the imported item value will ensure a smooth flow of trade and reduce corruption.
The success of trade facilitation is heavily reliant on the ability and efficiency of customs administrations. Simplifying the procedures contributes to the increase in the volume of international trade while system improvements cut the time and cost of international trade transactions.
PUBLISHED ON Mar 25,2023 [ VOL 23 , NO 1195]
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