CHAPTER TWO

IMPORT AND EXPORT PROCEDURE IN ETHIOPIA

2.1 Import procedure

This step-by-step guide provides an overview for importing goods into Ethiopia. It provides a
summary of the steps that an importer has to take, and the following pages provide more
information regarding each of the steps. Importers can also obtain additional information from
ERCA and/or use the services of a clearing agent to facilitate imports.

 How to import goods into Ethiopia – summary of steps

1. Obtain an import license / investment license
2. Obtain a pre-import permit (for certain restricted goods only)
3. Arrange payment issues (a) Foreign currency approval (b) Obtain bank permit/arrange mode
of payment or Franco valuta permit
4. Collect commercial documents required for customs declaration
5. Prepare the customs declaration
6. Submit the customs declaration
7. Obtain import customs clearance and goods release note
8. Pay service charges, exit goods from customs warehouse, and receive final import customs
declaration
9. Submit clearance declaration to NBE

1. Obtain an import license

The first step to import a good is to obtain an import license. Licenses are issued by the
concerned government offices against the submission of a completed application form along with
the following documents:

 A copy of the Tax Identification Number (TIN);

 A copy of the Memorandum of Association and Articles of Association for private limited
and share companies;
 A contractual agreement of office rent or office building plan;
 A document evidencing the capital allocated for the commercial activity;
 Two passport size photographs taken within the last six months;
 If the applicant is a foreign investor, the investment and residence permit; and

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  A valid business registration certificate.

Currently, import licenses are issued through a manual process which requires the applicant to
visit the government offices in person.
2. Obtain a pre-import permit for certain restricted goods in Ethiopia

The import of certain goods into Ethiopia is restricted for safety, security, environmental, health
and other reasons, i.e., they must not be imported without permission.
Important restricted goods and the responsible regulatory agencies issuing pre-import permits are
listed below. However, the import of other goods may also be restricted, and any importer should
check in advance, with ERCA and/or regulatory agencies, if the import goods are subject to
controls or limitations.
Permissions are granted in a two-stage process: first, a pre-import permit by the relevant
regulatory agency must be obtained before the import procedure starts. At a later stage, an import
permit must be obtained.

Restricted goods Regulatory agency

Pharmaceuticals and medicines, medical Food, Medicine and Health Care
supplies or instruments, baby food, food Administration and Control Authority
supplements, cosmetics (FMHACA)
Veterinary drug and animal feed Veterinary Drug and Feed Administration
and Control Authority (VDFACA)
Communication equipment Information Network Security Agency
(INSA)
Telecommunication and network equip- ment Ministry of Communication and Information
Technology (MCIT)
Radiation emitting equipment and radioactive Ministry of Communication and Information
sources. Technology (MCIT)
Vehicles Ethiopian Transport Authority
3. Arrange payment issues

An important step early in the process – after the pre-import permit is secured, if required – is to
prepare for the payment of imported goods, which might be through a bank or franco-valuta.
Payment through a bank requires two tasks. First, a foreign currency approval must be obtained.

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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. 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. As
part of the request, the importer must present his/her valid business license 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. For all methods of payment, the importer needs
to have an account with the bank, the required approved foreign currency (as obtained in
the previous task), and he/she must not be listed on the NBE delinquent list.

Currently, bank permits are issued through a manual process. Application forms are available
from the bank, which will also provide details about the documents to be submitted.

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, 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).

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The following documents are necessary for the preparation of a customs declaration:

 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.

With the exception of the other documents, all documents will be obtained from the bank and/or
the supplier.

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 to
transport 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.

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 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).

• Second, the value of the imported goods for the purpose of calculating duties and taxes must be
established (customs valuation).

• Third, the duties and taxes payable must be calculated by applying the respective percentages
on the respective base values.

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

It is the carriage of goods by at least two different modes of 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. In addition, the importer must pay the amount of duty and taxes, on the basis of the
self-assessment undertaken, before submitting the declaration. Payments made through a bank

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can be proven by a cash payment order (C.P.O.) from the bank, and ERCA will issue a payment
receipt.

Unimodal transport

It refers to transportation wherein the goods are transported by a single mode of transport,
including by road, railways, sea, inland waterway, air, space, and pipeline. In a nutshell, it refers
to the transportation of goods through a single mode of transportation.

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. 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.

7. Obtain import customs clearance and goods release note

After submitting the customs declaration, ERCA first determines, and notifies the importer of the
decision, whether to accept or reject it based on an initial compliance check, including of the
completeness of documentation submitted. If accepted, the risk level of the consignment is
determined using the customs management system. ERCA distinguishes three risk levels, i.e.,
Green (automatic release of goods without further checks), Yellow (requiring the verification of
the declaration only), and Red (requiring the verification of the declaration and the physical
examination of the imported goods) and Blue (automatic release of goods without further checks
at own premise).

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 and/or phytosanitary issues.

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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.

In addition to ERCA’s clearance activities, other regulatory bodies will also be involved in the
clearance of certain imported goods. This applies to all goods for which pre-import permits are
issued, as well as the ones listed below for which an import permit is issued only at the time of
clearance. The importer or his/her agent is responsible for obtaining the necessary permits from
the regulatory agencies at the time of clearance.

Once ERCA is satisfied, based on the risk assessment and examinations undertaken, that all
requirements prescribed by law have been complied with, the goods release note is released to
the importer or his/her agent.

8. Pay service charges, exit goods from customs warehouse, and receive final import
customs declaration

As the goods have been stored in a customs warehouse during clearance, storage fees must
normally be paid by the importer; in addition, other service charges (e.g., for scanning of goods)
might apply. Therefore, the importer must settle these charges once the goods release note has
been issued. The goods will then be released and the importer takes possession of them. In
addition, ERCA will issue a final declaration for the importer as a certificate of completing the
import procedures and importation of goods.

9. Submit clearance declaration to NBE

Any importer who obtained a foreign currency permit should present the final import customs
declaration to the NBE. This is a requirement for importing (or exporting) goods in the future.

An importer must keep all records and documents related to the import for five years from the
date of ERCA’s acceptance of the goods declaration. During this period, ERCA may perform a
post clearance audit of the import. The purpose of such audits, which may cover traders’
commercial data, business systems, records and books, is to verify the accuracy and authenticity
of declarations and information provided by the importer.

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2.2 Export Procedure

The procedure for exporting commercial goods from Ethiopia mirrors the one for importing, and
this section provides an overview. Further details are provided in Part II of this customs guide.
Exporters can also obtain additional information from ERCA and/or use the services of a clearing
agent to facilitate exports.

 How to export goods from Ethiopia – summary of steps

1. Obtain an export license
2. Arrange payment issues
3. Collect documents
4. Obtain export permit (for goods restricted for export only)
5. Prepare customs declaration
6. Submit customs declaration
7. Obtain export customs clearance and ship goods
8. Pay service charges and receive final export customs declaration
9. Submit clearance declaration to NBE

1. Obtain export license

The first step to export a good is to obtain an export license. For example, a manufacturing
license can also serve as an export license for output (finished goods) of a manufacturing
company. Licenses are issued by the concerned government offices against the submission of a
completed application form along with the following documents:

 A copy of the Tax Identification Number (TIN);

 A copy of the Memorandum of Association and Articles of Association for the company;
 A contractual agreement of office rent or office building plan;
 A document evidencing the capital allocated for the commercial activity;
 Two passport size photographs taken within the last six months;
 If the applicant is a foreign investor, the investment and residence permit; and
 A valid business registration certificate.

Currently, export licenses are issued through a manual process which requires the applicant to
visit the government offices in person.

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2. Arrange payment issues

Payment may be made on the basis of franco-valuta or bank permit. The bank permit allows for
three types of payment modalities, i.e., letters of credit (L/C), cash against document (CAD), and
advance payment. To obtain a permit for any of these, the exporter is required to present a
completed bank permit form, which is available from the banks, along with the following
documents to his/ her bank.

 An original sales contract agreement;

 The exporter’s business license;
 The exporter’s TIN certificate;
 For L/C: Advice and shipping documents (commercial invoice, packing list, bill of lading
or air way bill, certificate of origin and regulatory permit, if required);
 For advance payments: original credit advice, and advance payment receipt advice
(incoming telegraphic transfer) or customs declaration along with a bank advice for the
sale of the cash notes to the bank.

For all methods of payment, the exporter needs to have an account with the bank and must not be
listed on the NBE delinquent list.

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:

 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.

4. Obtain export permit for goods restricted for export in Ethiopia

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The export of some goods from Ethiopia is restricted, for example animal feed. For these, the
exporter must obtain an export permit from the relevant regulatory body prior to submitting an
export declaration. The list of restricted goods can be obtained from the concerned regulatory
agencies or from ERCA.

5. Prepare customs declaration

The exporter or his/her agent is required to complete the clearance customs declaration,
indicating the type of export regime, detailed data or information about the exported goods, and
also tariff classification and customs valuation, which leads to determining the export duties and
taxes.

According to the Ethiopian tax law, with the exception of hide and skin all export goods are
exempted from duty and taxes.

6. Submit customs declaration

The exporter needs to present his/her export customs clearance declaration with the supporting
documents to customs clearance office.

In terms payments, export goods – except raw hides, skins and leather – are not subjected to any
export duties and taxes. For those export goods where duty and tax payments are required, these
must be paid before submitting the declaration.

7. Obtain export customs clearance and ship goods

The procedures for export customs clearance is similar to the import procedures as outlined
above, except for some differences in the individual steps. The main steps are thus:

 Acceptance or rejection by ERCA of the goods declaration;

 Checking of the declaration and examination of the export goods by ERCA, depending
on the risk assessment;
 Preparation of the goods release note;
 Payment of the warehouse fee (and other services charges, if applicable) by the exporter.

After completing these formalities, ERCA will allow the goods to exit from the customs territory
for export and they can be shipped abroad.

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8. Pay service charges and receive final export customs declaration

This is the last stage of the export procedure. After fulfilling all obligations for customs clearance
and the release of goods, ERCA will issue the final declaration to the exporter as a certificate that
all customs procedures related to the export of the goods have been accomplished.

9. Submit clearance declaration to NBE

Any exporter who obtained an export bank permit is expected to present the final export customs
declaration to the NBE. This is a requirement for importing or exporting goods in the future.

As in the case of imports, an exporter must keep all records and documents related to the export
for five years from the date of ERCA’s acceptance of the goods declaration. During this period,
ERCA may perform a post clearance audit of the export.

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