Eacc Management Act 2004

P.
17 PUBLIC FINANCE AND TAXATION

EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT (EACCMA) 2004
INTRODUCTION TO EACCMA 2004
Treaty Establishing the East African Community
The Treaty establishing the East African Community was signed by heads of
government of the partner states on November 30, 1999 in Arusha, Tanzania and
came into force on July 7, 2000. The East African Community was formally launched
on January 15, 2001.
The broad goal of the EAC is to enhance co-operation in all areas for the mutual
benefit of the Partner States.
In order to reach this goal a Customs Union will be established as the entry point
of the Community followed by a Common Market, subsequently, a Monetary Union
and ultimately a Political Federation of the East Africa States.
Main features of custom union
1) A common set of import duty rates applied on goods from other countries
2) Duty free and quota free movement of tradable goods among its
constituent customs territories
3) Common safety measures for regulating the importation of goods from third
parties such as phyto-sanotary requirements and food standards
4) A common set of customs rules and procedures including documentation
5) A common coding and description of tradable goods
6) A common valuation method for tradable goods for tax purpose
7) A structure for collective administration of the customs union
8) A common trade policy that guides the trading relationships with third
countries outside the union.
The Objectives of the Treaty
Promotion of a sustainable growth and equitable development of partner states
including rational utilization of the regions natural resources and protection of the
environment;
1) Strengthening and consolidating the long standing political, economic, social,
cultural and traditional ties by partner states and associations between the
people of the region in promoting a people-centered mutual development;
2) Enhancing and strengthening participation of the private sector and civil
society;
3) Promotion of good governance including adherence to the principles of
democratic rule of law, accountability, transparency, social justice, equal
opportunities and gender equality; and
4) Promotion of peace and stability within the region, and good neighborliness
among the partner states.
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MR.SWALLO C.G.C
LECTURER IN PUBLIC FINANCE AND TAXATION (T.I.A)
A.D.A (T.I.A), CPA (MODULE-E)(NBAA), PGDTM(I.F.M), MBA(FINANCE)(O.U.T), MSC.ACC & FIN.(M.U)

Background
The East African Community Customs Union commenced operations on 1st January
2005 following the official launching ceremonies that were held simultaneously in
Kampala, Nairobi and Dar es Salaam on 31st January 2004.
Legal Framework for the EACCU
The following documents provide the Legal framework for the East African
Community Customs Union:
1.
2.
3.
4.
The Treaty for Establishment of the East African Community

Protocol on the Establishment of the East African Community Customs Union
The East African Community Customs Management Act 2004
Annexes to the Protocol on the establishment of the East African Community
Customs Union (key among them):
The EAC Common External Tariff
The Program for Elimination of Internal Tariff
The Rules of Origin
The Safeguard Measures
Function Structure of the EAC Customs Union

A Directorate of Customs and Trade at the EAC Secretariat is established whose role
is to:(i) Initiate policy on Customs and related trade matters in the Community
(ii) Coordinate and monitor among others Administration of the Common External Tariff;
Enforcement of the Customs law of the Community; and
Activities of the Commissioners in implementation of the Customs law.

The Commissioners of Customs in the Partner States will handle day-today

operations of Customs, including collection and accounting for Customs revenue and
management of human and capital resources employed in Customs. These
Commissioners and staff are appointed under the existing Partner States Revenue
Authority laws.
Changes brought about by the Customs Union
Common duty rates which will apply uniformly on goods imported into East
African Community
Zero rates on most of the goods originating and traded within East Africa
An East African Community Customs Act which will apply uniformly in the
three Partner States
A standard and harmonized exemption regime which does not give any officer
or minister any discretionary powers to grant tax exemption
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A harmonized list of prohibited and restricted goods which are not allowed to
be imported in any one Partner State
Tax incentives for producers of goods for export through Export schemes
where duty on inputs is waived. These include:
Export Processing Zones
Free trade zones
Manufacturing under Bond
Duty draw back for manufactures of goods for export
Inward Processing
Zero tariffs on most of the capital goods, agricultural inputs, medicines and
medical equipment, raw materials and chemicals
Protection of agricultural production such as milk and dairy products, maize,
rice, sugar
Simplified Customs procedures at border crossing where joint controls and
sharing of facilities will be in place
Computation of taxes based on CIF value at the initial port of discharge in
East African Community e.g. Mombasa, Dar es Salaam
Harmonized documents to eliminate duplication and delays in clearance
Dispute and appeal mechanism in case of dissatisfaction with a decision made
by Customs
Anti-dumping and countervailing measures to deter dumping of cheap goods
onto the East African Market
Use of information technology in Customs processes to enhance efficiency
and reduce delays
Negotiating as a bloc on trade matters
Airfreight cost to be excluded in the value for computation of duty
Settlement and compounding of cases by Customs will be upon admission by
the offender to have committed the offence
Customs must give reasons for refusal to grant or revoke a license to
Customs Agents, Warehouse Operators and Internal Container Depot
Operator
Duty remission Schemes for inputs used in manufacture of some products
including:
Sugar for industrial use
Paper for manufacture of excise books
ADMINISTRATION
Without prejudice to the generality of s.3, the directorate shall in relation to the
management and administration of customs, coordinate and monitor:
Administration of the common external tariff

Enforcement of the custom laws of the community
Trade facilitation as provided by article 6 of the Protocol
Administration of the rules of origin
Compilation and dissemination of trade statistics
Application and interfacing of IT in customs administration
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Training in customs related matters

Quality control in customs operations and enforcement of compliance
Customs related negotiations and
Activities of the commissioner in the implementation of this act
The performance of the directorate in performance of its functions under the act is
subject to the general directions of the council of ministers, and may consult with or
delegate its functions to any commissioner (see below).
Apart from the powers to establish the Directorate of customs, the council of
ministers has the following powers:
To establish within the communitys institutional framework a committee
To make regulations for the working arrangement between the directorate
and the customs

The committee as established above shall have the following objectives:
a) To facilitate the directorates formulation of policies and programs on customs

management and administration
b) Facilitate exchange of information between the directorate and the
commissioner and
c) Facilitate any other matters on working arrangements between the
directorate and customs
Appointment of the commissioner of customs

The commissioner responsible for the management of customs for each of the
partner states shall be appointed in accordance with the partner states legislation,
and so shall other staff as necessary for the administration of this act and efficient
working of the customs(s 5).
The commissioner shall be responsile for the management and control of customs
including the collection, and accounting for customs revenue in the respective
partner states (s.5.2)
Customs Control of Goods: (s.16)
The following goods shall be subject to Customs Control:(a) All imported goods, including imported through the post office, from the time of
importation until delivery for home consumption or until exportation whichever
first happens.
(b) All goods under drawback from the time of the claim for drawback until
exportation drawback means f refund of all or part of any import duty paid in
respect of goods exported or used in a manner or for a purpose prescribed as a
condition for granting drawback
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(c)
(d)
(e)
(f)
(g)
(h)
(i)
All goods subject to any restriction on exportation from the time the goods are
brought to any part or place for exportation until exportation
All goods subject to any restriction on exportation from the time the goods are
brought to any part or place for exportation until exportation
All goods which are with the permission of the proper officer stored in a
customs areas pending exportation.
All goods on board any aircraft or vessel whilst within any part or place in a
partner state
Imported goods subject to duty where there is a change of ownership over
such goods from an exempt person to a non-exempt person
Goods, which have been declares for or are intended for transfer to another
Partner State
Seized goods
Interpretations to EACCMA, 2004

Approved place of loading and approved place of unloading mean any quay, jetty,
wharf, or other place, including any part of a Customs airport, appointed by the
Commissioner by notice in the Gazette to be a place where goods may be unloaded
or loaded.
Boarding station means any place appointed by the Commissioner by notice in the
Gazette to be a place for aircraft or vessels arriving at or departing from any port or
place to bring to for the boarding by or the disembarkation of officers.
Bonded warehouse means any warehouse or other place licensed by the
Commissioner for the deposit of dutiable goods on which import duty has not been
paid and which have been entered to be warehoused.
Countervailing duty means a specific duty levied for the purposes of offsetting a
subsidy bestowed directly or indirectly upon the manufacture, production or export
of that product.
Customs area means any place appointed by the Commissioner by notice in writing
under his or her hand for the deposit of goods subject to Customs control.
Customs warehouse means any place approved by the Commissioner for the
deposit of un entered, unexamined, abandoned, detained, or seized, goods for the
security thereof or of the duties due thereon.
Duty drawback means a refund of all or part of any import duty paid in respect of
goods exported or used in a manner or for a purpose prescribed as a condition for
granting duty drawback.
Export processing zone (EPZ) means a designated part of Customs territory
where any goods introduced are generally regarded, as far as import duties and
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taxes are concerned, as being outside Customs territory but are restricted by
controlled access.
Government warehouse means any place provided by the Government of a
Partner State, and approved by the Commissioner, for the deposit of dutiable goods
on which duty has not been paid and which have been entered to be warehoused.
Import means to bring or cause to be brought into the Partner States from a
foreign country.
Manufacturing under bond means a facility extended to manufacturers to import
plant, machinery, equipment and raw materials tax free, for exclusive use in the
manufacture of goods for export.
Port means any place, whether on the coast or elsewhere, appointed by the Council
by notice in the Gazette, subject to any limitations specified in such notice, to be a
port for the purpose of the Customs laws and, in relation to aircraft, a port means a
Customs airport.
Prohibited goods mean any goods the importation, exportation, or carriage
coastwise, of which is prohibited under the EACCMA, 2004 or any law for the time
being in force in the Partner States. Re-exports means goods, which are imported
and are under Customs control for re-exportation.
Restricted goods means any goods the importation, exportation, transfer, or
carriage coastwise, of which is prohibited, save in accordance with any conditions
regulating such importation, exportation, transfer, or carriage coastwise, and any
goods the importation, exportation, transfer, or carriage coastwise, of which is in
any way regulated by or under the Customs laws.
Export processing Zone means a designated part of customs territory where any
goods exported or used in a manner or for the purpose prescribed, in so far as
import duties are concerned, as being outside customs territory but are controlled by
access.
Sufferance wharf means any place, other than an approved place of loading or
unloading at which the Commissioner may allow any goods to be loaded or
unloaded.
Transhipment means the transfer, either directly or indirectly, or any goods from
an aircraft, vehicle or vessel arriving in a Partner State from a foreign place, to an
aircraft, vehicle or vessel, departing to a foreign destination.
Transit means the movement of goods imported from a foreign place through the
territory of one or more of the Partner States, to a foreign destination.
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Transit shed means any building, appointed by the Commissioner in writing for the
deposit of goods subject to Customs control.
Unaccustomed goods includes dutiable goods on which the full duties due have
not been paid, and any goods, whether dutiable or not, which are imported,
exported or transferred or in any way dealt with contrary to the provisions of the
Customs laws.
IMPORTATION
To import means to bring or to cause something to be brought into United Republic
of Tanzania from a foreign country.
PROHIBITED GOODS AND RESTRICTED GOODS
Reasons for imposition of prohibitions and restrictions:
Political reasons
The state governments do
encourage antagonism or
weapons that may be used
and therefore prohibited or
encourage importation of items or goods that incites or

resistance to the government in power. Arms and
to fight against the government in power are undesirable
restricted.
Economic reasons
Importation of number of goods has a serious impact on local industries especially
manufacturing, agriculture and even employment and inflation levels. Duties
imposition plus restriction or prohibitions serve as deterrent measures to check
importation that foster both consumption of goods not locally available and
safeguard local industries.
Social reasons
Uncontrolled importation goods has severe effects on social life especially
employment, inflation, behaviour and even faith and belief. Prohibition and
restriction of goods not conforming to the desired social values and interest serve as
measure to check and control such importation of such goods.
Security reasons
Prohibition and restriction of goods considered being dangerous and harmful to
security and safety is necessary to attain a controllable level of the same in any
state.
Health reasons
Restrictions and prohibitions importation of drugs and chemicals approved for use in
a given state safeguard its residents against consumption drugs, chemicals and
other compounds not conforming to the desired health and social standards.
Agricultural reasons
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The barriers are intended to discourage in form of taxing, prohibitions or restrictions

of importation or exportation of some plants considered to have impact on the
country economy. Imposing tax on agricultural items or goods which is also
available locally or which may be produced locally, because the imports to be
relatively more expensive as compared to locally produced goods of the same type.
Convention for International Trade on Endangered Species (CITES)
Importation or exportation of all animals listed as endangered species in the CITES
convention is prohibited for the purposes or preserving the endangered species.
PROHIBITED GOODS
These are goods the importation on which is absolutely not allowed, they are
specified in the part of the 2nd schedule of the customs management Act (CMA) as
follows:
Cocaine
False money
Hazardous wastes
Pornographic materials & indecent articles
Counterfeit goods of all kinds
Restricted Good
These are goods whose importation is prohibited unless any conditions regulating
their importation has been certified
Arm and ammunitions
Precious stones and metals
Ivory
Firearms and ammunitions
Genetically modified products
Ozone depleting substances
Second hand tires
Historical artefacts
Psychotropic drugs under international control
- Tear gas live animals and birds
IMPORTATION PROCEDURES
There are found importation procedures which a person is required to go through
when goods are imported. They are as follows:
(a)
(b)
(c)
(d)
Entry
Examination
Valuation
Clearance
(a) Entry
S. 33 of CMA prohibits the unloading of goods from the vessel unless the goods
have dully entered Entry involves furnishing by the owner or agent of the goods
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the fully particulars of the goods imported supported by documentary evidence.

The documents include the following:
The invoice
Bill of lading
Single Bill of Entry
Import Declaration form
Certificate of origin
After lodging the documents with the customs department the proper officer should
examine the goods to see weather
Documents are genuine or bona fide
Values are reasonable
No document is missing
The arithmetic calculations are proper
To check on prohibitions and restrictions
(b) Examination
After processing of the documents has been done then they will be dispatched to
the port for examination of the goods by the examination officer. The
examinations officer will go with an agent or owner of the goods to make a
thorough examination of the goods imported.
(c) Valuation
This is the determination of the dutiable value and duties payable. The valuation
officer will rely on the report issue by the examination officer.
(d)
The Clearance
Clearance involves a release of a gate pass to allow the goods to be removed
from the port. A gate pass a release order will be processed only when all the
custom duties and port charges have been paid.
PROVISIONAL ENTRIES (S.38)
A provisional entry takes place when goods are cleared temporarily due to
insufficient or absence of documents, expecting that documents may be brought
later for the preparation of the perfect entry. Conditions to be fulfilled:
Application in prescribed form specifying the reasons for insufficient
documents
Making of a security. The security may be a deposit of an amount which is
equal to the duties payable
To perfect the entry within the period of 3months or such further period as
may be allowed by the proper officer.
TEMPORARY IMPORTATION (S.117)
The CMA provides for exemption of import duties on certain goods imported for a
temporally use or purpose.
Conditions to be fulfilled before exemption is granted
Making an application in a proper form
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Making a deposit or giving a security for the amount of the import duty to
which the goods would otherwise be liable
Certify the proper officer that the goods imported for temporally use or
purpose only.
Prove of exportation of the goods within such period not exceeding 12 month
from the date of the importation or any other period which may be allowed by
the proper officer
Example of goods which may be imported temporarily
Commercial Travellers samples
Stage properties imported for local exhibition
Goods imported solely for renovation or repaid
Reg. 127 a non resident who want to stay temporarily may have road
vehicle goods for this use and traitors hence may be allowed
WARE HOUSING OF GOODS
Definition of the warehouse
This is a place approved by the commissioner for deposit of goods which are unentered unexamined detained or seized for duties payable there on.
Types of where houses
i) Customs approved by commissioner general
ii) Bonded licensed by commissioner for dutiable goods
iii) Government Provided by good, approved by commissioner
Warehousing procedure S.48
- The proper officer before delivery of such goods to a warehouse shall, save
where the commissioner otherwise directs, take accounts of the goods, whether
or not such account had previously been taken.
- Record the name of vessel/aircraft/vehicle/parcel post reference; name of the
owner of such goods, the number of the packages; the mark and number on
each package; the value and particulars of the goods.
- Proper officer shall certify at the foot of the account that the entry and
warehousing of the goods is complete.
- Any goods entered for warehousing shall be within 14 days moved to such a
warehouse and deposited in the packages in which they were imported.
- Any goods were permitted to be repacked, bulked, sorted etc, they shall be
deposited in the packages in which they were contained when that count took
place.
- If the cargo is bulk or the warehouse is far away, the commissioner may allow
up to a maximum of 45 days.
An one who contravenes the above provision is liable of an offense, and if convicted
the goods shall be forfeited.
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In respect of goods not moved to warehouse by the owner, the commissioner may
direct such removal to the warehouse at the cost of the warehouse keeper, who
shall hold lien the goods for the recovery of such cost.
Entry of warehoused goods
Goods which have been warehoused may be entered either for:
- Home consumption
- Exportation
- Removal to another warehouse
- Used as stores for aircraft or vessel
- Removal to an export processing zone
- Removal to a free port
Operations in a warehouse S.51
Where any goods are warehoused the commissioner may permit subject to any
conditions imposed:
- Repacking, sorting, bulking
- Permit the taking of samples by the owner
- Allow the name of the owner as entered in the records changed to a new
owner if application is made by the owner on the prescribed form
- Permit the assembly or manufacture of any article consisting wholly or partly
of such goods, and for such purpose the commissioner may allow into the
warehouse any duty free or locally produced product necessary for the
manufacture of the product.
Where such manufacture happens and the final product is for home consumption,
the duty shall be charged on the final product based on the original entry of the
components except in the case of crude or partly refined petrol in which case the
duty shall be levied on the basis of the final product as if the product had been
freshly imported. The same procedure shall apply for blended lubricating oil.
Any contravention of the above procedure would result in the goods being
forfeited.
Re-gauging and revaluation S.52
The commissioner or on the application of the owner and at the expense of the
owner may
- re-gauge, re-measure, re-weigh, re-count etc any warehoused goods
- re-value any warehoused goods liable to duty
Where this happens the duty shall be based on the revaluation. However where
there is excessive loss or deterioration which has been negligently cause, the duty
shall be based on the original amount subject to any reductions that the
commissioner may grant
Duties of the warehouse keeper
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One receipt of the goods the warehouse keeper should make sure that proper goods
are received and they ate in the proper condition and the seal should be intact.
The warehouse keeper should not accept the goods whose seals is broken.
The warehouse keeper is require to record the full particulars of the goods in the
proper register when the goods are in the custom warehouse they can be sorted
repacked or assembles by permission of the commissioner general.
Customs warehouse charges rent
Where, any goods have been sold, then its proceeds are applied in the order to set
out below in the discharge of:(a) The duties, if any
(b) The expenses of removal and sale
(c) The rent and charges
(d) The port charges
(e) The freight and any other charges
If there is any balance after sale, then such balances shall: If the goods were prohibited goods or restricted goods in relation to which
there had been any contravention or if no application for such balance is
made as provided in below, will be paid into the customs revenue.
In any other case be paid too the owner of the goods if he makes application
for it within one year of the date of the sale.
If goods cannot be sold may be destroyed or disposed of in such manner as the
commissioner may direct.
Any officer may refuse delivery from customs warehouse until he is satisfied that all
duties, expenses, rent, freight and other charges due in respect of such goods have
been paid.
Goods deemed to be deposited in a customs warehouse S.43
The proper officer may decide that it is undesirable or inconvenient to deposit
certain goods in a customs warehouse and direct such good deposited in some other
place. Such goods are deemed to be deposited in a customs warehouse.
Inspection and Audit S.236
The Commissioner has the power to:
Verify the accuracy of the entry of goods or documents through examination
of books, records, computer stored information, business systems and all
relevant customs documents, commercial documents and other data related
to the goods.
Question any person involved directly or indirectly in the business, or any
person in the possession of documents and data relevant to the goods or
entry.
Inspect the premises of the owner of goods or any other place of the person
directly or indirectly involved in the operations.
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Examine the goods the goods where it is possible for the goods to be
produced.
Drawback of import duty may be allowed under section 139 for the
following goods:
- Goods imported for use in the manufacture of goods which are exported,
- Goods imported for use in the manufacture of goods which are transferred to a
free port, or
- Goods imported for use in the manufacture of goods which are transferred to
an export processing zone.
Sale of goods deposited in the custom warehouse
Where the goods stay for 30days in the customs warehouse without the owner
lawfully removing them, them the commissioner shall give a notice of 30 days in the
public gazette as the goods will be request to be sold in the public auction.
However the commissioner may extend the period in case the goods are owned by
the partner states government, diplomat mission or donor agencies.
EXPORTATION
Prohibited goods as per section A of the 3rd schedule: S.70
All goods the exportation of which is prohibited under any written law in force in the
partner states
Restricted goods as per section A of the 3rd schedule:
a) All goods the exportation of which is regulated under this act or any law in
force in the partner states
b) Waste and scrap of ferrous cast iron
c) Timber from any wood grown in the partner states
d) Fresh unprocessed fish (Nile perch and tilapia)
e) Wood charcoal
2.
The following goods shall not be exported in vessels less than 250 tons register
Warehoused goods
Goods under duty drawback
Transhipped goods
The council may be an order published in the gazette amend the provisions of the
third schedule, either specifically or generally. S. 71.
The provisions shall not apply for good in transit, transhipment or for stores of
vessels or aircraft (unless the vessel is less than 250 tons) or the goods are of the
category that are expressly prohibited or restricted for export under the act or any
other law in the partner states.
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S.72 where the goods are for trans shipment, transit, stores etc they should be dealt
with within a time as specified by the commissioner, otherwise they amy be deemed
prohibited or restricted.
Entry of goods for export S.73
Any cargo to be loaded for export must be entered by the owner of such cargo in
the manner prescribed, and such entry shall be supported by full particulars and
documentary evidence. Failure to do this is an offense and the goods may be
forfeited.
The vessel shall also be entered for outward movement, and no goods shall be
loaded on the vessel before the said entry is made.
Loading will be at an approved time and from an approved place of loading
Goods that may be loaded without entry S.76
- Goods which are the bona fide personal belongings of passengers, crew, or
vessel
- Goods intended for sale or delivery to passengers, crew, and vessel
- Mail bags and postal articles in the course of transmission by post
- On application by owner to make the entry within 48 hrs and upon issuance of
security on the duties due on the goods.
Goods entered for export, use by passengers, store etc shall not be discharged
within the partner states, save with the written permission of the officer and upon
such conditions as he may impose. S.77.
OFFENSES, PENALTIES, FORFEITURE AND SEIZURES S.193-S.218
1. A person who conspires with another person or persons to contravene the
provisions of this act commits an offense and shall be liable on conviction to a
term not exceeding 5 yrs.
2. Any person who shoots at a aircraft or vessel in the service of the customs,
shoots at any officer maliciously wounds any officer on duty, commits with
violence the following:
- Obstructs any officer in the execution of his duties
- Breaks, destroys, throws over board any goods to prevent the seizure of
such goods, or the securing if such seized goods
- Rescues any person arrested for an offense under the act commits an
offense and shall be liable on conviction to imprisonment for a term not
exceeding 20 yrs.
3. A person who while committing an offense is found armed or while being so
armed is found in the possession of goods liable for forfeiture under the act is
liable for imprisonment for a term not exceeding 10 years.
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4. A person who disguises and commits and offense under the act or while
disguised is found in the possession of goods liable for forfeiture commits an
offense and on conviction will be liable for a term not exceeding 3 years.
5. A person who removes, obliterates, defaces, alters, or imitates the customs
seal or any mark placed on custom goods shall if convicted be liable to a fine
not exceeding $2,500 or a term not exceeding 3 years or both.
6. Any person who induces another to commit an offense under the act shall be
liable for a jail term not exceeding 1 years
7. Its an offense to warn an offender, or impending action under the customs

act, Offense to assume character of customs officer
8. Master of a vessel, aircraft, vehicle who uses it to smuggle commits an
offense
9. Offense related to prohibited, restricted and un costumed goods- acquires or
is in possession of, causes to be carried coastwise, cause to be boarded, etc
is liable to an offense and may be imprisoned for a term not exceeding 5
years or fine not exceeding 50% of the dutiable value of the goods.
10. Offense to import or export concealed goods
11. Offense to make or use false documents
12. Offense to refuse to produce documents
13. Offense to interfere with custom gear-fine $2,500
General penalty
A person who commits an offense under this act for which no specific penalty is
provided shall be liable to a fine not exceeding $5,000.
Where under a conviction under the act a person becomes liable for a fine not
exceeding a certain amount, the court may impose a fine not exceeding three times
the value of the goods in respect to which the offense was committed or the
specified amount whichever is the greater. For the person of the value of the goods
the commissioner shall cause such goods to be valued by a customs officer, and
such valuation shall not take into account any damage to the goods.
Goods liable for forfeiture S.210
- Any prohibited goods
- Any restricted goods dealt with contrary to the condition attached to their
importation, exportation or carriage
- Any unaccustomed goods
- Goods imported, exported or transferred, but packaged in a manner appearing to
be intended at deceiving the customs officer
- Any goods imported, exported or transferred for which the entry, application for
shipment or application to unload does not correspond with such goods
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Goods subject to customs control, which are moved, altered, or in any way
transferred.
CUSTOMS DUTIES: CUSTOMS VALUATION OF IMPORTED GOODS

Method of determining the customs duties
Brussels Definition of value (BDV)
The Actual custom valuation (ACV)
Brussels Definition of Value (BDV)
The Value an article would fetch in the open market between the buyer and seller
where the two are in dependent of each other.
Objective
To facilitate international trade i.e. by having a common way of valuing imported
goods.
To simplify international negations and comparison of foreign trade statistics.
BDV Application in Tanzania
Under this method of valuation the normal price was determined under the following
assumptions:
Goods have been delivered to the buyer at the place of introduction in the
country of importation.
The seller will bear all the costs charges and expenses incidental to the sale
and delivery of goods at the part/place of introduction.
The buyer will bear any duties or taxes applicable in the country of
importation.
The price is the sole consideration and the price should not be influenced by any
relationship either:Commercial
Financial or otherwise other than the one created by sale.
Costs, charges/and expenses comprising the normal price
Freight
Insurance (if not invoiced the rate is 1.5 of C&F)
Port charges (in the country of export)
Dock due & wharf age (in the country of export)
Landing, handling, sorting costs
Postage (in the case of post parcels)
Demurrage (if any in the country of export)
Royalties (copy right and patent)
Inspection fees (in the country of export)
Advertising discount if invoiced as a deduction.
Charges not allowed as part of the normal price
1. Finance Commission
16
MR.SWALLO C.G.C

Example 1
Purchase price
Finance Commission
The normal price is 1,000/= USD
1,000
100
1,000
2. Breakage allowance fragile articles

Example 2
Supplier gives an allowance as
Purchase price
100
Breakage all 2%
2
98
USD
USD
USD
deduction
USD
USD
USD
This is not allowed so the CIF is 100 USD

3. Trade discounts
Example 3
Purchase price
Disc. 2%
120
2.4
117.6
USD
USD
USD
If granted to all it is accepted and the CIF will be 117.6 USD

If it is specific to certain individuals or institutions then the CIF is 120 USD.
Indicator Price
Techniques for compiling the indicator price
Research: Officers are sent to various countries to get data on prices.
Shortfalls on indicator price
Non frequent review of the indicator price
Poor description of the goods in the list regarding for example model/make
Non consideration of the technological advances of the manufacturer
Non secrecy of the indicator price i.e. the importers happen to know the indicator
prices
Lack of legal backing
Basic Elements of the BDV
There are five elements of the BDV namely
Price
Time
Quantity
Place
Level
Price: The normal price includes commission brokerage and the delivery costs to
the place of introduction into the country of importation.
It excludes duties and taxes applicable in the country of importation.
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MR.SWALLO C.G.C

If the price includes non-dutiable elements or conversely fails to include dutiable

elements, it will have to be adjusted to be brought into conformity with the normal
price. They include the following:
Packaging costs (country of export)
Handling costs (in country of export)
Port charger (in country export)
Wharf age charges (in country of export)
Insurance costs
Freight charges (CIF cost, Insurance & Freight)
Time: to establish a standard value applicable to all importation it is necessary to
lay down a fixed time element. The ideal time for goods to be valued is to moment
when they are cleared for home use. (i.e. the time when the duty becomes
payable).
Place: the definition stipulates the delivery of the goods to the buyer at the port or
place of introduction in the country of importation. Thus the normal price is the price
the goods would fetch for delivery to the buyer at that part or place.
Since the normal price is based on the concept of CIF it includes all the costs and
charges and expenses involved in delivering the goods to the port of importation.
However it excludes duties and taxes paid.
Quantity: the normal price is determined on the assumption that the sale is a sale
of the quantity to be valued. This is intended to comply with trade practices in
respect of each transaction.
Level: the level of the transaction means the commercial stage at which sale is
concluded e.g. Sale concluded between a manufacturer and wholesaler or between a
retailer and consumer.
The definition allows the price to be influenced by the level which has to be
determined individually for each importation by reference to the facts related to
actual goods concerned i.e. The level at which the sale is negotiated can also be
accepted for determination of the normal price, despite the fact that same goods
might have been sold at different prices to other importers buying at other levels.
Shortfall of the BDV
No frequent review of indicator price
No consideration of technological change advantages and economics of scale
No secrecy of indicator price (manipulability)
Lack of legal backing
Actual Customs Value
The parties to GATT/Valuation convention saw the need to have harmonised and
neutral valuation procedures.
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MR.SWALLO C.G.C

Under this valuation method the Agreement stipulates that the basis of valuation of
goods for customs purposes should, to the greatest extent be the transactional value
of the goods being valued. This method generally take the actual value agreed upon
between the buyer and the seller in the contract. Therefore the valuation purpose,
the ideal price should be the actual price of acquiring the good regardless of the
operation market price that may be at the time the valuation procedures are done:
The ACV may have the following values prices depending on circumstances
Valuation Methods
Transactional value
Transactional value of identical goods
Transactional value of similar goods
Deductive method of determining the value
Computed value method
Fall back method
TRANSACTION VALUE
The customs value of imported goods shall be the transaction value, which is the
price actually paid or payable for the goods when sold for export to the partner
state, can be taken to be the custom value of goods, if
(a) There are no restrictions as to the disposition or use of the goods by the buyer
other than restrictions which:
(i) Are imposes or required by law or by the public authorities in the Partner
State
(ii) Limit the geographical area in which the goods may be resold; or
(iii) Do not substantially affect the value of the goods;
(b) The sale or price is not subject to some condition or consideration for which a
value cannot be determined with respect to the goods being valued;
(c) No part of the proceeds of any subsequent resale, disposal or use of the goods
by the buyer will accrue directly or indirectly to the seller, unless an appropriate
adjustment can be made in accordance with the provisions of Paragraph 9; and
(d) The buyer and seller are not related.
TRANSACTION VALUE OF IDENTICAL GOODS
The transaction value of identical goods in a sale, at the same commercial level and
in substantially the same quantity of the goods being valued shall be used to
determine the customs value and where no such sale is found, the transaction value
of identical goods sold at the different commercial level or in different quantities,
adjusted to take account of differences attributable to commercial level or to
quantity, shall be used, provided that such adjustments can be made on the basis of
demonstrated evidence which clearly establishes the reasonableness and accuracy of
the adjustment.
TRANSACTION VALUE OF SIMILAR GOODS
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MR.SWALLO C.G.C

Where the customs value of the imported goods cannot be determined under the
transaction value of similar goods sold for export to the Partner State and exported
at or about the same time as the goods being valued;
The transaction value of similar goods in a sale at the same commercial level and in
substantially the same quantity as the goods being valued shall be used to
determine the customs value. This value is used when transaction value of identical
goods are not available. If more than one value takes the lower.
DEDUCTIVE VALUE
The custom value of the imported goods under the provisions of this paragraph shall
be based on the unit price at which the imported goods or identical or similar
imported goods are sold in the greatest aggregate quantity, at or about the time of
the importation of the goods being valued, to persons who are not related to the
persons from whom they buy such goods, subject to deductions for the following:
Sales commission paid
Profit added
General expenses added
Transport, insurance at other related costs incurred in partner states
Customs duties and other related costs incurred in partner states
Customs duties and other national taxes payable in partner states of importation or
sale of goods.
COMPUTED VALUE
The custom value under computed value shall consist of the sum of:
(a) The cost or value of materials and fabrication or other processing employed in
producing the imported goods;
(b) An amount for profit and general expenses equal to that usually reflected in
sales of goods of the same class or kind as the goods being valued which are
made by producers in the country of exportation for export to the Partner
State;
(c) The cost or value of all other expenses necessary to reflect the costs added
such as loading, handling and related charges, and transport and insurance
costs in the country of export.
FALL BACK VALUE
The customs value shall be determined using reasonable means consistent with the
principles and general provisions of this Schedule and on the basis of data available
in the Partner State.
No customs value shall be determined under the provisions of this paragraph on the
basis of:
(a) The selling price in the Partner State of goods produced in the Partner State;
(b) A system that provides for the acceptance for customs purposes of the higher
of two alternative values;
(c) The price of goods on the domestic market of the country of exportation;
20
MR.SWALLO C.G.C

(d)
(e)
(f)
(g)
The cost of production other than computed values which have been
determined for identical or similar goods in accordance with the provisions of
paragraph 7;
The price of the goods for export to a country other than the Partner State;
Minimum customs values;
Arbitrary or fictitious values.
Example 4
Total cost
5,000,000
Given the following: Port charges 500,000, wharf age charge 200,000, export charge
400,000 in order to arrive at CIF for determining the value of item then,
Total cost
5,000,000
Less port charges
500,000
Less wharf age
200,000
4,300,000 This is Deductive method
The Computed method will be:
The invoice price USD 2,000/=
Cost incurred; Transport costs (in export country) USD 50
Handling charges (cost) USD 30
Port charges USD 150
Insurance USD 70
Freight cost USD 200.
CALCULATION OF THE CUSTOMS DUTIES
The following are the types of taxes which are normally payable on importation of
goods.
1) Import duty
2) Excise duty
3) Value Added Tax
Method of calculating the Import taxes/duties:
Method 1
Example 5
Assume the following information has been provided for item
Imported (x) = 8,000 (USD) CIF
Import duty 25%
Excise duty 15%
VAT 18%
Exchange rate 1500 Tshs/USD
Required: Determine the total Tax liability
Method 2
Example 6
The following formula shall be used to determine the total duties payable =
[Y =x (1+i) (1+v) X]
21
MR.SWALLO C.G.C

Where y = The total duties payable e =rate of excise duty

i = the rate of Imported duty v=rate of VAT
x= Value of the Import CIF
Using the previous example
y
=
12,000,000 (1+25%) (1+15%) (1+18%) 12,000,000
12,000,000 x 1.25x1.15x1.18 12,000,000
=
20,355,000 12,000,000 = Tshs 8,355,000/=
Changing from FOB to CIF, Assume the following Data is provided relating to good
imported by Mr Kajua
One bus 10,000 USD (FOB)
One Saloon car 4,000 USD (FOB)
One Ambulance 800 USD (FOB)
Insurance (total) 2,000 USD
Freight charges (total) 3,500 USD
Suppose Mr Kujua is exempted from paying the customs duties with respect to an
ambulance, calculate the total duties that Mr. x will be liable to pay.
Assuming the following rates prevail:
Import duties 25%
Excise duty 15%
VAT 18%
Exchange rate 1,200 Tzs/USD.
EXEMPTIONS
Fifth schedule of the (MA)
There are two categories of the exemption available in the custom Act, there are as
follows:
Specific exemptions and General exemptions
SPECIFIC EXEMPTIONS
There are types of exemptions granted to specific person or institutions due to their
personality or due to nature of the activities performed by them. Such
persons/institution includes the following:
1) The president of the URT
2) Diplomats and Diplomatic Missions
3) Donor Agencies
4) Partners States (EAC)
GENERAL EXEMPTION
1. Air craft operations
2. Containers and pallets (not carrying Ad valorem duty goods)
3. Seeds for sowing
4. Items and Equipment Imported in order to be displayed in Public Museum.
5. Mosquito nets and other materials for manufacturing the Mosquito nets.
6. Educational articles and materials.
22
MR.SWALLO C.G.C

7. Chemically defined compounds to be used as fertilizers.

Example 7
Mr. Mwoyo is English who come into the United Republic of TZ solely to work as a
chief Accountant in a certain Private company. On his arrival in DSM he was
accompanied by the following items:
(i) His wearing apparel worth 1500
(ii) Household items worth 2800
(iii) One saloon car which he bought in UK two years back for his personal use
worth 4500
(iv) He also had 2 refrigerators worth 400 and 700 respectively, where the
from one was used by him in his former residence in UK. While the latter one
was purchased by him when giving into URT.
(v) One Min-bus (15 passengers) worth 10,000 purchased by him 5 years ago
for his person use
(vi) He also came with two office equipment worth 600 and 400 respectively,
for official use
(vii) Another saloon car worth 5000 which he bought six months ago in UK for
his personal use.
Required: Calculate the total tax liability one the importation of Mr. Mwoyo items
assuming the following rates prevailed at the time of importation.
Import duty 20%
Excise duty 10%
VAT 18%
Exchange 1800/
Note:
All values are CIF inclusive
It is assumed that the items imported are liable to all three types of taxes on their
importation
Example 8
Mr. Hazu had entered into a contract to import 600 pairs of shoes from USA on A
July 2009. The agreed value of the contract (CIF) was USD 3000 which was also the
market value at that time. It was agreed that the shoes should be imported by 30th
July 2009.
However, due to unavoidable circumstances, the goods failed to reach the URT in a
specific time, but came into URT on 31st January, 2010. At that time the market
value of these pairs of shoes was USD 3800.
Required: Calculate the total tax liability in the following methods of valuation
1) The Brussels Definition of Value (BDV)
2) The actual Custom Value (ACV)
Rates prevailing on 30th July 2009
23
MR.SWALLO C.G.C

Import duty 20%

Excise duty 12%
VAT 18%
Exchange rate Tshs. 1200/USD
Rates on 31st January, 2010
Import duty 25%
Excise duty 15%
VAT 18%
Exclusive Tshs. 1500/USD
(Asycuda++ Automated system for customs Data management
Is a customs computerized entry Processing systems developed by the United
Nations Conference on Trade and Development, UNCTAD).
Example 9
Migwo Importers Limited, (MIL) of Mara Tanzania, imported goods that are as per
East African Community Customs Management Act (EACCMA) 2004, restricted
goods. MIL did observe all requirements regarding importation of restricted goods.
Such goods arrived at Mtwara Port on January 3, 2009. The Commissioner of
Customs gave several notices and decided to sell the goods by public auction. The
goods were sold for Tshs. 22,700,000.
MIL had the following obligations to settle:
Duties due to customs Tshs. 12,500,000
Port charges of Tshs. 4,500,000
Freight and other charges of Tshs. 13,800,000
Expenses of removal and sale of Tshs. 2,600,000
Clearing and forwarding charges Tshs. 670,000
Rent and charges due to customs Tshs. 8,800,000
Required:
i. Give the above receipts and obligations, determine how the proceed of sale
may be distributed
ii. To whom a balance, if any, is supposed to be paid to?
Example 10
Tingo Gold Traders of Tanzania imported a used saloon car from Taiwan. The cost of
the car includes:
Cost (FOB) USD 3,500
Sea freights USD 1,800
Insurance USD 50.
Upon arrival of the car at Dar es Salaan Harbor on August 29, 2009, the customs
offices issued assessment that in fact was based on the customs value that is higher
than the actual CIF by 10%.
24
MR.SWALLO C.G.C

The following rates were applicable at the date of assessing the car for duty and
taxes purposes:Import duty on the car 20%
Excise duty on the car 5%
Value Added Tax 18%
Exchange rate Tshs. 1,350 per USD
Required:
i. Compute the custom value in (United State Dollar) had the Customs office not
uplifted the value of the car.
ii. Compute total duties and taxes payable based on the uplifted value in Tanzania
Shillings
iii. Mention any four possible reasons for imposition of import duty on imported
goods.
Four possible reasons for imposition of import duty on imported goods
1. To safeguard local industries
2. Security reasons
3. To safeguard endangered species
4. Agricultural reasons
5. To raise government revenues
Q.BAHATI COMPANY LIMITED is a newly formed company for carrying out

agricultural business.
During the first year of its operation, that is 2006; it purchased the following
depreciable assets:
A. Computers and data handling equipments, which were used by the company
secretary and accountants, 2computers were purchased at Tshs 1,800,000 in 1st
February 2006, never the less two minibuses with seating capacity of 30 passengers
were bought at same date.
B. Three bulldozers each costing Tshs.1, 000,000,furniture and fittings costing in
total Tshs.8, 500,000, harrows and plant all costs Tshs.6, 000,000,three 29
passengers minibuses which were used to shuttle the staffs were purchased each
Tshs.15,000,000 never the less purchased three FUSO tractors @ Tshs. 1,800,000.
C. Two prefabricated wooden houses, which were created in Japan and reassembled in Makete IRINGA for senior farm managers costing Tshs 20,000,000
each, these houses, were used for about 10,540,800 seconds in 2006.More over at
15th February 2006 the company acquired for Tshs. 3,000,000 the skills of
manufacturing juice which life span of it was 5 and 5 months.
25
MR.SWALLO C.G.C

Required: By applying relevant provisions of Income Tax Act 2004, compute the
depreciation allowance for depreciable assets.
Mr.Musa carried on the business of manufacturing and servicing electrical appliances
since then and closed his books of accounts on 31st December of each year the
following is the profit and loss account for the period from 1st January 2009.
TSHS.
Gross profit
Other income
Acb interest (deposit)
Bad debt recovered
Insurance compensation (loss of profits)
Gross rent from residential house
Dividends received from T.B.L (listed in DSE)
Less: expenses
Salaries and wages
General expenses
Telephone and electricity
Depreacition
Income tax
Motor car expenses
Bad and doubtful debts
Repairs
Promotion and advertisement
Net profit
4,800,000
3,600,000
900,000
1,000,000
1,000,000
5,000,000
500,000
850,000
700,000
40,000,000
750,000
850,000
2,000,000
1,500,000
1,000,000
46,100,000
18,350,000
27,750,000
Addition information
1. General expenses included the following.
(i) Travel expenses for Mr.misifa to Kampala for holiday tshs.500,000
(ii) Medical expenses for Mr.misifa tshs.100,000
(iii) Legal cost and stamp duties on acquisition of godown in October 2009
shs.900,000
2. Mr.misifa established that 1/5 of the motorcar expenses represent personal and
private use.
3. Bad and doubt debts: The whole amount represented a general provision for bad
doubtful debts
4. Repairs: The amount was incurred on a used building purchased for use in the
business as godown
5. Promotion and advertising: the amount included shs.100,000 being the cost of an
advertising sign board installed along Nyerere Pugu road
6. Depreciation allowances were claimed on the basis of the following information
26
MR.SWALLO C.G.C

Class I
Written down value b/d
Original cost
Purchases in 2009
Disposal in 2009
2,400,000
4,800,000
2,100,000
500,000
Class II
Class III
1,700,000
2,000,000
3,000,000
600,000
1,800,000
1,900,000
1,500,000
400,000
7. During the year Mr.Misifa acquired a loan from NMB for the purpose of expanding
the business carried on. the loan amounts to tshs.10,000,000/=which bears an
interest of 10% per annum. This item has not been treated in the profit and loss
account.
Required: Compute Mr. Misifas taxable income from the business (15 mark)
27
MR.SWALLO C.G.C

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17 PUBLIC FINANCE AND TAXATION

The Treaty for Establishment of the East African Community

Function Structure of the EAC Customs Union

The Commissioners of Customs in the Partner States will handle day-today

Administration of the common external tariff

Training in customs related matters

The committee as established above shall have the following objectives:

a) To facilitate the directorates formulation of policies and programs on customs

Appointment of the commissioner of customs

Interpretations to EACCMA, 2004

encourage importation of items or goods that incites or

The barriers are intended to discourage in form of taxing, prohibitions or restrictions

the fully particulars of the goods imported supported by documentary evidence.

7. Its an offense to warn an offender, or impending action under the customs

CUSTOMS DUTIES: CUSTOMS VALUATION OF IMPORTED GOODS

2. Breakage allowance fragile articles

This is not allowed so the CIF is 100 USD

If granted to all it is accepted and the CIF will be 117.6 USD

If the price includes non-dutiable elements or conversely fails to include dutiable

Where y = The total duties payable e =rate of excise duty

7. Chemically defined compounds to be used as fertilizers.

Import duty 20%

Q.BAHATI COMPANY LIMITED is a newly formed company for carrying out

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