Planning for border, customs clearing charges

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A Customs Clearing Agent’s role sometimes calls for making a number of payments to third parties on behalf of the importer or exporter at the time of customs clearance. With the proliferation of import and export controls and the generally bureaucratic customs processes at the border, it is sometimes necessary for an importer to properly budget for these costs, some which are known before importation.The most common payments to plan for are as follows:

(1) Customs dues: Import duty, import VAT, excise duty, clearance fee, customs deposits, customs fines

(2) Inspection Fees: For example agriculture plant protection protectorate, health, veterinary, biotech, and EMA.

(3) Permit Fees: Agriculture, bio safety, EMA

(4) Handling Charges: paid to customs appointed warehouses and storage facilities usually located at the border and airport areas.

(5) Special attendance

The first group of payments can be easily estimated by your clearing agent well before importation in most cases (except the fines) with only some small variations due to ZIMRA exchange rate changes at times. As an importer you will generally not have any influence to vary the amount as rates of duty are legislated.

But of course, in the long term you may have influence if you lobby for changes in rates of duty.

Fines will arise where you have flouted customs regulations or if your agent makes an error during entry submission.

For example, if you fail to provide a licence or permit, in addition to holding the goods until you meet the requirement; ZIMRA will charge the greater of a $2 000 fine or three times the duty paid value of the goods.

In cases where a wrong customs tariff code is used resulting in underpayment of duties, ZIMRA also levies a 100 percent fine of the potential prejudice to revenue.

This is done despite the fact that Section 87 of the Customs & Excise Act clearly gives the obligation of classification to ZIMRA? Sometimes your agent may make an error, say use the wrong currency during declaration entering a USD Invoice as Rand resulting in under declaration.

In most cases the importer will pay the fine which is usually 100 percent of the potential prejudice. ZIMRA have no mercy there.

Depending on your terms of reference with your clearing Agent or Advisor, you or your Agent may also find out if you may benefit from any rebates or suspensions of duty well before importation. These will greatly reduce your duty obligations.

Another way to obtain lower rates of duty is to use preferential rates of duty. Your supplier should be able to tell you if their product is registered under any preferential rate of duty regime and provide the Certificate of Origin.

Your agent is only able to give you the effective rate of duty and not whether your supplier’s product qualifies for preference or not. For example, let us say you are importing door locks from a South African Building materials supplier who also manufactures door locks.

They stock Yale locks made in China and others made at their South African plant. When they invoice you, it is only them who will know which locks they will despatch, the ones made in South Africa or the ones made in China.

The advice is to avoid fines arising from a wrong declaration by knowing the correct source of information.

It is not only ZIMRA who need payments to be made at the border. Various Ministries and government departments also enforce their controls and conduct inspections.

The Inspection fees are also legislated; therefore you can also easily plan for these. They usually range from $20 to $30 per shipment/product line. Permit fees are charged for permits issued at the border.

These are applicable for agricultural products, foods and feeds. In addition to the inspection fees, some have a penalty component if you do not have the permit at the border because ideally you are supposed to get a permit before importation. For example, the Bio safety permit for the minimum quantities will cost $50 if issued at the border, whereas you would pay only $30 if you obtain it inland before importation.

Of course ZIMRA will charge you a $2 000 fine and hold the goods for failure to produce a permits and licences. They will only release the goods upon production of the permit/license.

Permit fees are known and usually these need not be left for payment until arrival of the shipment. A good example is the Plant Importation permit where, if you are importing large quantities, you can process the split permits as soon as you have your Agriculture permit on hand.

Another major cost incurred at a customs port are handling and storage charges paid to owners of landing, loading, examination places, transit sheds, container depots.

These places are appointed and licensed by the Commissioner in terms of sections 17, 18 and 19 of the Customs and Excise Act.

The majority of them are privately owned while some are not e.g. The National Handling Services facility at the Robert Mugabe Airport.

While the Commissioner sets conditions when he appoints these places, it appears these have not been effective in protecting the trading communities. They are cases of overcharging, loss of goods and other vices occurring at these places.

Recently there have been press reports of the Manica depot at Beitbridge border post increasing storage and handling charges in an inexplicable manner. Just like a lot of other unscrupulous traders in the market, they tried to factor in the three tier pricing system obtaining in the market.

There is price for when you use the swipe facility, the Ecocash facility and when you use bond notes and coins. All these prices are tied to a USD price which is not openly stated.

And then we have the AGS facility at the Airport with charges which are way above the NHS facility? The worst thing is that the Importer does not have much of a choice on where their goods are offloaded at the moment. ZIMRA may you need to consider the level of their conditions when they licence these facilities.

One of the most worrisome payments requested by Agents from Importers is the Special Attendance. This will be discussed in a future article.

Importers and Exporters need to plan for these payments and agree well beforehand with the Clearing Agent on the payment modalities. This should be done to manage the risk of delays in release of the shipments from the border. The biggest risk is the loss of the funds to the Clearing Agent. Importers you may need to be wary of Agents who charge you very low Agency fees as little as $30?

Disclaimer: This Article is not meant to create a consultant/client Relationship. Readers are advised to consult their Consultants for specific advisory services.

About the author: Gertrude Mawire is a Fiscal Compliance and Investment Advisor based in Harare. She writes in her personal capacity. Gertrude, a member of ZNCEE ( customs & excise experts) holds an MSc in Finance & Investments (NUST) Bachelor of Business Studies (UZ), IOBZ Diploma various other Certificates. She can be contacted on mawireg@gmail.com, and 0712 437 256, 0772 336936.

 

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