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ECOWAS Tariff New ECOWAS Common External Tariff takes effect

The new law is a major move towards economic integration in the sub region.

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The new Economic Community of West African States (ECOWAS) Common External Tariff (CET) has taken effect, raising uncertainty among local importers.

The CET is one of the instruments of harmonising ECOWAS Member States and strengthening its Common Market.

The law is composed of four tariff rates of custom duty, namely 0 % for Essential Social Goods, 5% for Goods of Primary Necessity, Raw Materials and Specific Inputs, 10% for Intermediate Goods and 20% for Final Consumption Goods.

The law came into effect following the passage of the Customs (Amendment) Act, 2015 (Act 905), by the Ghana Revenue Authority.

Importers in Ghana are however uncertain whether the new law would lead to an increase or decrease in cost of importation.

How CET operates

The CET establishes a system where goods coming into any of the ECOWAS countries will be paid in the country of first entry within the ECOWAS region and the importer would no longer be required to pay in the country of final destination.

There is the possibility of the ECOWAS CET raising import tariffs of member countries by about 0.308 per cent, according to a customs document published by a German organisation helping the Nigeria Customs Service to implement the CET, Gesellschaft fur Internationale Zusammenarbeit (GIZ), on the new tariff scheme, Leadership.ng reported.

As a result, shippers should expect to pay between 11.38 and 12 per cent more (according to the simple weighted average rate) for their imports. The document, however, notes that the West African Economic and Monetary Union (UEMOA) tariffs which used to be relatively low will increase with the implementation of the CET, making tariff to drop in some ECOWAS countries.

“By contrast, tariff rates of other ECOWAS countries will generally fall. Such a levelling of rates is necessary to achieve harmonisation,” the document observes.

The Principal Revenue Officer at the Ministry of Finance, Ben Ayensu Kwarfo told Accra based Citi FM that the new law will help prevent revenue losses due to smuggling by some importers.

He said: “Smuggling has negative impact on revenue because if let’s say rice for instance, Liberia has not implemented the CET so rice in Liberia now is 10 percent but it is 20 percent in Ghana so at least there is the incentive to smuggle and avoid the payment of taxes but with the implementation of the CET, the system is now open and fair because it is the same everywhere and I think it will impact positively on our revenue and also protect the local rice production.”

GRA Guidelines

1. All CCVRs issued which remain unutilized as of 31st January, 2016 shall be reissued to reflect the tariff changes with effect from 1st February, 2016.

2. With effect from 1st February, 2016, all declarations shall be passed using the new applicable tariff rates.

3. Declarations passed before 1st February, 2016 but which remain uncleared, shall be processed using the old rates.

4. Goods warehoused before 1st February, 2016 shall be ex-warehoused using the Common External Tariff rates.

5. Overage penalties shall continue to be charged at existing rates by user-definition. 

6. Processing fees shall continue to be payable on zero-rated and exempt goods.

Any problem arising from the application of the above guidelines or clarifications should be sent to  info@gra.gov.gh

 

 

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