Authorized Economic

Operator in ECC
And
customs special service
presentation.
 Presentation Contents
 [Link] AEO Program in ECC
 2. AEO Accreditation process
 2.1 AEO Accreditation Process Flow chart
 [Link]- Audit Criteria.
 3. Compliance Audit
 3.1 . Risk Fields &Aggregated Eligibility Criteria.
 3.2 Table of Aggregated Eligibility Criteria.
 3.3 Evaluation Report
 4. level of facilitation/benefits
 [Link] AEO Benefits
 6. Implementing Security In Context
 [Link] Service and Communication
customs special service
[Link]
[Link] special service accreditation process.
[Link] of other regulatory/concerned bodies and
ECC
[Link] benefit and obligations to the customs special
service.
[Link] and follow-up mechanisms of AEO and
customs special service.
[Link] and differences between AEO and
customs special service.
 [Link] AEO Program in ECC

 The Authorized Economic Operator (AEO)

program was Started as a pilot project in 2010
using risk management as a tool to balance
between facilitation and control
 This helps ECC to divert financial and human
resources to high risk Consignment and
 to provide high level of facilities to
compliant taxpayers
 For the purpose of pilot test 13 Companies
were selected
 2. AEO Accreditation process
 AEO Application
 Pre Audit criteria
 Self Assessment
 System Compliance Audit
 The compliance auditor arrange a company
tour to assess the company tax and customs
operation system based on the compliance
audit template.
 The template is available to the company on the
web site and it can download and prepare in
advance
 2. AEO Accreditation process
 AEO Application
 Pre Audit criteria
 Self Assessment
 System Compliance Audit
 The compliance auditor arrange a company tour
to assess the company tax and customs operation
system based on the compliance audit template.
 The template is available to the company on the
web site and it can download and prepare in
advance
2.1 AEO Accreditation Process Flow chart
 [Link]- Audit Criteria

 Based on best practices and experiences of different

countries pre Audit criteria has set for each targeted
operators(Manufacturer ,importer, exporters, freight
forwarders, carriers, customs clearing agents).The
common pre-Audit criteria include;
1. Firms or branches of foreign companies must be
established in Ethiopia for at least 3 years before applying
unless it is decided by the general manager in a special
case);;
2. Obtaining a favorable rating from the Customs’ Risk
Management System( medium risk level);
 Manufactures –

 A. It should create permanent job opportunity

at least for twenty (20) days.
 B. It should produce and export it products to
abroad to make the necessary contribution the
foreign exchanges generation to the country or
it produces imports substitution items.
Freight forwarders and carriers the
good.

• Fright forwarding professional license with at least

two (2) professionals.
• The organization should have experience in serving
as fright forwarder and carrier at least forwarder and
carrier at least for three years.
• Its customs risk should be at least medium
• The organization’s asset /Capital should be at least
five (5) million
Customs Clearing agent-

• A. Having professional license of clearing agent and

at least one professional.
• B. The one that created job opportunity for eight (8)
people
• C. The organization’s capital should be at least one
(1) million
• D. The organization should three years work
expenses in serving as fright forwarders
Carriers:-.
• A. The one having at least one professional
trained in transport management or similar
profession.
• B. The one registered in trade license and
having a capital of five (5) million and above
Importers –.
A. The organization should get registered at least
five /5/ million capital as importer’s license.
B. the organization should have three (3) years
work experience as importer.
C. The one that paid one (1) million and above
duty and tax charges of customs in the post three
years.
D. The one that has paid at least a mean profit tax
of one (1) million and above in the post three
years.
E. The custom’s risk level should be medium.
Exporters-
A. The organization should be the one that has
generated more than one hundred thousand
and above average American dollar foreign
exchange annually the past three years.
B. The one that has paid a profit tax of two
hundred thousand annually in the past three
years.
C. The Organization should be the one that has
created job opportunity for at least ten
persons.
 Warehouse operators-
• the organizations with tangible bonded
warehouse are either manufactures or
importers. Hence, if they are warehouse
operators registered as importers or
manufactures should be served as
warehouse operators when they apply to be
embraced in authorized economic
operators subject to their fulfilling the
requirement ideated above for importer,
exporter and manufacturer.
 Cont….Cont…..
• Therefore, based on directive No. 40/2002 as well
as the revised directive No.76/2004, the licensed
organizations can directly audit their internal
procedures as the directive can serve as a
precondition.
• . If the organization had been easy customs service
using authorized by the authority or executive
office in a special manage and same have applied
to be embraced in the program they would be
audited without any pre-condition.
• Procedure of being served in a special condition
with out pre-conditions.
 Cont….
Cont…..
• Huge organization entre in to the country to
launch investment activities through economic
diplomacy or up on lobbing them and therefore
they and organizations that are important for
economy and that are strategic and embraced
under value chain shall be audited with out the
requirement of pre-condition as per the
decision of the directors genera and letter
written from a special executive offices and
direction of the director general.
 Cont…
• In addition if any organization has fulfilled
other pre-condition and has a red customs risk
the organization could be audited up on
putting quality of evidence in to account and
discussing management directorate and other
concerned bodies as well as considering the
importance of the organization.
 3. Compliance Audit
The compliance auditor arrange a company tour
to assess the company tax and customs
operation system based on the compliance
audit template.
 3.1 . Risk Fields &Aggregated Eligibility Criteria
No Potential Risk Fields Potential Risk Fields

1 Contribution to national 13 Information security -

Agenda documentation security

14 Financial Solvency

2 Volume of business 15 Entry and access to premises

3 Statistics on customs matters 16 Physical security

4 Compliance history 17 Logistical processes

5 Intelligence information 18 Non-fiscal requirements

6 Audit trail 19 Incoming goods

7 Accounting system 20 Storage of goods

8 Internal control system 21 Production of goods

 Cont…
9 Flow of goods 22 Loading of goods

10 Customs and Tax routines 23 Security requirements for

foreign suppliers business
partner security

11 Procedures as regards back- 24 Personnel Integrity

up, recovery and fall- back
and archival options

12 Information security - 25 External services

protection of computer
systems
 From the Compliance Audit report, some 25 areas
of risk have been evaluated to determine the way
the company currently addresses them within the
processes and procedures of organization.
 The compliance level of the company , will
determine through the eligibility aggregated
criteria that is directly derived from 25 risk fields
 3.2 Table of Aggregated Eligibility Criteria
No Eligibility Criteria Addressed Risk Areas Aggregated
score

1 Contribution to national 1+2+3

Agenda

2 Compliance history with tax 4+5+11

and customs

3 Financial solvency 15

4 Management of commercial 6+7+8+9

resources

5 Information management and 12+13+14

system computerization

6 Logistical frame work of 10+16+17+18+19+20+21+22

compliance

7 Education, training and 25

awareness

8 Compliance in the 23+24

relationships with business
partners
 3.3 Evaluation Report
 The compliance level of the company has been evaluated
according to the following scoring grid applied to each
eligibility criteria.
 Score  Comment

 5  Very satisfactory

 4  Satisfactory

 3  Passable/acceptable

 2  Need slight improvement

 1  Need deep improvement

 4. level of facilitation/benefits
Grade Benefits to be obtained

Diamond  Issuing VIP Level

 Differed Payment
 Simplified Service and facilitation in
copy of the document
 Prior inspection, providing inspection
service in their warehouse
 Deduction Customs Control and
interference
 Pre-arrival Clearance
 Service against the presented in voice and
reviewing the presented compliant

Gold  Differed payment

 Simplified service and facilitation in copy
of the document
 Prior inspection, providing inspection
service in their warehouse
 Deduction Customs Control and
interference
 Pre-arrival Clearance
 Service against the presented in voice and
reviewing the presented compliant
 Cont…
Silver  Prior inspection
 Providing inspection service in their
ware house
 Pre-arrival Clearance
 Providing Service in copy
 Service against the presented in voice
and reviewing the presented compliant

Bronze  Prior Service Freight forwarders and carriers, carriers and

 Prior inspection custom clearing agent as well as warehouse
 Facilitating in Prior in case of Compliant operators
 Additionally
 The prior services rendered for all authorized economic operators paying tax
locally.
 They shall be provided with prior solution they request clearance for their tax
settlement.
 Priority shall be granted to them when they come to settle tax or
reimbursement is made to them
 Providing them priority in technology projects to be networked (E-filling, E-
tax, bank relation and other similar services) to make tax collection be
effective.
 They shall be provided with prior solution in connection with tax
determination.
 Benefits obtained by other related offices for all accepted economic operators.
 Authorized economic operators found in the custom’s vicinity particularly,
comet transport plc and Ethiopian air lines warehouse shall be rendered with
prior services.
 When the accepted economic operator’s fright are inspected for the standards
and quality or competency, subject to the risk level of the frights, they shall
provided with prior service.
 CONT…
 Prior multi model service in provided to the frights
of accepted economic operators and door to door
service in granted to them.
 If their fright could not get prior multi modal service
at the Djibouti port, waiver of transporting their
frights in model is granted to them ( particularly for
manufactures) to remove the frights.
 The authorized economic operators having their
over trucks shall be authorized to transport fright
from Djibouti in a special manner by multi model
transport operators.
 CONT…
 In the manner it doesn’t violate bank’s credit provision,
fast credit service shall be outstretched; in addition, the
insurance company as well as other service providing
organization shall be made to provide similar services.
 Authorized economic operators request for land for
investment or expansion of new investment from the
Cities under Federal Government ( Addis Ababa and
Dire Dawa Cities) and Regional Administrations, they
shall be provided with the same prior as per authorized
by the law.
 Various capacity building utilizes such as electric
service , water service and telecommunication service
issued by various public enterprises
 6. Implementing Security In Context
 The customs-business partnership program was initially
developed to be in-line with Compliance program
 But now it is developed based on WCO safe framework
 The safe framework standards (both customs to customs
and customs to business partnerships ) are assessed in
ERCA (what we have and what we can do )
 Therefore, when we consider with the core elements of
SAF WCO FRAME WORK
 ERCA is managing its Import, Export , goods in transit
and other customs operations via customs Automation
(ASYCUDA++).
 The Authority is committed to optimize risk management
approach to address risk of revenue loses and security
threats.
 Con’t……..
 At the same time ERCA has about 18 scanning
machines includes THSCÃN Re-locatable
scanning machines, Palletized Cargo Inspection
and THSCÃN mobile Scanning machines are
already installed at the customs entry
borders( transit corridors and at international
airports) these scanning machines enable to
perform an outbound inspection of high-risk
cargo and/or transport conveyances non-
intrusively.
 [Link] Service and Communication
 The Authorized program is planed to be
strengthened based on the six standards of
customs trade partnership stipulated in
WCO safe framework.
 A one client coordinator is already assigned
at every branch who is responsible for
facilitating communicating and reporting
AEO specific cases to head quarter AEO
unit.
 [Link] and Follow Up
 The AEO will be monitored based on the
post clearance audit and Intelligence and risk
based control.
 Therefore monitoring and follow up
mechanism for AEO are mainly;
[Link] clearance Audit(both desk Audit and
comprehensive), this Audit should be done at
least once within three years for every AEO.
[Link] AEO compliance Audit Team should made
a system Audit(security and customs
compliance) at least once within two years.
 CONT..
 The controlling mechanism is also planed
to be supported by IT
 The AEO monitoring Procedure is
developed mainly based on vertical and
horizontal cooperation( with out which
there will not be effective and efficient
AEO)
customs special service procedure
 INTRODUCTION
GOVERNMENT POLICY:-Ethiopian government has
implemented 5th year economic plan to reach the
country a middle income level by doing a different
huge projects. In line with government policy,
companies in Ethiopia also play significant role to
achieve such gov’t plan.
 Hence ERCA has introduce customs special service
procedure to expedite the processing of their goods. It
is clear that making import and export goods control as
well as favorable customs balanced is the interest of all
administrators of the customs of all countries. Among
the major focuses set by Ethiopian revenues and
customs authority, collecting tax and duty based on
free and willingness of the payers up on making
commercial societies led by the law is the one.
Purpose of customs special service
is to create comfortable environment to
commercial societies especially for
manufacturers and exporters since they have
great economical contribution to the country
growth.
 A. Customs special service accreditation process.
manufacturers:- means those organization engaged in industry
minister, ministry of mining and agricultural ministers.
 Priority focus on growth and transformation plan.
 Value of value addition.
 Job opportunities.
 Volume of investment expense.
 Production capacity.
 Internal procedures and controlling mechanisms.
 Exporting his output.
 Produce import substitutions goods.
 Creating backward and forward linkage for production.
 Pay large amount of tax value.

 b. exporters .
 Generate large amount of foreign currency to the country.
 Supplying new product/goods to the importing country.
 Volume of investment expense.
 Job opportunities.
 Internal procedures and controlling mechanisms.
 Structured computerized information system.
 Pay large amount of tax value.
 Export fabricated outputs.
 Illustration Of accreditation process
 Leather factories
 Have great yearly export plan……………………………………...20%
 Export plan implementation…………………………………….….50%
 Forward finished leather products for shoe factories……………10%
 Readiness for environmental protection………………………..…10%
 Job opportunities …………………………………………………....10%
 Shoe factories
 Have great yearly export plan……………………………………..30%
 Export plan implementation……………………………………….50%
 Capacity utilization……………………………………………...…..10%
 Job opportunities ……………………………………………………10%
 According to the criteria leather and shoe factories should score
greater than 60% points in order to get the special service.
 CONT…
Agricultural product exporters.
 Within three years can Generate large amount of foreign currency to the
country…………………………………………………………………..….30%
 Selling higher price relative to his competitors to the importing
countries…………………………………………………………………….15%
 Promoting new product to the receiving customers………10%
 Escalating his exporting capacity to the common market
share……………………………………………………………18%
 Manufacturing warehouse and quality controlling
machines……………………………………………………….5%
 CONT…
 New customer attraction capacity and selling his product…………..7%
 Long and short run export plan…………………………………………5%
 Internal procedures and controlling mechanisms…………………….5%
 Structured office and computerized system……………………5%
 Employment benefits…………………………………………………….5%
 Not involved in contraband……………………………………………..5%
 According to the criteria they should score also greater
than 60% points in order to get the special service.
 3. Activities of other regulatory/concerned bodies and ERCA.

3.1. Activities of other regulatory/concerned bodies

 Select and evaluate commercial societies by the

criteria and recognize to ERCA.

 Check the accuracy of required documents; if

necessary visit the applicant’s premises.

 Inform the company his benefits and obligations.

 Penalized if he/she should abuse his privilege

 3.2. Activities of Ethiopian revenues and customs
authority.
 Issuing certificate for the accredited companies.
 Distribute the accredited companies to all customs
branch office in order to get their privilege.
 Produce customs special service IT system.
 In order to make the royalty supervision and
monitoring should be conducted
 4. The benefit to the customs special service.
 Being served in a low risk and expeditious tax and
customs service.
 Prioritized treatment of customs inspection provided that
the consignments are selected for control.
 The right to get the inspection of consignment at
his premises.
 Fewer physical and document-based controls .
 Being beneficiary of pre-arrival clearance.
 Priority treatment of grievance settlement.
 Outright acceptance of commercial document and
pending post-clearance-audit(PCA) if required.
 5. Obligation of special service
 The special customs-service beneficiary should not
abuse his/her privilege.
 Ought to cooperate when his consignment selected for
inspection.
 To punish their employees who are found unethical
acts against the tax and customs rule.
 Being cooperated in providing required documents
and information during PCA or tax audit.
 Settlement of tax liability on time.
 Duty-bound to implement and incorporate the ERCA
auditors’ recommendation.
 Report to the authority any problem occurred and
being cooperative to solve the problem.
 6. Controlling and follow-up mechanisms of AEO and customs
special service.
Authorized economic operators Customs special service

Customs branch investigation

and head office intelligence together should monitor .

Should be audited by PCA at least once within three Should be audited by PCA daily.
years.

At branch level with in evidence:-

 Under taking the correctness of declaration conditionally.
 Conducting desk audit
 Examining imported goods conditionally and monitoring unexpected trade change.

Authorized economic operators compliance audit team Controlling together with regulatory bodies and erca.
should conducted post validation
 7. Similarities and differences between AEO and customs special service.

Authorized economic operators Customs special service

The prior services rendered in all service providing government Only in customs The prior services rendered.
organization.

Due to WCO member countries AEO criteria . Simplified criteria

All traders that involved the supply chain. Only for manufacturers and exporters.

Simplified Service and facilitation in copy of the document Should not use copy documents.

Differed Payment and Issuing VIP Level Being served in a low risk and Prioritized treatment of
customs inspection

Organization to be embraced under the program are divided in to 4 The benefit they obtain is the same and are not divided.
grades as Diamond, Gold, Silver and Bronze. The benefits they
obtain are also differ according to their grade

They are selected by erca authorized officials. They are select by other concerned government bodies.
similarities

- Both of them should obtain Being served in a low

risk and expeditious tax and customs service.
- Being beneficiary of pre-arrival clearance.
- The right to get the inspection of consignment
at his premises or warehouses.
- They are monitored and controlled by PCA and
intelligence information.
THANK YOU VERY
MUCH!!!