There will soon be new rules for importing used vehicles into the country. A task force has presented their final draft to the Minister of
Finance (MoF) Ahmed Shide for final remarks. The tripartite committee consisted of representatives from the Transport Authority, Ministry
of Revenue (MoR) and MoF.
There has been debate between the Transport Authority and the MoF as to how to best go about discouraging used car imports. Some want to
limit the age of cars that can be brought into the country while others favor taxes or penalties.
Some reasons for limiting the amount of used vehicle imports include: supporting local car assemblers, reducing traffic accidents, limiting
environmental pollution and generating more revenue through taxation. To improve air quality and other environmental standards some have
suggested not allowing cars over five years old to be imported at all. While others think that very old cars, those older than ten years should be
banned or taxed at rates between 5 and 100 percent of the car’s value.
Regardless of the preference the consensus in the proposal means that as cars get older excise taxes would get higher. For example a 7 year
old car would cost less to import than a 10 year old car. The excise tax levied on cars would be as follows: from one to two years 5%, from 2-
3 years 10%, from 3-5 years 20%, from five to six years 20 %, from six to seven years 40 %, from seven to eight years 50 %, from eight to
nine years 60 % and finally from nine to 10 years 100 percent.
Another proposal is to penalize older cars that come into the country via a fine which would be calculated progressively as the cars age.
There isn’t really a law limiting the age of imports but rules have been enforced erratically at the customs administration.
There was a previous directive issued as the Harmonized System (HS) which only lists new vehicles. However, many imported cars in Ethiopia
arrive after major changes.
Transportation vehicles may arrive in the country after being changed from a driving vehicle into a loading vehicle, and that hampers the
tariff book from being reliable when used vehicles are imported. The Minister, Ahmed Shide, asked the team to focus on the revenue data of
imported vehicles and provide him information of classified models. Team members from MoR sent the requested information to the MoF
and the team is finalizing the issue to present to the minister in two weeks.
Finalizing the legal framework is among the 100 day plans for the tripartite government bodies which are changing many traffic laws such as the
Excise Tax Proclamation and installing speed limiting devices. Ethiopia, which is a World Customs Organization (WCO) member, had to revise
its Harmonized Commodity Description and Coding System, also known as the HS in 2017. The WCO improved its HS code and every member
country must do the same. Unfortunately, the country has not finished this yet and the Ministry of Revenue in collaboration with the MoF is
trying to achieve this in the coming few months. The revision includes the upcoming changes to rules involving vehicle imports. After the
approval of the policy and legal frameworks, the final output will be included in the tariff book.
“The government took the case very seriously and the contents of the final draft are subjected to multiple changes,” said Haji Ibasa, PR directorate
Director of the MoF. (Capital Ethiopia)