1.1
Stamp Duty
Updated Jun 20, 2020
What Is a Stamp Duty?
Stamp duty is the tax governments place on legal documents, usually in the
transfer of assets or property. Governments impose stamp duties, also known as
stamp taxes, on documents that are needed to legally record certain types of
transactions. This includes legal documents recording marriages, military
commissions, and the sale or transfer of a property.
Historically, governments impose these taxes in order to raise money to fund
government activities and projects. Stamp duties were thought to originate in
Spain in the early 17th century. These taxes were called stamp duties because a
physical stamp was used on the document as proof that the document had been
recorded and the tax liability paid.
KEY TAKEAWAYS
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A stamp duty—also known as a stamp tax or documentary stamp tax—is a
tax a government imposes on documents that are required to legally
record certain types of transactions.
Governments have imposed stamp duties on a variety of documents,
including those related to the sale or transfer of property, real estate,
patents, securities, and copyrights.
Governments impose these taxes as a source of revenue to fund
government programs and activities.
1.2.1 Customs Duty
Follow
Customs duty refers to the tax imposed on goods when they are transported across international
borders. In simple terms, it is the tax that is levied on import and export of goods. The
government uses this duty to raise its revenues, safeguard domestic industries, and regulate
movement of goods.
The rate of Customs duty varies depending on where the goods were made and what they were
made of.
Custom duty in India is defined under the Customs Act, 1962, and all matters related to it fall
under the Central Board of Excise & Customs (CBEC).
The Budget estimate of the government's customs revenue for the year 2020-21 was Rs 1,38,000
crore. The revised estimates of customs for the 2019-20 Budget came at Rs 1,25,000 crore, while
the actuals for the 2018-19 Budget stood at Rs 1,17,812.85 crore.
Types of custom duty
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Basic Customs Duty (BCD)
Countervailing Duty (CVD)
Additional Customs Duty or Special CVD
Protective Duty,
Anti-dumping Duty
Changes in Customs duty
In Budget 2019, the government announced a slew of changes to Customs duty in order to meet
multiple objectives, including promotion of clean energy, curbing non-essential imports,
boosting domestic manufacturing and raising revenue. Customs duty was cut on several inputs to
incentivise domestic production and increased on finished products to garner additional
revenues.
The government had said it was expecting a 19 per cent growth in Customs collection to Rs 1.5
trillion for 2019-20.
1.2.2
Import and Export Procedures in Ethiopia
This page presents information about Ethiopian import and export procedures.
1. Import Procedures
2. Export Procedures
Import Procedures
One can find info on import procedures in Ethiopia in relation to the pre-shipment inspection on
goods; applications submitted to commercial banks in Ethiopia to obtain import permit; modes of
payment allowed for import, documentation requirements to effect payment and document checking
and verification.
An importer who wishes to import goods to Ethiopia should pay through commercial banks. All
payments above USD 2000 should be made through Letter of Credit or Cash Against Document.
Preshipment inspections apply for all imports from China.
Go to our Starting A Business section to find out more on the procedures to start import business.
Pre-shipment Inspection:
Goods imported are not required to be inspected prior to shipment except when they are imported
from China or if the importer and the supplier have an agreement for pre-shipment inspections.
Pre-shipment Inspection on goods imported from China:
The Ministry of Trade has made arrangements with China Inspection and Quarantine Bureau (CIQ) so
that the latter would carry out the inspections prior to shipment and issue the quality certificates.
Requirments,
1.
Pre-shipment Inspection requirement on all goods purchased from China implemented in
effect since January 1, 2007
2.
Pre-shipment inspection certificate is one of the documents required to effect import
payment from China.
3.
Pre-shipment Inspection certificate requirement is mandatory for all import purchases
made from China in excess of USD 2,000
4.
Banks are required to insert requirement in the LC and also to insure that purchase order
transmitted clearly depict to have CIQ inspection requirement.
5.
Banks can not accept documents without CIQ certificate if goods are imported from
China.
Import Payment
Foreign exchange can be availed by banks to any importer provided they can present one of these
1.
Import License issued by Ministry of Trade
2.
Industry License issue by Ministry of Industry (If applicable)
3. Investment License issued by Investment Agency
Applications submitted for import should be accompanied by the Proforma Invoice / contracts from
suppliers stating
1.
The type of commodity
2.
Quantity of the commodity
3.
Price per unit
4.
FOB amount
5.
Freight if any
6.
Other charges
7.
No insurance payment is allowed for payment in Foreign Exchange, so the importer should
make insurance arrangement locally.
Mode of payment allowed for import
1.
Letter of Credit
2.
Cash against document
3. Advance payment up to USD 5000
Documentation requirements to effect payment:
It is important that the required sets of documents that should be presented by the supplier to
demand payment should be mentioned in the LC or Purchase order. The following are mandatory for
payment and always mentioned in the LC or Purchase order:
1.
A final invoice (commercial invoice) attested by the chamber of commerce of the
country of the supplier
2.
Original sets of Bill of lading, Airway Bill, Truck way bill, Railway
Manifest (depending on the mode of transportation)
3.
Country of origin invoice attested by the chamber of commerce of the country of the
supplier
4.
Packing list
5. Certificate of quality where appropriate
Importers who wish to import using CAD
1.
Should first get approvals of the their Bank on the purchase order they wish to pass to the
supplier
2.
The purchase order should clearly sate document requirements and certificate to be
attached.
3.
Shipping documents normally required for import payments
4.
Payment can only be released on CAD provided the importers get the prior approval from
its bank.
On Document checking and verification
1.
Banks shall have the responsibility to check documents and insure that goods shipped are
in accordance with the L/C term or the purchase order issued (in case of CAD) which
should clearly sate the list of documents that should presented .
2.
If the documents presented are in compliance with the letter of credit terms pr the
purchase order approved (in case of CAD) then the documents shall be accepted and the
payment will be released. If not, it will be kept in suspense pending receipt of clarification
and amendments.
Export Procedures
Businesses that wish to export from Ethiopia should know the export procedures needed to
obtain export permit by commercial banks; should prepare Application for Quality Testing
and Certification to obtain Export Authorization Certificate from the Quality and Standards
Authority of Ethiopia; should fill the Customs declaration. We have included all these export
procedures in Ethiopia and also the VAT registration for exporters from Ethiopia and VAT
rate applied on goods exported from Ethiopia.
Export permit by commercial banks
Documents required for Export Permit Approval:
(taken From Dahsen Bank)
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Duly signed contract by seller & buyer
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Undertaking letter of our customer that consignment will be settled within a
maximum of 90 days from date of the Foreign Exchange Permit for Cash Against
Document (CAD) mode of payment and Authenticated message of L/C opened for
Letter Credit mode of Payment.
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Seller’s invoice
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Export License Valid for the year
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Tax registration certificate (TIN certificate)
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Export permit application form duly filled, signed & stamped (as appropriate) by
the customer.
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NBE (National Bank of Ethiopia) issues delinquent list of exporters periodically.
Customer’s name should not appear in the delinquent exporters list of NBE for
the period. If the name appears, there should be subsequent list indicating the
given customer has cleared all outstanding items at NBE.
In regards to payment, the exporters should:
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Know thoroughly the foreign counterpart’s (buyer’s) financial soundness,
reliability, integrity, full address, etc.
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Sales/Purchase contract should exist between the two parties (importer and
exporter).
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(LC Mode of Payment) Go through text of L/C opened in their favor and make
sure that compliance can be met without doubt. Otherwise, amendments need to
be requested from opener as soon as L/C has been received or at the earliest –
long before shipment of consignments.
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(CAD Mode of Payment) Follow up the payment, as nonpayment or even delay of
remittance above 90 days will put name of exporter in delinquent list freezing
further exports until proceeds are received.
Application for Quality Testing and Certification:
When export products are ready, make arrangements for suitable packaging and apply to
the Quality and Standards Authority of Ethiopia for quality testing, and acquire the Export
Authorization Certificate.
Customs Declaration:
To avoid costly delays, the exporter declares all facts about the export consignment, and all
supporting original documents should be forwarded to the Customs Clearing Agents to
enable customs formalities and authorization of the dispatch of the export goods.
Accordingly, the exporter must hand over the Export Permit, the copy of the Customs
Declaration Annex form, the Ethiopian Customs Declaration form, the Certificate of Origin,
and the special movement forms/certificates (the EURI Movement Certificate and the GSP
form A) to the clearing agents.
Exporters, VAT and VAT Registartion
According to the Value Added Tax Proclamation (285/2002) and the Regulation by the
Council of Ministers on VAT (Regulation 79/2002), all exports of goods and services are
liable to VAT at the zero rate. This means that VAT is charged at 0% (or no VAT has to be
charged). However, more importantly an exporter is entitled to reclaim the VAT on all the
goods and services purchased to produce the exports.
But since this still means an exporter is still making taxable supplies even at a zero rate, the
law requires the exporter to register if the turnover exceeds the registration limits.
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