Any delays and “red tape” pose a burden for moving goods across borders for traders. Trade facilitation—the simplification, modernization and harmonization of export and import processes—has therefore emerged as an important issue for the world trading system.
The country of Egypt has announced some changes to their current processes and have introduced some important updates that companies doing business in Egypt need to take a moment to review and possibly implement to their best practices to ensure the smooth movement of goods.
A recently published law known as law No. 207 has updated the previous laws that have been in place for many years. The new law brings many changes to the customs processes and systems that will benefit all parties involved with both the importing and exporting of goods. Some of these changes will be introduced over a period of time while others go into effect in 2021.
Egypt will begin the implementation of the “single-window” system that will ensure the facilitation of the customs processes as well as set up communication channels to address companies’ technical questions that arise in today’s new modern world. Customs is also updating their rules for the new and increasing need for E-commerce and Intellectual property rights and goods from around the world as they enter the marketplace.
The following details have been prepared from information within the new laws and will apply if your business is involved with the listed items.
What are some of the new Duty and Fees impacts under the new law?
- The customs duty due on machinery, equipment, devices and production lines imported to manufacturing projects which do not enjoy any exemptions or reductions in customs tariffs, may be paid in installments for a period not exceeding one year in exchange for an additional tax for each month or part of it
- Collecting a customs duty of 5% from the value of machinery, equipment, devices and production lines, which is necessary for the establishment of projects in accordance with the Companies Law, as well as construction projects, hotel and tourism projects
- A customs duty of 5% of the value shall be levied on passenger cars which does not exceed EGP 400,000 and is intended for use in touristic transportation
- Refund of customs duties on raw materials imported under the drawback system in case of exportation, within a period not exceeding one and a half years (previously, this was two years)
- Refund on customs duties and other taxes and duties relating to foreign goods that have been destroyed. This shall be in accordance with the rules stated within the executive regulations of the law
- Clarifications provided on the special customs regime, such as drawback, temporary admission, and special warehouses
- The refund of the guarantees shall be issued immediately upon the exportation of the goods under the temporary admission regime or the re-export of machinery and equipment under the temporary release regime
- Acceptance of financial / non-financial guarantees as an alternative to taxes and fees in the case of the temporary admission regime
- Any cargo will remain in customs for more than one month without submitting Import declaration (take any step from customs procedures) will be subject to auction
- Manifest & Bill of lading must include consignee Tax ID number, except personal effects
What are the new Customs violations? The below are considered violations and a fine of EGP 10,000 will be imposed in the following cases:
- If incorrect data is included in the customs declaration
- Not preserving the seals placed on parcels, containers, or transportation means
- Violating the established customs rules
- Failure to enable customs employees to carry out their duties in inspecting, requesting and examining documents
What are the new fines when a violation occurs?
Firstly, a fine equivalent to half of the customs duty value shall be imposed in the following cases:
- The unjustified decrease or increase in the imported goods
- Providing incorrect data of the value of goods if the discrepancy exceeds 20% of the value
- An increase in the inventory of special customs regimes such as warehouses and duty-free shops, if the goods are not listed in the records
Secondly, a fine equivalent to the value of the cutoms duty shall be imposed in the following cases:
- Providing wrong information about the type of goods or their origin
- Violating customs rules and procedures established in special customs regimes such as free zones, transit and warehouses
As we can see, many of these updated changes also bring the toughening of penalties when violations in trade occur, therefore understanding the changes in processes, procedures, systems and how businesses need to adhere to these changes will become a very important step for businesses around the world.
Trade facilitation is the best step forward to promote international trade with the world, these improvement in Egypt will help the growth of their exports and well as improve the imports are trade continues to grow in the world today.
If you have any questions please do not hesitate to reach out to BDP Egypt so that they may assist you.