The Role of Customs Procedures

24 min

Why not just open the border?

Imagine that every lorry crossing into Rwanda could drive straight to the shops with no checks. Goods would arrive faster, but the government would lose the duties and taxes it uses to build schools and roads; banned goods, such as plastic carry bags, would flood in; fake medicines could reach patients; and nobody would know how much the country imports. Customs procedures exist to prevent all of this, while still letting honest traders move quickly.

Definition

Customs procedures: the set of rules and steps that goods, people and vehicles must follow when crossing a border: declaring the goods, presenting documents, inspection, paying duties and taxes, and release.

Smuggling: moving goods across a border secretly, or declaring them falsely, to avoid customs control or duties. Example: hiding goods under other cargo, or declaring new phones as “used” to pay less.

Prohibited goods: goods that may not be imported or exported at all. Restricted goods: goods that may cross only with a permit or certificate from the authority concerned, such as medicines.

Eight roles of customs procedures

Role	How customs procedures achieve it	Example in Rwanda
1. Collect government revenue	import duty, VAT on imports, excise duty and levies are assessed on each declaration and paid before release	VAT of 18% is charged on imported goods that are not exempt
2. Protect local industries	high duties on finished goods make imports dearer than local products	the 35% band of the EAC tariff on goods such as garments and furniture
3. Protect society and the environment	prohibited goods are seized; restricted goods need permits	plastic carry bags are banned under Law N° 17 of 2019
4. Protect consumers’ health and safety	regulators check that food, medicines and products meet standards before release	medicines need clearance from the Rwanda Food and Drugs Authority
5. Record trade statistics	every declaration records the goods, value, origin and destination	NISR compiles its reports on formal trade in goods from data collected by RRA’s Customs Department
6. Apply trade agreements	certificates of origin show which goods qualify for duty-free entry	EAC and COMESA certificates of origin
7. Facilitate lawful trade	trusted traders are cleared faster and checked by audit afterwards	RRA’s blue channel and Authorised Economic Operator scheme
8. Protect security	checks at borders stop weapons, drugs and stolen goods	customs works with the police and immigration at border posts

Definition

Customs value (CIF value): the value on which import duty is charged: the Cost of the goods plus the Insurance and Freight (transport) costs of bringing them to the border.

\text{CIF value} = \text{cost} + \text{insurance} + \text{freight}

VAT on imports: in Rwanda, VAT at 18% is charged on the customs value plus the import duty and any excise duty.

Worked example

Worked example 1: what customs collects (illustrative figures)

A trader imports sofas from outside the EAC. They cost Frw 3,400,000; freight is Frw 500,000 and insurance Frw 100,000. Import duty is 35%; VAT is 18%. Find the duty and VAT due.

Step 1, CIF value: $3,400,000 + 100,000 + 500,000 = 4,000,000$ , so Frw 4,000,000.

Step 2, import duty: $\frac{35}{100} \times 4{,}000{,}000 = 1{,}400{,}000$ , so Frw 1,400,000.

Step 3, VAT: $\frac{18}{100} \times (4{,}000{,}000 + 1{,}400{,}000) = \frac{18}{100} \times 5{,}400{,}000 = 972{,}000$ , so Frw 972,000.

Total: $1,400,000 + 972,000 = 2,372,000$ , so Frw 2,372,000.

Note: many imports also pay small levies on the customs value; this example leaves them out.

Worked example 2: how the tariff protects a local producer

Suppose the same sofas had been made in an EAC partner state and carried a certificate of origin. No import duty is due, so VAT is $\frac{18}{100} \times 4{,}000{,}000 = 720{,}000$ , Frw 720,000.

The non-EAC sofas paid Frw 2,372,000; the EAC sofas pay Frw 720,000. The difference is $2,372,000 - 720,000 = 1,652,000$ so Frw 1,652,000 more on the same consignment. A furniture maker in the EAC, including one in Rwanda, can therefore compete on price with sofas made outside the region.

Tip

Exam technique. For “Explain the role of customs procedures”, pair each role with how it is done: “Customs protects consumers by holding medicines until the Rwanda FDA has cleared them.” Remember both sides of the balance: control and facilitation. Many answers list only collecting revenue.

Warning

Common mistakes. (1) Charging duty on the cost alone: duty is charged on the CIF value, which includes freight and insurance. (2) Charging VAT on the CIF value alone: VAT on imports is charged on the CIF value plus import duty (and excise duty). (3) Thinking that faster clearance means less control: trusted traders are still checked, by audit after release.

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Practice

Define customs procedures, smuggling and CIF value.
Distinguish between prohibited and restricted goods, with one example of each.
State six roles of customs procedures.
Explain how customs procedures help the National Institute of Statistics of Rwanda.
A shop imports shoes costing Frw 1,050,000, with freight of Frw 120,000 and insurance of Frw 30,000. The import duty rate is 25% and VAT is 18%. Calculate (a) the CIF value, (b) the import duty, (c) the VAT and (d) the total of duty and VAT.
Explain two ways in which smuggling harms Rwanda.
“Customs should check every lorry physically, to be safe.” Evaluate this statement.

Show answersHide answers

Customs procedures: the rules and steps that goods, people and vehicles follow when crossing a border. Smuggling: moving goods across a border secretly, or declaring them falsely, to avoid customs control or duties. CIF value: cost of the goods plus insurance and freight to the border, the value on which duty is charged.
Prohibited goods may not cross at all (plastic carry bags in Rwanda); restricted goods may cross only with a permit or certificate (medicines, which need Rwanda FDA clearance).
Any six: collect revenue; protect local industries; protect society and the environment; protect consumers’ health and safety; record trade statistics; apply trade agreements; facilitate lawful trade; protect security.
Every declaration records what was imported or exported, its value, origin and destination. NISR compiles these customs data into its official reports on formal trade in goods, which the government and businesses use to plan.
(a) $1,050,000 + 120,000 + 30,000 = 1,200,000$ , so Frw 1,200,000. (b) $\frac{25}{100} \times 1{,}200{,}000 = 300{,}000$ , so Frw 300,000. (c) $\frac{18}{100} \times 1{,}500{,}000 = 270{,}000$ , so Frw 270,000. (d) $300,000 + 270,000 = 570,000$ , so Frw 570,000.
Any two: the government loses duties and taxes; honest traders and local producers are undercut by goods that paid nothing; unsafe, fake or banned goods reach consumers; trade figures become wrong.
Checking every lorry would catch more offences but slow all trade, raise costs (lorries waiting, goods spoiling) and waste officers’ time on honest traders. Risk-based checks, using channels and audits, put inspection where risk is highest. The statement goes too far.

Sources and credits

Tariff bands and the goods in the 35% band: EAC Ministers adopt 35% as the EAC CET 4th Band, East African Community, 2022.
VAT rate: Law N° 049 of 2023 establishing value added tax, as published by the Rwanda Revenue Authority (RRA); calculation of VAT on imports: Customs duties, RRA Tax Handbook (2019).
Plastic ban: Law N° 17 of 2019 relating to the prohibition of manufacturing, importation, use and sale of plastic carry bags and single-use plastic items, via RwandaLII.
Trade statistics: Formal External Trade in Goods, Fourth Quarter 2025, National Institute of Statistics of Rwanda (NISR), 2026.
Trusted-trader facilities: Blue Channel facility, RRA (consulted 2026).

Written by Ganzaa: the balance diagram, the table, the worked examples and the practice items. The figures in the examples are illustrative (2026).

1Why not just open the border?

2Eight roles of customs procedures

Why not just open the border?

Eight roles of customs procedures