Declaration procedures and computing duties

35 min

From the border to the workshop

Mukamana's container has its documents and its customs value (lesson 4). What happens next decides how long the lorry waits and how much cash she must find. A well-prepared importer can have goods released within hours; a careless one can wait days in a customs yard while storage charges grow. This lesson follows the declaration step by step and computes what the container costs at the border.

Definition

Customs procedure (customs regime): the treatment the declarant asks for, shown by a code on the declaration. The main ones are home use (import for use in Rwanda, paying all duties and taxes), transit (passing through under customs control without paying duty), warehousing (stored in a bonded warehouse with duty suspended until removal), temporary importation (brought in for a limited time and re-exported, with duty secured by a guarantee) and export.

Definition

Assessment notice: the statement of duties and taxes due on a declaration. Release order: customs' permission for goods to leave customs control. Post-clearance audit: a check of an importer's records after goods have been released, to confirm the declaration was true.

Definition

Channel (lane): the level of checking ReSW assigns to a declaration according to risk. Blue: no checks and immediate release, for traders with a good compliance record. Yellow: the documents are checked. Red: the documents and the goods themselves are checked. Any of them can be audited after release.

The steps of an import declaration

Prepare. The importer gathers the invoice, packing list, transport document, certificate of origin and any permit, and hires a licensed clearing agent.
Lodge. The agent enters the declaration in the Rwanda Electronic Single Window (ReSW), launched in 2012, with the HS code, value, origin and procedure code. The agent may do this before the goods arrive (pre-clearance), so the rest can happen while the lorry is still on the road.
Assess. The system calculates the duties and taxes, and the agent passes the assessment notice to the importer.
Pay. The importer pays the amounts assessed.
Select a channel. ReSW assigns blue, yellow or red. RRA's Service Charter IV targets, after all documents are submitted: 1 hour for blue (and for Authorised Economic Operators and Gold Card holders), 1.5 days for yellow and 2 days for red. The processing fee is Frw 3,000 a declaration.
Release. Once checks are complete, customs issues the release order and the importer must remove the goods from the customs area.
Audit. RRA may audit the importer's records later; a clean record helps a trader qualify for faster lanes.

Tip

Speed is earned. RRA rewards compliance: traders with a clean record can join the Gold Card scheme or become Authorised Economic Operators, whose goods usually go blue. For an entrepreneur, honest declarations are not only lawful; they cut waiting time and storage costs on every consignment.

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Computing the charges at import

For goods entered for home use, the main charges are computed in this order:

Charge	Base	Rate	Recoverable later?
Import duty	Customs value (CIF)	CET band of the tariff line: 0%, 10%, 25% or 35%; 0% for goods of EAC origin	No: a cost of the goods
Excise duty (some goods only)	Set by the excise law	Varies by product	No
VAT	CIF + import duty + any excise duty	18%	Yes, as input VAT, for a VAT-registered business
Withholding tax	CIF value of goods for commercial use	5% (RRA, 2023)	Yes, deducted from income tax; holders of a tax clearance certificate are exempt
Processing fee	Per declaration	Frw 3,000	No

Other levies charged at import are left out of the examples below.

Worked example 1: the container from China

Customs value (lesson 4): Frw 20,300,000. Suppose the tariff line is in the 25% band and no excise duty applies. Find the charges at import.

Import duty: $0.25 \times 20{,}300{,}000 = 5{,}075{,}000$

VAT: the base is $20,300,000 + 5,075,000 = 25,375,000$ , so VAT $= 0.18 \times 25{,}375{,}000 = 4{,}567{,}500$

Withholding tax: $0.05 \times 20{,}300{,}000 = 1{,}015{,}000$

Processing fee: 3,000

\text{Total} = 5{,}075{,}000 + 4{,}567{,}500 + 1{,}015{,}000 + 3{,}000 = 10{,}660{,}500\ \text{francs}

The workshop must find over Frw 10.6 million in cash before release, more than half the value of the goods.

Worked example 2: the same goods from an EAC supplier

Suppose a Kenyan manufacturer offers identical goods with the same customs value, Frw 20,300,000, and a certificate of EAC origin.

Import duty: 0. VAT: $0.18 \times 20{,}300{,}000 = 3{,}654{,}000$ . Withholding tax: 1,015,000. Fee: 3,000.

\text{Total} = 3{,}654{,}000 + 1{,}015{,}000 + 3{,}000 = 4{,}672{,}000\ \text{francs}

Analysis: the cash needed at the border falls by $10,660,500 - 4,672,000 = 5,988,500$ francs. But for a registered business the VAT and withholding tax come back later as credits, so the true cost difference is the duty, Frw 5,075,000, which the workshop can never recover. If the Chinese price were lower by more than that, China could still be cheaper, but the workshop must also finance a larger cash outlay and wait longer for credits.

Warning

Duty is charged on CIF, not on the supplier's price alone. Forgetting freight and insurance understates every figure. And VAT at import is charged on the duty-inclusive value: $0.18 \times \text{CIF}$ is wrong whenever import duty is due.

Exporting

Exports follow the same path in reverse: the clearing agent lodges an export declaration in ReSW with an EBM invoice, any export licence and a certificate of origin where the buyer needs one. RRA's charter targets 6 hours, at a fee of Frw 3,000. Exports are zero-rated for VAT (lesson 2), so the exporter charges no VAT and can claim back its input VAT. The certificate of origin lets the buyer in another EAC country import the goods free of duty.

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Practice

List, in order, the seven steps of an import declaration.
Distinguish between the blue, yellow and red channels, giving RRA's target time for each.
Explain the difference between importing goods for home use and moving them in transit.
Goods have a customs value of Frw 13,340,000 and a 10% duty rate. Calculate the duty, the VAT, the withholding tax and the total including the processing fee.
Imported furniture has a customs value of Frw 6,000,000 and falls in the 35% band. Find the duty and the VAT.
A trader holds a valid tax clearance certificate. How does this change the charges in question 4?
A Rwandan furniture maker says the 35% band is "the best thing the EAC has done for us". A hotel buying furniture disagrees. Analyse both views.

Show answersHide answers

Prepare documents and hire an agent; lodge the declaration in ReSW; assessment; payment; channel selection; release; post-clearance audit.
Blue: no checks, immediate release, about 1 hour. Yellow: documents checked, 1.5 days. Red: documents and goods checked, 2 days. (Targets after all documents are submitted.)
Home use: the goods stay in Rwanda and all duties and taxes are paid. Transit: the goods pass through Rwanda under customs control to another country, without paying Rwandan duty, provided they leave as declared.
Duty $0.1 \times 13{,}340{,}000 = 1{,}334{,}000$ ; VAT $0.18 \times 14{,}674{,}000 = 2{,}641{,}320$ ; WHT $0.05 \times 13{,}340{,}000 = 667{,}000$ ; total $1,334,000 + 2,641,320 + 667,000 + 3,000 = 4,645,320$ francs.
Duty $0.35 \times 6{,}000{,}000 = 2{,}100{,}000$ ; VAT $0.18 \times 8{,}100{,}000 = 1{,}458{,}000$ francs.
The trader is exempt from withholding tax, so the Frw 667,000 is not charged; the total falls to Frw 3,978,320.
The maker gains protection: imported furniture costs 35% more before VAT, so local furniture is more competitive, and sales and jobs can grow. The hotel pays more for imported furniture or must accept local designs; its costs rise. A balanced conclusion weighs the jobs and skills built locally against higher prices for buyers, and asks whether local makers will improve quality or simply rely on protection.

1From the border to the workshop

2The steps of an import declaration

3Computing the charges at import

4Exporting

From the border to the workshop

The steps of an import declaration

Computing the charges at import

Exporting