One of the most stressful exercises for a merchant results from the payment of tax obligations, especially when those taxes emanate from a poorly regulated and difficult to control trade system.
How can merchants prepare to apply a free trade agreement in a safe, orderly and efficient way without breaking the community rules?
Equatorial Guinea is part of the CEMAC community tariff regime, which applies a common external tariff (AEC) to imports from third countries. The CEMAC Customs Code applies special taxes, to imports from third countries, adopting a free trade policy applicable to all 6 member states.
Notwithstanding, the implementation of the free trade between CEMAC zones in practice has posed several challenges. One being the informal payments of custom duties leading to an over payment of customs at the borders. This is due to the absence of a government agency with well-defined standard rules and qualified personnel especially dedicated to normalizing trade at the land borders with Cameroon and Gabon. More transparency is needed to provide guidance to merchants on the requirements, procedures, accurate customs rates and regulations. Another headache for traders is the requirement for prior authorizations or licenses due to the delays of the administration.
To resolve these issues, the Government published Decree 002/2021 on 11 January 2021 establishing measures to regulate and ameliorate the challenges plaguing commerce within the regional borders of Equatorial Guinea, Cameroon and Gabon.
- Do imports-exports under Decree 002/2021 affect oil products?
The Decree does not directly affect oil products. It may, however, have implications that benefit imports provided they are produced in the CEMAC zone, since in principle such imports do not bear import or export tariffs. The Decree does not clarify whether this affects other internal taxes such as VAT, whose exception to oil products no longer applies. Products marketed and manufactured in the CEMAC zone would benefit from this new regulation provided that the importer or exporter has the necessary authorizations and licenses.
- How does this affect existing customs duties?
The new Decree does not modify or seek to regulate community tariffs, but rather to clarify and expand their scope. The tariffs that CEMAC applies to products coming from third states continue to be the following: for basic goods (5%), raw materials and capital goods (10%), intermediate and miscellaneous goods (20%), current consumer goods (30%) including VAT of 15%.
The new Decree answers two important questions regarding the terrestrial borders of Gabon and Cameroon:
1. What happens to products coming from third states if they have already paid the tariffs in a member state such as Gabon or Cameroon? And;
2. What happens if you require an additional health certification?
For products coming from a third State exported to a CEMAC member country, who have paid custom duties in Equatorial Guinea, are subject to 0% in customs duties. Where they are destined for a real authorized recipient they must be identified and located by a customs services of the Republic of Equatorial Guinea as established by the community regulation No. 7/93-UDEAC-556-5E.
The second question tries to solve and prevent a public health problem. A large proportion of the livestock consumed in Equatorial Guinea is produced in third countries or members of the CEMAC and also within the CEMAC. For these types of products, what the law requires are authorizations from the Ministry of Agriculture and phytosanitary certifications from a veterinarian.
Although some of these standards are already established in the CEMAC legislation, never before have instructions been issued to make it effective.
- What are the main innovations and contributions of the Decree, and how will they improve trade on the land borders between Equatorial Guinea, Gabon and Cameroon?
It is an important step in the implementation of the AfCFTA. The new cross-border Decree could be seen as a positive step by Equatorial Guinea towards the implementation of the current free trade agreement (AfCFTA). It establishes an administrative special agency with expanded functions. This agency is expected to have personnel trained for technical tasks which will ensure the efficient implementation of a free trade.
It Creates an import and export control office. It is a requirement that countries develop their infrastructures for the AfCFTA to be a practical agreement and the Trade Borders Decree between Equatorial Guinea, Gabon and Cameroon has made progress in this regard. A Control Office has been established to supervise all matters related to the exchange of goods and services carried out at land borders including additional functions and resources such as the support of the Customs Security Corps.
- What are the main functions of the import and export office?
The Decree also provides for a much clearer procedure for authorized merchants when importing, exporting or re-exporting goods. The main functions of the import-export office are administrative, economic and security controls.
- Administrative functions. CEMAC issues an authorization that allows merchants to import and export at tariff-free rates in the CEMAC zone. In Equatorial Guinea this procedure was unclear, and the Decree creates transparency in this regard. The cost of this authorization has been established by the Decree at 50,000 XAF. Those who wish to export or import goods in the area can go to the import-export office due to its multi-ministerial composition.
- Economic functions. With all the customs and control procedures assigned to this office, it will be possible to avoid some situations of irregular, illegal or overpayments that have occurred in the past due to the lack of coordination between different Ministerial officials.
- Security control functions. The import-export office will have among others a customs security body whose main task will be to verify the security of the goods.
In conclusion, the Decree not only favors the regulation of trade on the land borders between Equatorial Guinea, Gabon and Cameroon but can also be seen as Equatorial Guinea’s first measure aimed at normalizing and facilitating trade on its land borders. This, only months after the commencement of the AfCFTA.
Credit: Maria Cheswa
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