The Ministry of Industry (MoI) is preparing a standard for raw material inputs used in metals, chemicals, horticulture, foods, beverage, and pharmaceutical products. The ministry had applied similar raw materials consumption standard on 360 leather and 44 textile products a month ago.
The standard prescribes the amount of raw materials that are consumed per unit of a product. It also gives an estimate of waste material that is left behind during use of raw materials. This will let the customs office to charge reasonable tax by listing in detail what amount of the raw materials are used in the products.
For many years, importers bring in raw materials free of duty. The cost of these inputs is deducted from the annual profit taxes manufacturers have to pay. The deducted sum is calculated based on the raw materials consumption declaration the merchants give to the authority. The self-declaration method has been the bone of contention between merchants and the customs office when the later calculates annual profit taxes traders have to pay.
Girma Gelelecha, Sectoral Relation and Incentive Director at the ministry told Capital, “Productions must be done with the right calculation. Manufactures misuse their duty free privilege they have when importing raw materials. They over state their demand and usually use fewer amount of the imported inputs to produce a unit of product.”
“But for every problem there is a solution. We started using the raw materials standard first on textile and leather products and we received good suggestions. In the past, importers bring their self-declared raw material demand to the industry ministry for approval and then they give it to the customs office. Now importers will go to customs office when they need to import raw materials, the custom office knows the right unit rate of raw material consumption for one product.’’
“We have established technical teams who are currently preparing the listing of raw materials needed for the production.’’
Importers in the sector delighted with the unit rate preparation for but forward there suggestion the unit rate should be up dated with time.
Aberra Taffese who imports chemicals said, “We know that the standard will help us to import the right proportion of raw materials and reduce the percentage of wastage on certain products. But the raw material intake of every product is not constant, it might increase or decrease over time. The ministry should consider this point’’
[CapitalEthiopia]
[Image Source: www.mycsainc.com]