KENYA REVENUE AUTHORITY CUSTOMS SERVICES DEPARTMENT

AUTHORIZED ECONOMIC OPERATOR

NEGOTIATION GROUP ON TRADE FACILITATION (NGTF)

GENEVA SWITZERLAND

9TH -13TH JULY 2012

BY JONAH CHERUIYOT

Introduction

This presentation covers the following

Definition of Customs The AEO Concept in line with Customs Business Operationalisation of the AEO program Existing Opportunities and benefits Challenges

What is Customs ?Customs is an authority or agency in a country responsible

for collecting and safeguarding customs duties and for controlling administration of the international movement of goods .

Pillars of Customs; Trade facilitation Revenue collection Protection of society( Security) Collection of trade statistics

THE AEO

Re

lea

se

IDF

DPC

RML(MANIIFEST)

RELEASE POINT

BANK

CLIENT READY TO TAKE DELIVERY

EXIT POINT

AEO OFFICE

SHIPPER

Existing Opportunities Mutual recognition : the increasing globalization of

sourcing, production and sales means that most

companies are dealing with customs and trade

requirements in several markets- accountability expansion

beyond cross border requirements, hence the need for

faster clearance of cargo.

Business Predictability and planning: Enrollment into the

program is a guarantee that you will operate within the set

rules. This is in line with general worldwide trend to

tighten rules and other requirements and penalize non

compliance. Failure to plan ahead may lead to border

delays, hence production and delivery deadlines.

Information Exchange. Seamless information exchange

between taxpayer and customs facilitates intelligence

driven risk management hence few post arrival

interventions .( The upgrading of seamless systems within

East African Partner States ,i.e RADEx,Ascud ++ and

SIMBA system will go along way in allowing the Region to

see and communicate well with each other on the side of

imports and exports likewise.

Exports: Inclusion of exports into AEO, gives assurance

and confidence to the receiving Administration hence

similar benefits will be enjoyed in the importing country.

Existing Opportunities Cont.

Enhance competitiveness and safe investment

destination: In a global economy, the speed and certainty

of crossing the border, and importing and exporting

goods are vital for Kenya’s Competitiveness, hence

attracting foreign investments.

Existing Opportunities Cont..

AEO Implementation in Kenya The AEO program was piloted in Kenya in the Year 2007/08 with

twelve selected companies by pairing Importers/exporters and licensed Customs Clearing Agents who have over a period of time proven to be reliable taxpayers and partners of Customs Services Department.

By 2nd December 2010 the program was fully operationlised as a Unit.

Currently the total number of AEO are 64 (40 Importers/Exporters and 24 Clearing Agents) . We are in the process of expanding the program to increase the number to at least 100 Opertors in this Financial Year 2012/2013. include other players i.e. Transporters, Warehouse Keepers, Oil marketers, Shippers, Customs Freight Stations (CFSs) and Shed Operators.

AEO Implementation in Kenya Cont.

The AEO Office undertook to sensitize all Customs staff and stakeholders including other Government Agencies on the operation of the program

The AEO companies are subjected to annual audits by Post Clearance Audit (PCA) Unit. The program so far has helped in raising the compliance levels in declarations and payment of correct duties and taxes.

We therefore envisage an improvement in the Facilitation of legitimate trade, high compliance levels and increased revenue collection. 

The application form is vetted upon submission by a selection committee comprised of senior managers from the Customs Services Department based at the Headquarters. The managers are drown from Valuation &Tariff unit, Document Processing Unit (DPC),BONDS section,ICT,Programs division, Post Clearance Audit (PCA),Project unit and AEO Office.

Accreditation proces

Stage 1

Application Form Scrutiny

Stage 2

Site visit & Validation

Stage 3

No objection from Customs Divisions, Regions & KRA Depts.

Stage 4

No objection from other Govt. Agencies

Stage 5

Commissioner’s Approval

Selection Criteria

Benefits to Business

Simplified procedures (speed, reduced costs etc.) Predictability (hence better ability to plan the logistics in advance) Enhanced level of voluntary compliance Recognized as a trustworthy and transparent partner within the

supply chain in the region Market access within the EAC region Mutual recognition within the region Improved reputation and customer loyalty AEO as a criterion for partner selection Improved dialogue with Customs

Benefits to Customs

Exchange of timely and accurate information Improve control and better allocation of resources Customs reform – willingness for change Mutual recognition, trust and capacity building within

the EAC Customs administrations Reduced compliance costs Reduction of red-tape Improved transparency, governance and integrity

(Customs-Customs & Customs-Trade)

Benefits to Government

Trade Growth Increased revenue Attract foreign investments Recognized as a trustworthy trading region Improved safety and security within the supply chain Improved intergrity, relationships among the

stakeholders and good governance)

Challenges

Low level of understanding of the program by other Government Agencies and stakeholder

Information sharing within the Departments and other Government Agencies

THANK YOU FOR YOUR ATTENTION.