Bonded export factory incentive scheme in Ethiopia

Bonded export factory scheme

Bonded export factory means a factory under the control of the Ethiopian Revenues and Customs Authority which produces goods exclusively for export using raw materials imported free of duty.

Beneficiaries of the bonded export factory scheme are a) those who engaged exclusively in the production of export commodities; b) obtained certificate of eligibility from the Ministry of Industry; and c) a manufacturing plant which meets the standards set by the Ethiopian Customs Commission.

Currently, the Ethiopia government implements the following export trade duty Incentive schemes;

These are;

a) The duty draw-back scheme;

b) The voucher scheme;

c) The bonded export factory scheme;  

d) The bonded manufacturing warehouse scheme;

e) The bonded input supplies warehouse scheme; and

f) The industrial zone scheme.

In this article we will see the third scheme, the bonded export factory scheme;  

The Ministry of Industry shall issue certificate of eligibility to become beneficiary of the scheme, and the Ethiopian Customs Commission define the standards to be met by the manufacturing plants owned by beneficiaries of the scheme.

Procedure for the application of bonded export factory scheme are the following;

These are;

  • The first procedure is raw materials imported by a person who is beneficiary of the bonded export factory scheme shall be transported to the factory under the control of customs without being subject to payment of duty.
  • Next, Ethiopian Customs Commission shall inspect raw materials brought into the bonded export factory and goods exported from the factory.
  • Then, Raw materials imported under the bonded export factory scheme shall be used in the production of export commodity and the commodity so produced shall be exported within one year from receipt of such raw materials by the factory; provided, not permitted for extension.
  • A beneficiary of the scheme can submit his application for extension one month before the expiry of such period.
  • A beneficiary of the scheme who has not secured permission for extension of the period, or to sell the raw materials imported under the scheme upon payment of duty chargeable on the raw materials, in addition to the duty payable on the unused amount of the raw materials, be required to pay 50% of the duty.

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