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 Release IDF BANK DPC RML(MANIIFEST) SHIPPER AEO OFFICE RELEASE POINT CLIENT READY TO TAKE DELIVERY EXIT POINT

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.

Existing Opportunities Cont. 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.

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. 

Selection Criteria 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 4 No objection from other Govt. Agencies Stage 1 Application Form Scrutiny Stage 2 Site visit & Validation Stage 3 No objection from Customs Divisions, Regions & KRA Depts. Stage 5 Commissioner’s Approval

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.