Freight forwarders decry ‘unfair’ rules

Imported products at Dubai Port World in Kigali on August 30. / Photo: Emmanuel Kwizera.

When Rwandan companies and individuals are importing goods to the country, they procure the services of clearing and forwarding agents who handle the formalities, clearing taxes and necessary documentation.

However, the agents who are regulated by the Rwanda Revenue Authority, are now decrying tough operating conditions which they say has affected their operations, business growth and service to their clients.

 

Among the regulatory challenges they are facing include the annual license renewal process and liability of clearing agents.

 

The firms are expected to renew their licenses at the start of every calendar year a process, which sees most of them halt operations as they wait for the renewal.

 

This, among other things, they said, affects their business growth, ability to meet their clients’ demands, as well as run sustainable enterprises.

Owners and managers of freight forwarding companies interviewed by The New Times said that the annual license renewal requirement, though well intended, leaves behind negative consequences.

“Often, one begins the process around September to ensure that you are on time, come end of year, most firms have to halt operations to get a new license. At times its often unclear how long you might have to halt operations,” a representative of a freight forwarding company who requested anonymity said.

They, however, said that they are not opposed to the license renewal, but the modality. The companies are appealing to concerned authorities to review regulatory laws which they said risk hurting the industry further.

Punished over clients’ mistakes

The firms also cited challenges in regard to liabilities of clearing agents where they noted that they are often penalised for irregularities by their clients.

The firms said that often, in the process of clearing, in the event one of their clients (owner of the goods) is found to have any irregularities or did not clear certain taxes, the clearing agents involved end up having to pay penalties and charges that ought to have been paid by clients.

This, they said, also often puts them out of business as their licenses cannot be renewed prior to the settlement of the penalties and fines.

A representative of a firm interviewed by The New Times on condition of anonymity said that they recently had to pay over Rwf4 million to clear taxes owed by one of their former clients.

While the importer was already using the goods in their business, the forwarding agent had to halt operations to pay penalties that were meant for the importer.

Companies said that, while they take responsibility for some technical irregularities committed during clearance of goods, it’s unfair to make them liable for aspects such as the features of the imported goods as they too rely on paperwork from the client.

“One can appeal this or go to court but it is time consuming considering that you have had to halt operations,” another representative of a firm said.

The status quo has often seen clearing agents take it upon themselves to pay their clients’ fines, penalties and arrears to be re-licensed well aware that it’s not dues they owed themselves.

Clement Bukuru, the Chairperson of the Rwanda Freight Forwarders Association, told The New Times that it was indeed true that the challenges exist and have impact on the industry.

The industry and its operations are governed by the East African Customs Management Act.

He said there is need to renew the law.

With the association working to establish self-regulation law, he said that could put them in better position to advocate for a review of engagement with the regulator.

Self-regulation, he said, would increase professionalism, tax compliance, and skills set among operators.

Responding to a query about the subject, RRA said that the license renewal process is aimed at securing duties, taxes, and fees, as well as to ensure continued compliance to customs laws and other regulatory requirements.

The RRA communications office defended the halting of operations during the license renewal process saying that EAC Customs Management Act 2004 stipulates that agents must be licensed before they can be involved in the clearance of goods.

“Licenses cannot be issued or renewed if the licensee or applicant has a criminal record, is involved in dishonest activities or any other wrongdoing. The validity period of a license provided under the law is one calendar year…The renewal process is meant to scrutinise the practices of the licensee in order to examine whether they still abide by customs laws and regulations,” it said.

RRA also explained the liability of clearing agents saying that the same laws provide that a duly authorised agent who performs any act on behalf of the owner of any goods is deemed to be the owner of such goods, and is personally liable for the payment of any duties liable.

cmwai@newtimesrwanda.com

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