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Published On  Nov 27,  2011
   
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ERCA Amends Duty Free Insurance Directive to Exclude Diplomats

Diplomats can collect excess premiums they paid before amendment from insurers

 

 

A directive mandating the calculation of insurance coverage of duty free cars including the custom and duty that would have been paid has been amended last week to exclude those with diplomatic privileges.

The Ethiopian Revenues & Customs Authority (ERCA) had issued the directive aimed at collecting the customs and duties that would have been paid on duty free cars when risks materialize. This was received with complaints from the different international and regional organizations including the African Union (AU) and NGO, which were lodged at the Ministry of Foreign Affairs (MoFA). 

The authority also has priority right over all claims when the insurance company is paying for damages when risks materialize, according to the directive.

“This shows that ERCA was collecting customs and duties indirectly since it will collect the duties when the insurance companies pay damages after a risk materializes,” a legal expert, who wished to remain anonymous, argues.

This is also in violation of the different bilateral agreements that Ethiopia is a signatory including the Vienna convention, which exempts a diplomatic agent from all taxes and duties except the taxes are incorporated in the price of goods, the AU headquarter agreement, which explicitly exempts AU diplomats and the AU privilege convention.  

“The authority did not even consult the MoFA when drafting the,” a source at the Ministry told Fortune.

This will force other countries to demand the same from Ethiopian diplomats, which the country cannot afford to pay in foreign currency, according to the expert.

Now the directive has been amended, the Ministry is now discussing on how to return the excess money paid in premiums. The Ministry is urging ERCA to tell insurers that it will not ask for the money in claims so the companies can return the money to vehicle owners, according to the source.

The Authority on the other hand argues that it is not in its mandate to give orders to insurance companies.

“The Authority has made its stand clear in the amended articles that the previous provision does not apply to diplomats,” a legal expert at the Authority told Fortune. 

Messay Shemsu, a supervisor at NICE Insurance Company, which insures staffs of the UNECA, agrees.

“Diplomats and organisations can ask for their money back and can receive it,” he told Fortune.

 

By Mahlet Mesfin
Fortune Staff Writer

 
 
 

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