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
“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
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
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
“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.