Advance Rulings

The Classification of Goods means determining the subheadings or further subdivisions of the Yemen Tariff under which the goods will be classified. Yemen is using the Harmonized Commodity Description and Coding System (HS).

Classification is not just used to determine the customs duty rate for a specific subheading. It is also used to apply non-tariff measures (policy measures other than ordinary customs tariffs that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both). So, even if all goods were zero-rated for customs purposes, classifications could still be necessary if you need to:

• apply for an import or export license
• find out if import or export restrictions apply
• issue a certificate of origin
• claim an export refund or similar
• determine whether or not a product is liable to excise duty
• find out if a reduced value-added tax rate applies

The structure of Yemen HS tariff for 06011000  بصلات وبصيلات ودرنات وجذور درنية وبصلية,تيجان,وسيقان ارضية(جذاميراو ريزومات)  راقدة..إلخ (Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant) is presented in the picture below:

According the WTO Technical Information on Rules of Origin Rules is used:

• to implement measures and instruments of commercial policy such as anti-dumping duties and safeguard measures;
• to determine whether imported products shall receive most-favored-nation (MFN) treatment or preferential treatment;
• for the purpose of trade statistics;
• for the application of labelling and marking requirements; and
• for government procurement

According the WCO international recommendations, the following products shall be considered wholly obtained/originatedin the country of export:

1. mineral products drawn out directly from their land or their sea bottom;
2. vegetal products picked up in that country;
3. life animals born and raised in that country – verification should be verified through veterinary documents on registration of borne animal;
4. products generated from life animals raised in that country;
5. products generated from hunting or fishing performed in that country;
6. products from sea fishing and other products taken out of the sea outside of territorial waters of that country with their vessels;
7. products made on their boats-plants exclusively for products listed under point  (f) of this article
8. collected used objects in that country, available only for recycling of raw materials;
9. waste material and remains from the manufacture operations performed in that country;
10. products taken out from the sea bottom or the territory under it outside of the territorial waters, on the condition that the country in question possesses exclusive rights for exploitation of the sea bottom or the territory under it;
11. goods produced in that country only from the products listed under points (1) to (9) of this stand.

From this definition it can be concluded that the products may be considered as “wholly obtained products” if not a single material originating from a third country has been used. In this process, materials originating from the Republic of Yemen may be used, on the condition these materials should not contain materials (components) originating from third countries.

Origin of goods for exportation form Yemen

According the Yemen Customs Code, article 38, the value declared in export is the value of the goods at the time of registering the customs declaration to which are added all costs until the goods leave the frontiers. Such value does not include:

• Fees and taxes imposed on exports
• Internal fees and taxes and production taxes and others that are refunded upon export

The customs value of imported goods is the transaction value, which is the price paid or payable for the goods when imported into the customs territory of Yemen. It is usually calculated on the basis of the CIF value. If the customs value cannot be determined on the basis of the transaction value of the imported goods, the following values are, in compliance with the rules on determining the customs value according to the Agreement on Implementation of Article VII (Customs Valuation) of the General Agreement on Tariffs and Trade (GATT 1994), to be applied successively as a basis for its calculation:

• the transaction value of identical imported goods
• the transaction value of similar imported goods
• the deductive value
• the computed value
• the value deduced by way of an appropriate fall-back method.

The legal ground for determine the customs value is defined in 1990 Customs Law No. 14 of and its amendments by Law No. 12 of 2010 of the Yemen Customs Authority Act.

As many other customs administrations worldwide, YCA is facing problems to determine the real value of the imported goods, which is the basis in the process of calculating customs duties, taxes and other revenues. Therefore, the General Department of Value is extracting the statistical reports of imported and customs-treated goods for the previous year (last edition 2013) and analyzed those values to reach the volume of commercial activity and the volume and quantity of imported goods and goods, as well as the customs value of those goods from the statistical reality and the automated system reports.

Another limitation for determine the value of the goods is the ASY++ CDPS. The data related to valuation must be extracted from the database and manually analyzed. AW is providing facility to monitor the customs value systematically thought Tariff Specification Code and Valuation list (explained in detail later in this document).

According the YCA statistics and the analysis performed for this document, 21 commodities participate in 70% of the total YCA revenue.

Relevant International Standards / Regulations / Recommendations

Purpose of Valuation – The purpose of valuation is to monitor, control the implementation of the World Trade Organization Valuation Agreement and conduct valuation audits on import documents / contracts / agreements to evaluate whether the correct value has been declared or to determine values within the confines of the WTO Agreement

Customs authorities face increasing challenges in the execution of their mission to primarily secure revenue, prevent capital flight, and facilitate legitimate trade. They have to make swift and accurate decisions regarding the value of consignments, either prior to Customs clearance or at the post-clearance stage. However, the frequent lack of information hampers Customs authorities from making reliable decisions and consequently, from collecting the correct duties and taxes.

The problem is further complicated by frequent high levels of fraud in goods valuation and tariff classification, both having a significant impact on revenue collection and capital flight.

Yemen Customs Authority must comply with international regulations in the domain of Customs valuation, such as the WTO Agreement on Customs Valuation (WTO ACV) which establishes a set of guidelines and provisions for the determination of the Customs value. The ACV was primarily designed to foster trade globalization, facilitation, and security but does not include any guidance in the prevention of fraud;

“For importers, the process of estimating the value of a product at customs presents problems that can be just as serious as the actual duty rate charged. The WTO agreement on customs valuation aims for a fair, uniform and neutral system for the valuation of goods for customs purposes — a system that conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values. The Committee on Customs Valuation of the Council for Trade in Goods (CGT) carries out work in the WTO on customs valuation.”

Technical Information on Customs Valuation is available at the WTO Website (Annex II: Technical Committee on Customs Valuation. Customs valuation is a customs procedure applied to determine the customs value of imported goods. If the rate of duty is ad valorem, the customs value is essential to determine the duty to be paid on an imported good. Customs valuation shall, except in specified circumstances, be based on the actual price of the goods to be valued, which is generally shown on the invoice. This price, plus adjustments for certain elements, equals the transaction value, which constitutes the first and most important method of valuation. For cases in which there is no transaction value, or where the transaction value is not acceptable as the customs value because the price has been distorted as a result of certain conditions, five other methods of customs valuation, to be applied in the prescribed hierarchical order.

According the above mentioned WCO Technical Information on Customs Valuation, the YCA is obliged to apply the following valuation methods:

First, the YCA needs to try to apply the Method of Transaction Value. When the customs value of the goods is determined with the application of the Method of Transaction Value, it implies that the goods was subject to transaction on the basis of which the export of the goods from a foreign state was realized and the same goods were imported in the Republic of  Yemen.

The other methods are intended to cover situations when the Method of Transaction Value is inapplicable. If the YCA cannot determine the customs value by using the Method of Transaction Value, then the other methods are applied.

The next method that the YCA needs to try to apply is the Method of Transaction Value of Identical Goods. This implies that the determination of the customs value of the goods that are valuated shall be done on the basis of the Transaction value of the identical goods sold for export in Yemen approximately at the same time as the goods that are valuated, in approximately the same quantities and at the same commercial level.

If the value cannot be determined with the application of this method, then the YCA needs to try and apply the following method – Method of Transaction Value of Similar Goods. This means that the determination of the customs value of the goods that are valuated shall be done on the basis of the Transaction value of similar goods sold for export in Yemen approximately at the same time as the goods that are valuated, in approximately the same quantities and at the same commercial level.

The next group of methods for determining of the customs value is the Method of Deductive Value and the Method of Computed Value.

When using the method of deductive value, the customs value is determined by “going backwards”, that is the expenses that were added to the goods after the export are deducted from the selling price in Yemen for those imported goods or the identical or similar goods.

According the method of computed value, the customs value is determined on the basis of the production expenses for those particular goods that are valuated, plus the amount of the profit and the general expenses which are in general presented when selling the goods of the same class or type as the goods that are valuated.