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4th Schedule: Declaration by the Producer
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FIRST SCHEDULE

Rule 4 (1) (b) (ii)

ELEMENTS OF EX-FACTORY COST

1. In the calculation of the ex-factory cost determining value added in terms of Rule 4(1) (b) (ii), the following elements of costs, charges and expenses shall be included:

(a) the cost of imported materials, including the cost of waste materials and materials lost in the process of manufacture, as represented by landed costs of these materials at the factory, including any charges incidental to the delivery of such materials to the factory but excluding customs duties and other duties and charges of equivalent effect on the cost of the imported materials:

Provided that the cost of imported materials not imported by the manufacturer will be the delivery cost at the factory but excluding customs duties and other duties and charges of equivalent effect on the cost of the imported materials;

(b) the cost of local materials, including the cost of waste materials and materials lost in the process of manufacture, as represented by their delivery price at the factory;

(c) the cost of direct labour as represented by the wages paid to the operatives responsible for the manufacture of the goods;

(d) the cost of direct factory expenses are represented by:

(i) the operating cost of the machine being used to manufacture the goods;

(ii) the expenses incurred in the cleaning, drying, polishing, pressing or any other process, as may be necessary for the finishing of the goods;

(iii) the cost of putting the goods up in their retail packages and the cost of such retail packages but excluding any extra cost of packing the goods for transportation or export and the cost of any extra packages;

(iv) the cost of special designs, drawings or lay out; and

(v) the hire of tools, or equipment for the production of goods; and

(e) the cost of factory overheads as represented by:

(i) rent, rates and insurance charges directly attributed to the factory;

(ii) indirect labour charges, including salaries paid to factory managers, wages paid to foremen, examiners and testers of the goods;

(iii) power, light, water and other service charges directly attributed to the cost of manufacture of the goods;

(iv) consumable stores, including minor tools, grease, oil and other incidental items and materials used in the manufacture of the goods; and

(v) depreciation and maintenance of factory buildings, plant machinery, tools and other items used in the manufacture of the goods; and others.


2. In the calculation of the ex-factory cost determining value added in terms of Rule 4(1) (b) (ii), the following elements of costs, charges and expenses are excluded:

(a) administration expenses represented by :

(i) office expenses, office rent and salaries paid to accountants, clerks, manager and other executive personnel;

(ii) directors’ fees other than salaries paid to directors who act in the capacity of factory managers;

(iii) statistical and costing expenses in respect of manufactured goods; and

(iv) investigation and experimental expenses;

(b) selling expenses represented by:

(i) the cost of soliciting and securing of orders, including expenses such as advertising charges and agents’ or salespersons’ commissions or salaries; and

(ii) expenses incurred in the making of designs, estimates and tenders;

(c) distribution expenses, represented by all the expenditure incurred after the goods have left the factory, including:

(i) the cost of any materials and payments of wages incurred in the packaging of the goods for export;

(ii) warehousing expenses incurred in the storage of the finished goods; and

(iii) the cost of transporting the goods to their destination;

(d) charges not directly attributed to the manufacture of the goods represented by:

(i) any customs duty and other duties and charges of equivalent effect paid on the imported raw materials;

(ii) any excise duty paid on raw materials produced in the country where the finished goods are manufactured;

(iii) any other indirect taxes paid on the manufactured products;

(iv) any royalties paid in respect of patents, special machinery or designs; and

(v) finance charges related to working capital.