Key Takeaways
- Medicines are included in Category One goods in CEMAC and hence fall under a low common external tariff of 5%, and there is an exemption from Gabon VAT of 18%.
- Apart from customs duty, other additional taxes that need to be considered in addition to the CIF value include CEMAC Community Integration Tax at 1%, ECCAS Community Integration Contribution of 0.4%, and OHADA tax of 0.05%.
- The RUSID processing cost for the use of the customs IT system varies and can be very expensive at times, and hence needs to be confirmed with the customs broker in advance.
- Freight charges from India to Gabon differ depending on whether the goods are shipped by air or by sea, whereby the sea freight cost is lower than the air cost in case of non-urgent cargo.
- Regulatory costs like marketing authorisation and import authorisation need to be considered separately from the costs of customs duties and freight.
India is among the largest generic drug manufacturers in the world, and hence it stands out as a preferred source for drugs by importers in Central Africa due to its favourable prices. In order to understand the cost of importing medicine from India to Gabon, it is important to note that the manufacturer’s invoice does not tell the total landed cost and there is a need to consider the various costs such as the customs duties.
Overview: Components of Landed Cost
The total cost involved in the importation of medicines into Gabon normally includes five main elements, namely the cost of the product (cost ex works/F.O.B. cost charged by the Indian manufacturer), the cost of international transportation and insurance, Gabonese customs and community duties, regulatory fees, and the cost of port handling within Gabon. All these have to be calculated separately for accurate landed cost determination.
1. Cost of the product (Ex-Works/FOB) from India
The first item on our list is the basic price of medicines offered by Indian pharmaceutical manufacturers or exporters, most often on EXW/FOB terms. Indian generic manufacturers are usually known for their competitive prices on a per-unit basis against many other sourcing countries, but again, prices vary significantly based on the therapeutic class, dosage form, volume of purchase, and whether the product is a simple generic or a more sophisticated formula.
2. International transport from India to Gabon
Medicine transport from India to Gabon (through the port of Libreville or Port-Gentil for sea transportation or Leon-Mba International Airport for air transport) is usually carried out by sea or air:
Sea transport: Usually more economical for larger shipments, but shipping takes several weeks, including transit through intermediate ports.
Air transport: Much faster, most often within a few days, although much more expensive for transport on a per-kilogram basis, better suited to urgent and valuable cargo.
The price will depend on how many pharmaceutical products are shipped by supplier: full container or less than full container, fuel surcharges, and the need for cold chain logistics for temperature-sensitive medicines.
3. Marine or Air Cargo Insurance
Considering that pharmaceutical products are highly valuable and sensitive goods, a mandatory cost component will be cargo insurance, which is usually charged as a percentage of the shipment value. The purpose of such insurance is to protect the shipment from possible damages during transportation. The cargo insurance is normally included into CIF value, on which customs duties are calculated.
4. Customs Duty in Gabon on Medicines
Being part of the Central African Economic and Monetary Community (CEMAC), Gabon levies a CET duty on products from countries that do not belong to CEMAC. Imported products are divided into four tariff categories:
- Category One – basic products (including medicines): 5% duty
- Category Two – raw materials: 10% duty
- Category Three – intermediate products: 20% duty
- Category Four – all other products: 30% duty
The medicines and pharmaceutical products are usually included in Category One, meaning that they will be subject to the lowest CET (about 5% of the CIF value).
5. Value Added Tax (VAT) – Generally Non-applicable for Medicines
The usual VAT rate in Gabon is 18%, but as it follows from Gabonese tax law, medicines and medical products are exempted from VAT.
6. Other Taxes or Fees Related to Community Customs Duty
Apart from the primary community customs duty mentioned above, there are several other taxes and fees, calculated based on the CIF value of the cargo imported from non-CEMAC or non-ECCAS countries:
- CEMAC Community Integration Tax (TCI): 1% of imports coming from non-CEMAC member states
- ECCAS Community Integration Contribution (CCI): 0.4% of imports coming from non-ECCAS member states
- OHADA Levy: 0.05% of customs value
- RUSID Processing Fee: A fee charged for using the customs computer system, and the cost may vary a lot depending on the current rate at that time. So, it would be advisable to get confirmation from a customs agent before shipping.
7. Regulatory and Registration Charges
Medicines need to get an authorisation (in the form of a Marketing Authorisation) by the Gabon National Agency of Medicines and Health Products before being legally imported into the country. There are charges for applications and evaluation of the medicine in addition to the charges on the importation authorisation application for each shipment.
8. Port Handling, Clearances, and Local Freight Charges
After the products are imported to Gabon, there will be some additional local charges such as port handling charges, customs brokering charges, warehousing charges (especially when clearance is delayed), and inland freight charges from the port to the distributors‘ warehouses.
Illustrative Cost Structure (as a Percentage Breakdown)
While the actual percentages can differ depending on factors like shipment size and transportation mode, an approximate percentage allocation of costs (excluding the cost of the product itself) would be:
- Customs duty (Category One): around 5% of CIF
- VAT: 0% (medicines are usually exempt from VAT)
- CEMAC TCI: 1% of CIF
- ECCAS CCI: 0.4% of CIF
- OHADA: 0.05% of CIF
- RUSID processing fee: negotiable, please contact your broker for the current rate
- Freight and Insurance: varies greatly depending on transport mode (air or sea) and size of shipment
- Port charges, brokerage and inland transportation: depends on the complexity of the shipment
Key Factors That Influence Total Import Cost
- Quantity shipped: Higher quantities shipped would reduce the shipping cost and other expenses on a per-unit basis.
- Mode of transportation: Sea transportation would be more economical but take more time, while air transportation would be relatively faster but expensive.
- Temperature-controlled requirement: Temperature-sensitive goods would be expensive to ship due to specialised logistics.
- Documentation discrepancies: Discrepancies in the documents would lead to demurrage expenses.
- Exchange rate fluctuations: Since the currency used in Gabon is XAF (CFA franc), which is fixed with the euro, exchange rate fluctuations between the Indian Rupee and Euro will have an impact on the landed cost.
Tips to Manage and Reduce Import Costs
- Consolidate loads when possible for efficiency in freight
- Use a seasoned customs broker knowledgeable with the Gabonese pharmaceutical importing process
- Make sure that the HS code is confirmed so that the correct duties apply
- Have the regulatory registrations planned well ahead, as any delay will hold up the whole shipment
- Get quotations for sea and air freight by several forwarders, taking into account the landed costs
Frequently Asked Questions on Importing Medicines from India to Gabon
Is VAT levied on medicine imported into Gabon?
No, VAT is not levied on medicines and medical equipment in Gabon, but this may vary depending on the tariff code number.
What is the customs duty on medicines imported into Gabon?
Medicines normally fall into CEMAC Category One tariffs, meaning a common external tariff amounting to 5% of the CIF value.
Which mode of transport is the most economical for delivering my medicines to Gabon from India?
Sea freight is normally the most economical way, while air freight is expensive but delivers fast.
Do I have to register my product in Gabon before its importation?
Yes, every pharmaceutical product needs to be registered in Gabon to get an AMM, i.e., Marketing Authorisation from the Gabonese medicines regulatory body.
Is there any other tax apart from the customs duty that I need to take care of?
Yes, you will also incur taxes such as CEMAC Community Integration Tax (1%), ECCAS Community Integration Contribution (0.4%), OHADA levy (0.05%) and variable RUSID (CIF value).
Conclusion
The advantage of importing medicine into Gabon from India is that medicine falls under the lowest classification of tariffs of CEMAC and is VAT-exempt. Nevertheless, the real total landed cost will depend on the method of freight, community taxes, regulatory costs, and local clearance charges, which should be considered during the calculation process. Good knowledge of every cost element, together with cooperation with customs and regulatory authorities, is essential for making accurate calculations and preventing extra costs.
