Rules of Practicing Customs Clearance Profession (ZATCA Administrative Resolution No. 58406 dated 21/09/1444H)

Article (16):Employees Transfer Procedures 16 Article (17): License Cancellation Cases 17 Chapter Eight: Final Provisions 18 Article (18): penalties 18 Article (19): Objections 18

Article (20): Entry to force 18 2 <!-- page 3 --> Introduction The Common Customs Law of the GCC States was issued By Royal Decree No. M/41 dated 03/11/1423 H (16/01/2003), which unified customs procedures and laws in the GCC Countries. Were unified in accordance with international conventions on governing customs activities. The Law regulates several customs procedures, including the procedures for practicing the profession of customs clearance, under Article 113 of the Common Customs Law. The purpose of these rules is to establish the procedures and requirements governing the profession of customs clearance, and define customs activities and the stages that goods undergo upon arrival at customs ports, whether related to the import, export, or transit of goods. The present rules also establish the regulations for practicing customs clearance activities by classifying the activities and specifying the terms and conditions necessary for practicing each activity. Additionally, the rules also aim to control and monitor customs clearance activities for incoming, outgoing, and transit goods, in addition to organizing the management of relations between the Authority, customs clearance facilities, and customers by specifying the obligations of the establishment and the Authority, in order to enhance the efficiency of the customs clearance sector. 3 <!-- page 4 --> Chapter One: Introductory Provisions

Article (1): Definitions In implementation of the provisions stated herein, the subsequent words and terms shall have the meanings ascribed thereto, unless the context otherwise requires: The Authority: Zakat, Tax and Customs Authority. The Governor: Governor of Zakat, Tax and Customs Authority. The Common Customs Law: The Common Customs Law of the GCC States approved by Royal Decree No. M/41 dated 03/11/1423 H (16/01/2003). The Rules: The Rules of Practicing Customs Clearance Profession. Customs Clearance: Documenting customs data for incoming, outgoing, and in-transit goods in accordance with customs procedures stipulated in the Common Customs Law. License: Approved document issued by the Authority authorizing the entity practicing customs clearance activities after being activated. Legal Entity: Each business entity licensed by the Authority to practice customs clearance. Classification Broker: Employee within the entity specializing in classifying goods in accordance with customs tariffs. This employee is the only one authorized to create customs data in the Authority systems. Clearance Broker: Employee within the entity specializing in monitoring the customs data procedures requiring Authority review, such as sampling or inspection procedures. Special Representative: Employee of a public/ private sector entity specializing in classifying goods in accordance with customs tariffs and completing clearance procedures on behalf of the entity. Bank Guarantee: A document issued by a bank licensed by the Saudi Central Bank to guarantee the payment of a specified sum, with the guarantee being unconditional. 4 <!-- page 5 --> Insurance Policy: A policy issued by an insurer licensed by the Saudi Central Bank to cover the customs activities amount, in accordance with requirements Established by the Authority. Documentary Credit: A letter of credit that meets the criteria Established by the Authority. Import and Export Activity: The activity authorizing the entity to carry out customs procedures on behalf of clients for goods entering and leaving the KSA in accordance with the Common Customs Law. Transit Activity: The activity authorizing the entity to transport goods through the KSA in accordance with the provisions of the Common Customs Law and applicable international conventions. Express Transport Activity: The process of transporting parcels and postal consignments within the KSA or between the KSA and other countries in accordance with the requirements and controls issued by the competent authorities in the KSA. Clients: Importers, exporters and the like. Customs Zone: The area designated by the Minister of Finance in each sea, air, or land port or any other administrative centre where all or some of customs procedures are authorized to be completed. The Academy: The department Specialized in training programs and certification within the Authority. Toxicology Screen Certificate: A certificate Issued by health entities approved by the Ministry Of Health In the Kingdom Of Saudi Arabia stating that the applicant is not under the influence of toxic or narcotic substances. Criminal Record Certificate : A certificate issued by the competent security authorities in the KSA, attesting that the applicant has not previously been condemned by Final judgment for reasons associated with the abuse of power, or convicted by a conclusive judgment for a crime related to customs smuggling or any other crime, unless the applicant has been rehabilitated or five years have elapsed since the sentence was issued. 5 <!-- page 6 -->

Article (2): Application Scope Without prejudice to applicable laws and regulations, all entities and public and private sector Entities and agencies involved in customs clearance shall be bound by these Rules. Chapter Two: Issuance and Renewal

Article (3): License Issuance and Renewal The license shall be valid for (3) years and renewed for a similar period. The entity desiring to practice any of the customs clearance activities shall apply to the Authority for the issuance or renewal of a license in accordance with the conditions set forth in this Article. I: Customs clearance license requirements: 1. Apply for issuing customs clearance license through channels approved by the Authority; 2. present a valid commercial register that includes “customs clearance activities.” Commercial entities holding a valid unified logistics license issued by the competent authority are exempted from this requirement; 3. Adding any of the activities mentioned in Article 9 hereof. Second: Customs clearance license renewal requirements: 4. Apply for the renewal of the customs clearance license through channels approved by the Authority; 5. submit a valid commercial register containing “customs clearance activities.” Clients holding a valid unified logistics license issued by the competent authority are exempted from this requirement. 6 <!-- page 7 --> Chapter Three: Licenses

Article (4): Customs Clearance Licenses Categories A. General Clearance License: Allows the entity to engage in customs clearance for one or more of the following activities: 1. Import and export activity. 2. Transit activity. 3. Transportation of postal packages. B. Special Clearance License: permits public and private sectors authorities to perform customs clearance activities only for their inbound and outbound shipments, subject to the existence of an authorization for an employee working for such authority in accordance with the requirements described herein.

Article (5): Conditions for Customs Clearance Employees Working In Customs Clearance Entities Entity desiring to engage in any customs clearance activities shall provide at least one broker or more for customs clearance and at lat least one broker or more for customs classification. Employees in customs clearance entities may be simultaneously designated to these two professions after meeting the requirements outlined below for each occupation listed belowI: Clearance Broker: The clearance broker shall: 1. Be either a Saudi either or a national of a GCC state, residing in the Kingdom of Saudi Arabia. 2. Be at least (18) years old. 7 <!-- page 8 --> 3. Have, at least, a high school diploma or its equivalent. 4. Be an entity employee as per the records of the General Organization for Social Insurance (GOSI). 5. Not own another active licensed entity, and may only practice the profession within that entity. 6. Provide a toxicology screen certificate. 7. Provide a criminal record certificate. II: Classification Broker: The person undertaking such task shall: 1. Be either a Saudi or a national of a GCC state,who is a resident of in the Kingdom of Saudi Arabia. 2. Be at least (18) years old. 3. Have, at least, a high school diploma or its equivalent. 4. Be an entity owner or employee as per the records of the General Organization for Social Insurance. 5. Not own another active licensed entity, and may only practice the profession within that entity. 6. Provide a toxicology screen certificate. 7. Provide a criminal record certificate. 8. Pass professional examinations and evaluation requirements administered by the Academy or any other Authority-approved agency. Those who have worked in the clearance and customs procedures field for at least five years may be exempted from such examinations. 8 <!-- page 9 -->

Article (6): Special Representative Public and private sector agencies have the right to carry out imports and/or exports customs procedures by authorizing an employee per the following requirements: 1. Representative must be at least (18) years old. 2. Representative must not own an entity with an active clearance license, and may only practice the profession of a special Representative for the agency authorizing him or her to carry out procedures on their behalf. 3. Representative must be an employee of the agency per the records of the General Organization for Social Insurance; diplomatic agencies are excluded. 4. An authorization from the owner of the goods detailing the special Representative's information shall be provided to the Authority. 5. Provide a toxicology screen certificate must be submitted; diplomatic and government agencies’ employees are exempted . 6. Provide a criminal record certificate must be submitted; diplomatic agencies employees are excluded. 7. A final discharge certificate must be submitted (in case of being previously employed at another entity). 8. Pass professional examinations and evaluation requirements administrated by the Academy or any other Authority-approved agency. Those who have worked in the clearance and customs procedures field for at least five years may be exempted from such examinations.

Article (7): Continual Professional Qualification and Assessment The Authority may perform periodic assessments on the classification brokers and the special Representative, or conduct qualification courses and workshops to confirm their proficiency and expertise in all aspects of their duties and responsibilities. Such activities aim to enhance their professional and academic aptitude according to the guidelines of the Academy. 9 <!-- page 10 --> Chapter Four: Customs Clearance Activities

Article (8): License Activation in case of a license activation, entity shall: 1. Add one or more activities from the following: a. Export and import activity. b. Transit activity. c. Express transportation activity. 2. specify the port(s) where the selected activity will be performed.

Article (9): Requirements of Customs Clearance Activities I: Entity may conduct one or more activities in a port and may designate one or more classification brokers at several ports. II. Entity shall comply with the following requirements for the inclusion or renewal of customs clearance activities: 1. Export and import activity: a. Select the port at which the activity is intended to be exercised. b. Provide a documentary guarantee. c. Appoint a classification broker in accordance with the requirements outlined in Article 5 of these Rules. 2. Transit activity: a. Select the port at where the activity is intended to be conducted. b. Agree to cover, under all circumstances, any deficiency in the required transit guarantee. c. Appoint a classification broker in accordance with the requirements outlined in Article 5 of these Rules. 10 <!-- page 11 --> d. Provide a bank guarantee or insurance policy in the Authority's name for a minimum of fifty thousand Saudi riyal, provided that the bank guarantee/insurance policy remains in effect for at least one year beyond the license term. 3. Express transport activity: a. Acquire a postal parcel international transport license issued from the competent authority. b. Select the port at which the activity is intended to be conducted , provided that such port shall be one of the customs ports which allow the conduct of express transport activities. c. Provide a documentary guarantee of fulfilling any financial obligation concerning the activity. d. Appoint a classification broker in accordance with the requirements outlined in Article 5 of these Rules. III. Documentary guarantees may be granted for transit activity if any of the following conditions are met: 1. If the entity acquired an economic operator license approved by the Authority. 2. If the entity is being licensed to exercise express transport activity by the competent authority. 3. If the entity is a joint stock company listed in the Saudi Capital Market. 4. If the entity obtained a unified logistics license from the competent authority. This requirement shall be limited to activities of export and transport. IV. The activity may be renewed for a duration not exceeding the license's expiration date. 11 <!-- page 12 --> Chapter Five: Obligations

Article (10): Entity Obligations Entity and employees shall: 1. Comply with all laws and instructions issued by the Authority or other relevant authorities pertaining to the activities being carried out. 2. Maintain the confidentiality of information, data and passwords used to access the Authority’s e-system and any other associated e-system. Entity and/or employees shall prohibit access to and/or use of the same at all times. 3. Maintain the confidentiality of their clients’ commercial transactions, and shall exercise due diligence in the performance of their duties. 4. Provide automatic customs declaration immediately and effectively following the receipt of documents required for clearance. Moreover, entity and/or its employees shall archive documents online, translate invoices into Arabic or English, if needed, elucidate the description of each item individually, and list such items under the applicable clause. 5. Provide an e-system through which all customs activities, as well as other client-related activities, are registered, provided that such data be retained for five years at least. 6. Perform the assigned customs-clearance transactions immediately following automatic registration. If there is a reason for the delay in carrying out any procedures, the entity shall notify the customs zone and the affected person in writing or via email. The entity may not discontinue the follow-up of carrying out the procedures without providing a justification acceptable to the Authority. 7. Provide the owner of the goods with a copy of the invoice for expenses and costs incurred as a result of the clearance of the goods, as well as a copy of the customs declaration and customs payment fixed receipts, as well as any other fees or expenses paid for this purpose. 8. Deliver any shipment whose procedures have been completed to the agreed-upon delivery point off the client and entity have agreed to provide other transport services in addition to clearance. Entity may not, in any way, withhold, conceal, or confiscate the shipment. 12 <!-- page 13 --> 9. Adhere to standards of professionalism and honesty in its dealings with clients. The Authority may issue any rules or instructions pertaining to these employees. 10. Cooperate with the employees of the Authority during inspection visits and provide them with all necessary documents. 11. Conduct customs clearance operations using authorized personnel. Entity may not assign or authorize external personnel for this activity. 12. Commitment to contracting with all employees of the entity in accordance with the Labor Law and other applicable laws. Entity shall also ensure a sufficient number of employees for the performance of required tasks, and the Authority may, as appropriate, establish classification standards and criteria to ensure operational efficiency and improve quality of the provided services. 13. Comply with Labor Law and applicable regulations and decisions when terminating the services of an employees. Entity shall also report to the Authority via the authorized communication channel immediately after terminating the employment contracts of such employees. 14. Customs clearance entity shall fulfil its obligations and restrictions. within ten (10) business days. 15. All employees of customs clearance entities shall report any suspicion of infraction of the public order to the public order applicable in the KSA or any customs operation by their clients or customers. 16. Custom clearance entity shall complete all license renewal procedures and activities with fifteen (15) days before the date of expiration. 17. Comply with the detailed description when collecting and entering data in all sections of the customs declaration based on the documents provided by the client. , 13 <!-- page 14 --> 18. Custom clearance entity shall be liable for any obligations owed to the Authority if a delay is caused by it or any of its employees. This shall apply unless it is proven that the delay was caused by circumstances beyond the control of the entity or its customer, or if the Authority accepts the delay's justification in each case, procedure or circumstance. 19. Comply with the customs zone's requirements regarding the request of presence of a customs clearance broker by the specified date.

Article (11): Employees Obligations Entity’s employees shall: 1. Comply with the provisions of the Common Customs Law, the instructions issued by the Authority, and these Rules. 2. Cooperate with employees of the customs zone and observe standard work ethics. 3. Refrain from working for and/or at any entity other than the entity for which they are permitted to work. 4. Maintain the privacy and confidentiality of all client and customs clearance entity data, information and passwords. Moreover, entity employees shall use the Authority›s or relevant agencies› systems accurately and appropriately. 5. Act transparently, in accordance with disclosure policies, and in accordance with the applicable regulations. 14 <!-- page 15 -->

Article (12): Authority Obligations towards the Entity 1. The classification broker and special representative shall be granted access to clearance activity e-system and all other relevant necessary powers to administer the account of the entity and/or its affiliated agencies. 2. Entity employees are entitled to receive and automatically activate a customs portal access card. 3. All systems, special models, and training materials related to the practice of customs clearance shall be made available, and any amendments thereon shall be published through official channels of communication. 4. The Authority shall conduct routine inspections of customs clearance entities to ensure their compliance with customs clearance regulatory instructions and to evaluate the performance of customs clearance personnel. 5. Requests and complaints of clearance entities shall be received, and suggestions and proposals submitted via Authorized communication channels shall be reviewed, along with the progress in accordance with the Authority's adopted service level. 15 <!-- page 16 --> Chapter Six: General Provisions

Article (13): Terms of Customs Clearance Offices 1. A customs clearance entity shall provide at least one office in accordance with the type of activity intended to be conducted, provided that such office is independent and licensed by the competent authority under a lease agreement or deed of ownership to conduct customs clearance. 2. Appropriate premises, requirements, and necessities must be available to receive and serve clients. In addition, devices permitting access to the Authority's e-system around the clock must be provided. 3. An instructive and informative panel shall be placed.

Article (14): License General Provisions 1. Entity shall acquire an e-authorization from clients before conducting customs clearance on their behalf. 2. Customs clearance shall only be performed on behalf of a client after obtaining the required license from the Authority in accordance with the terms and conditions outlined in these Rules. , 3. The Authority has the right to revoke any entity s license if it has been inactive for (180) consecutive days, and any fees owed to the Authority must be paid. 4. Customs clearance licenses may not be rented nor waived -without the Authority’s approvaland if either of these actions were taken, the license shall be revoked. 5. If an entity does not communicate with its employees regarding goods-clearance finalization procedures for unjustified reasons, the Authority shall have the right to transfer finalization authorization to another entity at the request of the affected person without any liability whatsoever. 16 <!-- page 17 --> 6. The Authority may determine the number of licenses and activities based on actual business requirements. 7. Renewal of license does not include renewal of activities, and the customs clearance entity must renew the activity intended to be exercised in accordance with the provisions of these Rules. 8. Additional bank guarantee shall be returned to cover any discrepancies that may arise after the complete and lawful exit of the goods from the port. 9. The Authority may return the bank guarantee to the complied entities in accordance with the requirements it establishes. Chapter Seven: Termination and Cancellation

Article (15): License and/or Related Activities Cancellation Procedures Any customs clearance entity who desires to cancel a customs clearance license or any thereof activities shall submit a cancellation request per the following: 1. Submission of a cancellation request clarifying the activity intended to be cancelled. 2. Settlement of any financial or documentary obligations entitled to the customs clearance entity or any thereof employees. After that, port access cards shall be returned and user code and password be deactivated.

Article (16): Employees Transfer Procedures , The following requirements shall be met for an employee s transfer from one entity to another: 1. Submitting a transfer request to the Authority via the Authorized channels. 2. Returning the access cards of the original customs yards to the Authority and deactivating the user ID on the e-system upon transfer or termination of business. 3. Submitting the final discharge certificate provided from the employing entity. 17 <!-- page 18 -->

Article (17): License Cancellation Cases A license shall be cancelled in any of the following cases: 1. Company Termination and Liquidation or stricken a sole proprietorship from the Commercial Register for any reason whatsoever. 2. Violation of the customs clearance regulations and laws after the issuance of a final decision of conviction from the customs committees or competent courts, after issuance of a final decision of conviction with regard to customs smuggling, or after issuance of a final judgment of conviction -from the competent court- enforcing a custodial penalty due to the indulgence in a moral tribute crime. 3. Remaining inactive for a period of (180) consecutive days. 4. Issuance of a judicial ruling enforcing the liquidation, bankruptcy, or enjoinment of the entity; or if the entity is unable to pursue customs clearance activities in any way. 5. Issuance of a decision from the competent authority enforcing the cancelation of activity or commercial register. 6. If the license is proved to be rented to, used by, or assigned to a third party by the entity without the Authority’s approval. 7. If the activity remains undefined after (180) days from license issuance date. 8. If the customs clearance entity requests cancellation of the customs clearance license. 18 <!-- page 19 --> Chapter Eight: Final Provisions

Article (18): Penalties 1. According to Articles (154) and (157) of the Common Customs Law, the entity and its employees are jointly and severally liable for any customs violations and smuggling crimes committed by its authorized and/or affiliated users. 2. Disciplinary sanctions specified in Article (114) of the Common Customs Law shall be applied if any provision of these Rules, the Common Customs Law, or any related law is violated by the entity or its employees. After conducting a thorough investigation into the culpable party, such penalties shall be applied. 3. Subject to Paragraph (2) of this Article, the Authority may apply penalties and fines for customs infractions committed by the entity or its employees in accordance with the provisions of Article (14) of the Common Customs Law.

Article (19): Objections The entity is notified of the penalties and/or sanction through the Authority, s official channels of communication. Entity may contest such penalties and/or sanction in accordance with the regulatory procedures outlined in Articles (114) and (148) of the Common Customs Law.

Article (20): Entry to force The present Rules shall be promulgated and amended by a decision of the Governor, and become effective one hundred twenty (120) days after publication in the official gazette. Such Rules shall supersede the conflicting provisions and decisions. 19 <!-- page 20 --> 20