SUNBIZ

All to You Need to Know About Duty Evasion

Steady increases in trade volumes and complexity in recent years have signifi­cantly changed the operating en­vironment for the international trading community. They have highlighted the nega­tive impact of inefficient border
22 Sep 2018 11:00
All to You Need to Know About Duty Evasion
Fiji Revenue and Customs Service chief executive officer Visvanath Das.

Steady increases in trade volumes and complexity in recent years have signifi­cantly changed the operating en­vironment for the international trading community.

They have highlighted the nega­tive impact of inefficient border procedures on Governments, businesses and ultimately on the customer and the economy as a whole.

Trade facilitation is particular­ly important for developing coun­tries like Fiji.

It enhances goods and people flow which directly impacts eco­nomic activity and multiplier ef­fects that grows the economy and tax base.

It brings more efficient and reli­able tax collection, a particularly important consideration for an economy like us that depends on taxes to finance our public ad­ministrations.

With the Fiji Revenue and Cus­toms Service aiming for effective and efficient trade facilitation, partnership with stakeholders is imperative.

We will look into the impor­tance of voluntary compliance, improving processing time, de­termining the correct tariff clas­sification, valuation of goods and other documents produced to with customs entry at points of clearance and authentication of appropriate tax and duty payable.

Traders, customs brokers and agents are well aware of what happens at our borders.

We provision under the legisla­tion whereby traders can volun­tarily disclose errors and omis­sions pertaining to cross border transaction without any penal­ties.

While Revenue and Customs commends those traders that have voluntarily complied in the recent past, it also encourages other traders to come forward and comply with tax and customs laws of the Fiji.

Like other tax and customs ad­ministration, Fiji is also vulner­able to fraudulent activities.

However, we have compliance improvement strategies to com­bat such non-complaint traders.

Fraudulent activities at our border millions of dollars maybe lost annually through under/over-valuation of goods.

The fight against fraudulent cross border transactions has be­come an international issue.

The search for ways to combat this has resulted in many ini­tiatives being taken on a global level.

Fiji has partnered with other customs administrations in the region for exchange of informa­tion and data sharing in identify­ing corrupt practices.

This is possible through mutual agreements, multi-lateral and bi-lateral agreements and Memo­randum of Understandings.

The collaboration with other customs administration and law enforcement agencies is im­perative to combat cross-border fraudulent activities.

Individuals and traders engaged in customs fraud are liable for penalties and prosecutions as provided for under the customs legislation.

Some common customs fraud are:

nMis-description and incorrect classification of goods.

For example, importer import­ing garments but declaring it as fabrics and paying less duty.

n Under valuation of goods- traders producing fictitious in­voices with lower value of goods with the intention of evading proper duties.

Traders engaging services of graphic designers to produce fic­titious invoices.

nOver-valuation of goods- trad­ers over invoicing zero rated or goods attracting lower duty rates with the intention of shifting their profits abroad and paying less taxes, a common regime used in trade based money laundering using transfer pricing.

Revenue and Customs has noted that most cases of undervalua­tion and overvaluation is preva­lent in related party transactions whereby traders have established related business entities abroad which are used to facilitate such type of fraud transactions.

Illicit imports

In Fiji, we have confiscated il­licit imports and apprehended those in the business of smug­gling such imports including il­licit drugs, undeclared curren­cies and prohibited goods.

These confiscation and appre­hensions on smugglings were from internationally registered visiting fishing vessels, yachts, traveler’s and parcel post.

Through information and data sharing with our counterparts abroad, Revenue and Customs is able to apply risk management techniques to risk profile and tar­get high risk fishing vessels and yachts visiting Fiji, parcels and individuals.

Partnership with stakeholders

Whilst there is competition in the market for Customs Agents, we are aware that importers shop around so as to obtain the cheap­est deal, however, the low charge given by an Agent should not be used to understate duties hence defrauding the Government.

We request the customs agents to work with integrity by provid­ing importers with correct and sound advice.

The Agents need to be honest when compiling and submitting the trade entry thus declaring the correct imported goods and importantly the tariff rate appli­cable.

We cannot emphasize enough the importance of voluntary compliance.

When you undervalue or de­fraud duties and taxes, you not only deprive the Fijian Govern­ment but the people of Fiji from much needed development and social services.

The difference between Sec­tion137 and Section139 is that Section137 are strict liabilityof­fences whereby it does not have to be proven but the offence is committed whether by

lack of knowledge, negligence or being reckless As for Sec­tion139 – the intent has been proven that the importer deliber­ately intended to evade duty.

Partnership and stakeholder engagement is our goal and Rev­enue and Customs is willing to work with you all the time. Let us work together to build better future for all Fijians.

Feedback: maraia.vula@fijisun.com.fj

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