Trade Facilitation at Our Borders

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 FRCS’s aim 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.

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

While FRCS 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 transactionshas become an international issue, and the search for ways to combat­this 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 MOU’s.

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:

• Mis-description and incorrect classifi­cation of goods – e.g. Importer importing garments but declaring it as fabrics and paying less duty.
• 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.
• Over-valuation of goods- traders over in­voicing zero rated or goods attracting low­er duty rates with the intention of shifting their profitsabroad and paying less taxes, a common regime used in trade based mon­ey laundering using transfer pricing.

FRCS has recently 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, FRCS 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, FRCS is 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.

FRCS requests 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 emphasise enough the impor­tance of voluntary compliance.

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

Penalty Regime

The penalties for Customs Fraud is very clear under Customs Act.

1.Customs Offences - Under Section 137 of the Customs Act:

The penalty is $25,000 or a term of impris­onment not exceeding 10 years or both

2.Penalty for fraudulent evasion of duty: under s139 of the Customs Act

“is liable to a fine not exceeding three times the value of the goods or $25,000 whichever is the greater or a term of im­prisonment not exceeding 10 years, or both”.

The difference between Section137 and Section139 is that Section137 are strict li­ability offences 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

We have also investigated some compa­nies for similar offences in the past few months.

Let us work together to build better fu­ture for all Fijians.

Feedback: maraia.vula@fijisun.com.fj