Voluntary disclosure programme opportunity for importers

When goods are imported, the importer is required to clear them through customs, with the payment of any duty or other import taxes. To save time, the importer generally does a self-assessment. The customs officer will generally rely on the information or documents submitted by the importer.
The price of obtaining quick clearance is random but regular audits by the Customs Department’s Post-Clearance Audit Bureau.
While goods may have been imported without any issues being raised by customs at the port, it’s possible that mistakes made by the importer may be caught during an audit.
Because of the complexity of custom rules and regulations, there is a risk of misunderstanding certain rules and making an incorrect declaration.
For example, the importer may have incorrectly determined the value of the goods on which the duty is paid or incorrectly classified the tariff code for the goods, which affects the duty rate.
If the officer discovers any non-compliance, the importer may be subject to the import-duty shortfall, a penalty of up to four times the import value plus duty, import VAT (value-added tax) shortfall, monthly duty surcharge of 1 per cent and monthly VAT surcharge of 1.5 per cent.
Where there has been a systematic mis-declaration of many imports, the duty exposure may be significant.
In January, the Customs Department re-launched a programme that allows importers voluntarily to disclose unintentional under-declared customs duty and other border taxes. This amnesty represents an excellent opportunity for importers to clear incorrect customs declarations before they are discovered by customs audit officers.
Under this special programme, the import duty penalty, VAT penalty and monthly duty surcharge of 1 per cent will be waived. The importer will only be liable for additional duty, import VAT and the monthly VAT surcharge.
The import VAT should, however, be creditable to the importer’s monthly VAT return if it is a VAT registrant.
The programme avoids the need for importers to settle with each customs port in case of separate shipments, as the collection of any unpaid duties will be facilitated by central customs officers.
The programme provides an opportunity for importers to manage their customs exposure in a manner that is cost- and time-efficient.
Importers can apply to the programme by making a verbal request to a customs officer. If the officer agrees, he will issue an invitation letter to the importer, including a list of additional documents requested.
However, the importer should carefully consider issues that might arise, as the officers handling the programme are also the customs post-audit officers.
Certain customs issues may not qualify for inclusion in the programme. For example, an importer would not be eligible if the issue is under investigation by the Customs Department and/or the Department of Special Investigation, or the case involves the smuggling of prohibited or restricted goods, or the infringement of intellectual property rights.
The programme is due to expire at the end of the year.
We would encourage importers to do a self-review of their import/export compliance, perhaps with the assistance of the Deloitte Customs & Global Trade team, to determine whether there is potential exposure.
For those issues identified, the importer could consider entering the programme before December 31.

Stuart Simons is a tax partner, |while Sujitra Sukpanich is a director for tax and legal services. They can be reached at [email protected] and [email protected].