Draft law to digitalise customs
A new customs law is likely to be placed in parliament soon under which the associated environment will have to be digitalised by the government, said officials of the National Board of Revenue (NBR).
The draft new law also incorporates various provisions in line with global practices to speed up clearance of goods meant for export and import from ports with the objective of facilitating international trade, they said.
“We have drafted the new law in light of international best practices. The latest one is more updated and more pragmatic,” said a senior NBR official, seeking to remain unnamed as he was not authorised to talk to the media.
The cabinet approved the draft Customs Act, 2018 on October 3 clearing the way for it to be placed in parliament. It is now undergoing processes to be placed in parliament in the coming session, he said.
The government took the initiative to frame a new customs law several years ago to replace the existing Customs Act that was framed 49 years ago. The official said the existing law has undergone numerous revisions over the years and suffers from various shortcomings.
The new law includes various provisions followed by advanced economies to facilitate faster trade.
One of the provisions is Advance Cargo Declaration, which provides a scope for businesses to submit import related documents to customs ahead of the entry of goods at ports.
Once passed, the new law will also open up the scope for compliant businesses to clear goods fast under a mechanism called Post Clearance Audit.
Compliant and honest traders will get a green channel to import and export goods as Authorised Economic Operators, according to the draft.
Officials said the existing law has no provision making it compulsory to hold consultations with stakeholders ahead of the formulation of any new rule or revision of existing ones.
Consultation with stakeholders has been proposed to be made mandatory in the draft new law, said officials.
The customs authority will also assess duty and taxes of imported goods based on transaction value once the new law was passed. Presently tax and duty of various imported products are assessed through different methods, prompting importers to conceal the actual transaction prices, causing the loss of revenue, according to an NBR paper.
Under the new law, valuation of duty and tax will be done based on current exchange rates of currency instead of the present method of weighted average rates of the previous month.
Importers will also face higher penalties than what are at present for not clearing goods from ports within a certain period of time, according to the draft.
To rein in false declarations, a provision of establishing a risk management unit has been kept in the draft law, according to the NBR paper.
The new customs law also incorporates provisions to curb money laundering, terrorism and proliferation of weapons of mass destruction and prevent financing of the spread of terrorism, according to the NBR.
The NBR official said the draft law was placed before the cabinet in September 2014 and the cabinet gave some suggestions.
“We have fulfilled the observations of the cabinet and submitted the draft law to the cabinet early this year and the cabinet has given its final nod this month,” he said, adding that the draft would be placed in parliament as a finance bill.