Dinesh Naik –
After nearly twenty years since its enactment, the Customs and Excise Act is finally being reviewed. Business needs to engage to make the most of this opportunity.
The Review covers a range of areas including the approach to legislation, information collection and storage, issues with payment, refund and reassessment of duty and GST, and the current penalties framework.
While we welcome the Review and its aim of simplifying Customs compliance and improving New Zealand’s international competitiveness, we believe that more can and should be done.
Golden chance
The review is an excellent opportunity for business to be heard and to influence change that adds value, improves the facilitation of trade, and enhances the operational effectiveness of New Zealand Customs. The danger here is in keeping silent and hoping that positive change will occur naturally.
We therefore strongly encourage affected businesses to make submissions.
The Customs and Excise Act Review discussion paper covers a wide variety of areas.
Important factors
These include the following:
A fresh approach to legislation moving to a principles-based Customs and Excise Act
Information: a new framework for collecting, using, storing, sharing and disposing of information
Duties and GST: various proposals on excise and excise-equivalent duty, refunds, managing the payment and recovery of import GST, valuation and reassessment of duty Sanctions: the appropriateness of the current Customs and excise penalty structure.
Customs Controlled Areas: Proposals to ensure that these are “designed and operated in ways that support effective Customs operations without interfering with efficient business practices.”
Submissions are due by May 1, 2015.
Welcome move
KPMG supports the aim of the Review to simplify compliance and ensure high levels of assurance but with a ‘light-touch’ approach, and to support New Zealand’s international competitiveness.
We also acknowledge the business friendly proposals put forward, such as allowing businesses to store records outside New Zealand, removing the need to get permits to move products between different Customs Controlled Areas and giving New Zealand Customs discretion in collecting revenue.
NZ Customs should be able to issue valuation rulings. Similar to how business can request a tax ruling or Advance Pricing Agreement on transfer pricing matters from Inland Revenue, they would benefit from being able to get certainty from New Zealand Customs on the value for duty and GST.
A bugbear
Guidance is needed on how business can efficiently meet both transfer pricing and Customs requirements. This is a key bugbear for business as the need to comply with different sets of rules imposes additional compliance and monetary costs.
Businesses should consider how requirements can be streamlined to minimise additional costs and submit accordingly.
While not part of the Customs review, we note that GST on low value imports and digital downloads is being considered in parallel.
This remains a highly topical issue.
The international trend is to apply GST (or equivalent) to these cross-border transactions. There are recent suggestions that New Zealand could follow this trend.
Business impact
A wide variety of businesses will be impacted by the Customs review including importers, exporters, freight forwarders, brokers, excisable goods manufacturers to list a few. This is a golden opportunity for business to be heard and to influence change that adds value, improves the facilitation of trade, and enhances Customs’ operational effectiveness. It would be dangerous to remain silent, hoping that positive change will occur naturally.
We therefore strongly encourage affected businesses to make submissions, not only on the areas covered in the discussion paper, but also on issues that are not addressed.
Dinesh Naik is Tax Partner at KPMG, New Zealand, which is the Sponsor of the ‘Best Accountant of the Year’ category of the Indian Newslink Indian Business Awards 2015. Email: dnaik@kpmg.co.nz
