Eugen Trombitas –
New Zealand prides itself of having one of the more progressive Customs services in the world.
However, our Customs legislation has not kept pace with the digitalisation and globalisation of trade and travel and changes in global business models and practices.
We expect a discussion document on the review of the CEA in the next few weeks.
The current legislation, enacted in 1996 after a decade long review process, was a re-written version of the 1966 Customs legislation, which still had many of the provisions made in early 1900s.
Although the 1996 rewrite exercise was a landmark at the time, it did not replace all the Customs provisions but retained various rules in the 1966 legislation.
The 1996 rewrite was designed to propel the Customs framework into the 21st century, be innovative and give businesses flexibility.
Simplified process
The 1996 rewrite brought in simplified import entry procedures, introduced Customs Controlled Areas (CCAs), established an independent Customs Appeal Authority, modified the powers of officers on account of the Bill of Rights Act 1990 and introduced various administrative penalties.
The name of the Department at the time was changed to the New Zealand Customs Service (NZCS).
Almost 20 years later, it is time to assess the landmark 1996 changes.
Innovative approach
NZCS and our government now have the opportunity to create a legislative framework that is modern and meets the dual objectives of border protection and business growth.
In recent times, NZCS has taken great strides in delivering innovation and better services through, for example, ‘SmartGate’ and ‘Trade Single Window.’
As noted in the Customs 2020 strategy, “Our goal is to make compliance easy to do and hard to avoid.”
NZCS’s ability to meet various economic and security objectives is constrained by detailed legislation that can be difficult to amend.
In our view, a more enabling and principles based approach to the CEA, supplemented by practical Customs rules, is worthwhile pursuing, as this would provide continued efficiencies in this area.
Ultimately, this will benefit all stakeholders and have a positive impact on NZ Inc.
New Document
We look forward to the upcoming discussion document.
Although there are many dimensions to the rewrite including border protection, security and inter-Governmental information functions, we have listed below a selection of issues that would concern businesses.
Facilitative approach preferred over prescriptive – reduce the volume of primary legislation and have compliance light Customs rules
Ensure that the new CEA is progressive legislation, keeps pace with digitalisation and modern business supply chains
Clarify the term ‘Enter the commerce of another country’ and how this affects the application of preferences under Free Trade Agreement for imports
Record keeping – in the digital age, the need to keep records in New Zealand (Section 95 current CEA)
Align Customs valuation methods with current tax/transfer pricing (TP) valuation methods
Simplify TP adjustment procedures and methodology
Consider if import GST (that can be claimed from Inland Revenue) should not be charged on the importation of goods by GST registered importers. Options here are removing import GST completely from these imports ensuring that they are outside the scope of Customs collection, applying a zero-rating or offset mechanism, licensing of importers (licensed importers would not have to pay import GST)
Clarify when a number of individual packages are treated as one importation for Customs purposes (relevant for the low value import threshold);
Eugen Trombitas is Partner and GST expert at PricewaterhouseCoopers based in Auckland. The above is an extract of the Firm’s March 2015 Report. For full text, please visit www.pwc.co.nz
