Study Guide

The 24 Revised Kyoto Convention standards and transitional standards relating to duties and taxes (see Reading 2) place a strong emphasis on the need for national legislation to specify a number of revenue-related matters. The aim is to give the trading community a high degree of clarity and certainty in their dealings with customs, especially on revenue matters.

What national legislation must specify

01 When liability begins The point at which revenue liability is incurred.	02 Who is liable Who carries responsibility for paying the duty or tax.
03 How it is assessed When and how the liability must be assessed.	04 How it is paid When, where, and how the duty or tax must be paid.
05 How to challenge How an assessment may be challenged.	06 Interest on amounts owed How interest may be charged on outstanding amounts.

Not all provisions need to be spelt out in national law. For example, an appropriate basis in law must exist to enable a customs authority to break the link between its physical control over internationally traded goods and the revenue liability (customs duty and other taxes) those goods may attract. This does not mean that the differentiation must be explicitly addressed in the relevant statutory provisions. If the legislation itself is silent on the relationship between customs control over cargo and revenue liability, there is usually scope for administratively flexible solutions.

Clearing goods usually involves lodging a Goods declaration with or without supporting documents (such as an import or export permit or certificate of origin) and paying applicable duties and taxes. Traditionally, payment of duties and other taxes has been a prerequisite for customs clearance, and clearance has been withheld until all payments are made and all formalities are complete. Modern customs regimes use strategies that break the link between physical control over goods and a trader’s revenue liability, so customs clearance can be granted as soon as possible.

The Revised Kyoto Convention provides customs authorities with a modernization framework that includes contemporary methods of assessing, collecting, paying, and refunding duties and taxes. The framework includes the concept of deferred payment, which is designed to facilitate the clearance of goods to the greatest extent possible, while ensuring that the correct amount of revenue is collected.

Some customs administrations now allow payment to be deferred and made on a transaction-by-transaction or periodic (usually monthly) basis, provided the importer or owner meets certain conditions. For example, security may be required to guarantee payment.

National customs legislation is required to set out the requirements for duties and taxes and the circumstances in which liability may be incurred. These circumstances typically arise when goods are cleared for home use after arriving in the customs territory, or when they are cleared for home use from a free zone or warehouse. Other circumstances arise when goods are exported from countries that have export duties and taxes. In addition, goods under a temporary admission procedure that are not exported within the stipulated time period may be subject to duties and taxes.