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Transcript of Preparing for changes to the customs ... · Preparing for changes to the customs, excise and...
Preparing for changes to the customs, excise and international trade environment – what you need to do.
www.pwccustoms.com
27 October 2015
Strictly Private and Confidential
Agenda
The New Customs Act - what to expect?
Other Updates
New Excise Act - the compilation from seven into one legislation
Wrap up
Q&A
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27 October 2015Maximise Shareholder Value 2016
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27 October 2015
The New Customs Act - what to expect?
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Current status
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Section 1 – The New Customs Act - what to expect?
• Some changes already incorporated in current Customs Act and Customs Tariff Decree as part of approaching ASEAN Economic Community, including
Advanced binding rulings
Transit and Transhipment provisions
Outward Processing Relief (OPR)
• First draft to revise complete Customs Act – released in October 2014
• Second draft released March 2015 after revisions by Customs
• Approved by Cabinet on 21 July 2015
• Currently being reviewed by Council of State
• Latest update…..enter into force by this year or next year?
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The New Customs Act – what to expect?
Bonded Warehouse
Advance Rulings
Duty Surcharge
AgentsStatute of Limitation
Overtime goods
Import License
Statutory Penalties and Fines
Bribes and Rewards Regime
Post-Audit/ Investigation
Appeal Timeline
Customs Free Zone
Origin Power Enforcement officers
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Bribes and Rewards
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Section 1 – The New Customs Act - what to expect?
Officer (‘reward’)
o 25% of duty fine or selling amount of seized goods or 30% in case no informant involved
o No threshold
o 10% of shortfall amount in case of duty deficit collection discovered by officer
Informant (‘bribe’)
o 30% of duty fine or selling amount of seized goods
o No threshold
Officer (‘reward’)
o 15% of duty fine or selling amount of seized goods or 20% in case no informant involved
o Limited to 5 million baht per case
o 10% in case of duty deficit collection discovered by officer (same) - no threshold?
Informant (‘bribe’)
o 30% of duty fine or selling amount of seized goods
o Limited to 10 million baht per case
Current
New Proposal
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Statutory Fines and Penalties
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Section 1 – The New Customs Act - what to expect?
Offense
• Smuggling
• Duty Evasion
• Evasion in relation to
import of restricted goods
without import license
Current
4 times of CIF value +duty
or
Imprisonment not more
than 10 years
or both
(current Section 27)
No prove of willful intent
or negligence required
New proposal
• 4 times of CIF value + duty or imprisonment
from 3 months - 10 years or both
• Forfeiture of goods
• Customs does not need to prove wilful intent
or negligence
• 0.5 to 4 times of duty shortfall or
imprisonment for not more than 10 years or both
• Customs has to prove wilful intent
or negligence
• Penalise according to the main Act or
imprisonment from 3 months – 10 years or both
• Forfeiture of goods
• Customs does not need to prove wilful intent
or negligence
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Statutory Fines and Penalties (cont’d)
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Section 1 – The New Customs Act - what to expect?
Offense
• Knowingly assisting in
concealing, disposing,
purchasing duty unpaid
goods, smuggled,
restricted or prohibited
goods
Current
4 times of CIF value +duty
or
Imprisonment not more
than 5 years
or both
(current Section 27bis)
New proposal
• Duty evasion - 0.5 to 4 times of duty shortfall
or imprisonment not exceeding 5 years or both
• Import restricted goods –Penalise according
to the main Act or imprisonment from 3 months
– 5 years or both
• Smuggling – 4 times of CIF value + duty or
Imprisonment from 3 months to 5 years or both
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Current New Proposal
Import License • Required at the time of importation
• Under current Act– when vessels enters Port
• Possible non-compliance at early stage of importation
• Time of importation changed for restricted goods
• Prior to taking the goods out of Customs’ custody
• Possibility to obtain import license with relevant agency while goods remain under Customs’ custody
Post Clearance Audits /Investigations
• No timeline specified for audit period
• Typically every 2-3 years after last audit or investigation
• Within 5 years after the import/export date
• Aligned with record retention requirements
Overtime goods • 2 months 15 days • 1 month 15 days
• Reduction of time period will lead to more space in Customs warehouse
• Faster duty collection for overtime goods
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Section 1 – The New Customs Act - what to expect?
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Current New Proposal
Statute of Limitation
• 10 years
• Duty refund within 2 years after import/export date
• Remains 10 years
• Duty refund within 3 years after import/export date
• Still reservation required
Agents • No provision • Definition of Agent (authorized by owner and approved by Customs)
• Deemed to be the owner of goods
• Shall be liable to customs offences except where they can proof that they are not involved in such wrong doing.
• Owner remain liable to same penalties
• Civilly liable towards agent in case judgment by Court
Appeal Timeline • No provision • The Board of Appeal (BOA) shall consider the application within 180 days from receipt date of completed information and application
• The BOA shall include at least one member from the private sector
Duty Surcharge • Unlimited – no cap • Limited to the duty shortfall amount
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Section 1 – The New Customs Act - what to expect?
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Current New Proposal
Advanced Rulings • No provision • Binding Advance rulings possible for customs valuation, origin and classification
• Separate Notifications already issued
• How does it work in practice?
Bonded Warehouse • Consignment into Bonded Warehouse not considered as ‘export’
• Consignment into Bonded Warehouse considered as ‘export’
• Subject to regulations by DG
• BOI compliance?
Customs Free Zone • No waiver of importrestrictions, standards, testing requirements etc.
• Waiver of import restrictions, standards, testing requirements, unless….
• Subject to further Ministerial Regulations to not exempt or waive
Origin • Prohibition to import goods with wrong or incorrect origin marking
• Based on old Act B.E. 2481
• Incorporated into new Act
• Goods considered as ‘prohibited goods’
• Smuggling offence for importing / exporting goods with ‘wrong’ or ‘incorrect’ origin statement or marking
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Section 1 – The New Customs Act - what to expect?
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Current New Proposal
Power Enforcement officers
• Different from Revenue Department
• Aligned with Revenue Department officers
• Power to seize and sell property by auction to obtain duty deficiency
• No need for Court approval
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Section 1 – The New Customs Act - what to expect?
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27 October 2015
New Excise Act - the compilation from seven into one legislation
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Current status
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Section 2 – New Excise Act - the compilation from seven into one legislation
• 9 March 2015, Ministry of Finance proposed the excise tax bill to the cabinet.
• The new bill is made under the concept of principal of sound tax theory that based on 6 main pillars which are;
1) Simplicity
2) Equity
3) Fairness
4) Transparency
5) Anti-Tax Avoidance and
6) Internationalization.
• Expected to enter into force 180 days after published in the government gazette.
• As Tax rates in the initial proposal were deemed to be too high, Ministry of Finance will reconsider the appropriate tax rates
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Excise tax base
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Section 2 – New Excise Act - the compilation from seven into one legislation
CIF value / Ex-factory price
CIF value / Ex-factory price or Last Wholesale price
Suggested retail price
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Other Updates
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Outward Processing Relief (OPR)
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Section 3 – Other Updates
Thailand
Singapore
Export = $100
Re-imported = $120
Duty exemption = ...... Duty payable = ……
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Outward Processing Relief
• Possible duty saving opportunities (e.g. using RDC outside Thailand and goods re-imported into Thailand)
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Section 3 – Other Updates
Local/Duty paid
Re-import within 1 year from the date of approval
Same importer and exporter
Evidence for verifying that the re-imported goodshas passed further processing
Request for principle approval must be done prior to exportation
Conditions
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Free Zone
• Current discussion to change requirement conditions for local sales transactions
• More stringent requirements on manufacturing process within the Free Zone and subject to verification by Customs
• Possibly based on Finished Products and/or Industry Sectors
• Currently being discussed and input requested from the Federation of Thai Industries (FTI)
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Section 3 – Other Updates
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FTA updates
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Section 3 – Other Updates
Topic Key change Condition Effective date
Third party invoicing interpretation under the ACFTA
• “Third Party” can now be interpreted as one or more country under ACFTA
• Currently, only the preferential ACFTA and ATIGA are allowed when using duty benefits
27 February 2015
Harmonised System version 2012 applied for Form D
• The change of HS 2012 version under ATIGA, instead of 2007
• Use of HS 2012 required for Form Ds (except for Cambodia)
30 March 2015
Self-Certification under the Second Pilot Project under ATIGA
• Certified exporters in Philippine, Indonesia, Laos and Cambodia are enable to make out invoice declarations on the origin of goods.
• Certified exporters are limited to only manufacturers
1 May 2015 / 1 August 2015
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FTA updates
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Section 3 – Other Updates
Topic Key change Condition Effective date
Harmonised System version 2012 applied for Form E
• The change of HS 2012 version under ACFTA, instead of 2007
• Use of new HS version for imports
• DFT pending update system
31 May 2015
Transition period from 31 May till 31 July 2015
Harmonised System (“HS”) version 2012 applied for Form AANZ
New Certificate of Origin (“CO”) Form AANZ
• The use of HS 2012 version under AANZ FTA, instead of HS 2007
• For Third Party Invoice, the name of third party must be indicated in Box 7
• In case of the RVC rule, the FOB value must still be indicated in Box 9.
• Implement the use of new HS version for imports
• Allow to use old Form AANZ during the transition period (valid for 12 months) but FOB value will apply in all cases.
1 October 2015
Transition period from 1 October 2015 till 31 March 2016 (Cambodia, Myanmar and Indonesia will have extra conditions on FOB value and the use of old CO Form AANZ)
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FTA updates
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Section 3 – Other Updates
Topic Key change Condition Effective date
Thai-Chile FTA • Expected to be implement at the end of this year
TBD • Expected November 2015
Thai – Pakistan FTA
(Under negotiation)
• 1st round already started in September 2015
• Target to conclude the negotiation in 2017
TBD TBD
Regional Comprehensive Economic Partnership (RCEP)
(Under negotiation)
• Extended timeline to 2016• At least 80% goods are
liberalized• 33% of global GDP
TBD TBD
Trans-Pacific Partnership (TPP)
(Thailand is interested to join TPP?)
• Finally reached the agreement on 5th October 2015
• 40% of global GDP
TBD TBD
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FTA updates
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Section 3 – Other Updates
Topic Key change Condition Effective date
FOB Value in case of 3rd party invoicing
• No change yet but under discussion
• Currently only waived when using CTC
• Which FOB value to use?
• TBD TBD
Combination B-2-B and 3rd party invoicing
• Not allowed by Thai Customs
• No change yet but under discussion
• TBD TBD
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3rd party invoicing vs. back to back
3rd party invoicing Back to back
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Section 3 – Other Updates
Malaysia Thailand
Ireland
Malaysia Thailand
Singapore
Goods + Form D
2nd invoice1st invoice Goods + Form D
Partial goods+ Form D
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Combination B-2-B and 3rd party invoicing
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Section 3 – Other Updates
Malaysia Thailand
Singapore
Goods + Form DPartial goods+ Form D
Ireland
1st invoice
2nd invoice
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Export Control for Dual-USE Products
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Section 3 – Other Updates
• Dual-use goods are goods, software and technology normally used for both civil purposes but which may have military applications or may contribute to the proliferation to the of Weapon of Mass Destruction (WMD).
• Examples
Goods Commercial Military
Multi-Walled Piping Use in petrochemicals and chemicals industries
production of chemicals weapons
Fermenters Beverage industry Medical industry
Microbiological Culture
Switching devices Medical equipmentSurge protector
Bomb detonators
Carbon Fiber Motor sport production, especially racing car, sport equipment such as tennis rackets and golf club
Gas centrifugesand material of missiles
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Export Control Of Dual-use items in Thailand:
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Section 3 – Other Updates
Short Term
• Ministry of Commerce propose Ministerial Notification for export control of Dual Use items (list of approximately 1,000 items are expected to be covered)
• Develop e-Trade Management of Dual-Use Items (e-TMD) for Dual Use items licensing
• Standardized laws and regulations regarding export control of dual use items of relevant Ministries
• Establish the relevant laws and regulations regarding dual use items such as the control of End Use and End Users.
Long Term
Enact Trade Management Of Dual-use Item Act (possibly after 2018?)
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Which Thai business sectors could be impacted?
1. Electronics and Electricity
2. Computer
3. Chemical and Medicine
4. Automotive components and parts
5. Steel
6. Telecommunication and Communication Business
7. Glass
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Section 3 – Other Updates
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Facilitation Act: Facilitating business or simply adding more work?
Trade facilitation Act entered into force in July 2015. The Act applies to all permissions and licensing including registrations and notifications. Under this Act, government agencies have the following obligations:
- The Authority who authorizes a permission shall present to the public a manual of such permission
- The officer who receives the request of permission shall examine the completeness of the application and the relevant documents. In the case where the requirements are not complete, the competent officer shall suggest the applicant promptly and all the documents to be fulfilled should be suggested at once
- The officer shall finish his consideration within the period as specified by the licensing manual
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Section 3 – Other Updates
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Facilitation Act: Facilitating business or simply adding more work? (contd.)
Based on our experience with Customs: Request for Advance Ruling
- Difficulties in request submission
- The officer denied to accept the request / supporting documents
- Scrutiny on document checking
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Section 3 – Other Updates
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Wrap Up
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Section 4 – Wrap Up Positive developments in proposed Act but still various issues up for interpretation and ‘discretion DG’
Already some items incorporated and enacted
As goods as it gets…?
Revised Customs Act unlikely to enter into force this year
Explore new opportunities under revised Act
Stay on top of developments and be proactive rather reactive
Customs regulatory environment changes rapidlyo FTAso AECo Export Control
Wrap Up
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Discussion - Q&A
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WMS Thailand
Paul Sumner (Partner)Tel: +66 (0) 2 344 1305Email: [email protected]
Santi Krongsithidej (Director) Tel: +66 (0) 2 344 1341Email: [email protected]
Nu To Van (Director) Tel: +66 (0) 2 344 1353Email: [email protected]
Wiphawee Lertdhamtawee (Senior Manager)Tel: +66 (0) 2 344 1248Email: [email protected]
Yossatorn Wattanapituksakul (Manager)Tel: +66 (0) 2 344 1233Email: [email protected]
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Thank you
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