Customs

Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal, and hazardous items, into and out of a country.[1][2] Traditionally, customs has been considered as the fiscal subject that charges customs duties (i.e. tariffs) and other taxes on import and export. In recent decades, the views on the functions of customs have considerably expanded and now covers three basic issues: taxation, security, and trade facilitation.[3]

Taxation
An aspect of fiscal policy
Vienna Convention road sign for customs

Each country has its own laws and regulations for the import and export of goods into and out of a country, enforced by their respective customs authorities; the import/export of some goods may be restricted or forbidden entirely.[4] A wide range of penalties are faced by those who break these laws.[5]

Overview
Officers from US Customs and Border Protection boarding a ship

Trade and taxation

A customs duty is a tariff or tax on the importation (usually) or exportation (unusually) of goods. Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All authorized ports are recognized customs areas.

Trade facilitation objectives were introduced into routine of customs authorities in order to reduce trade transaction costs. The contemporary understanding of the “trade facilitation” concept is based on the Recommendation No. 4 of UN/CEFACT “National Trade Facilitation Bodies”.[6] According to its provisions (para. 14),[6]

facilitation covers formalities, procedures, documents and operations related to international trade transactions. Its goals are simplification, harmonization and standardization, so that transactions become easier, faster and more economical than before.

Security

The September 11, 2001 terrorist attacks in the United States has become the cardinal factor in prompting a significant strengthening of the security component of modern customs operations, after which security-oriented control measures for supply chains have been widely implemented for the aims of preventing risk identification. At airports today, customs functions as the point of no return for all passengers; once passengers have cleared customs, they cannot go back. Anyone arriving at an airport must also clear customs before they can officially enter a country. Those who breach the law will be detained by customs and likely returned to their original location.[7] The movement of people into and out of a country is normally monitored by migration authorities, under a variety of names and arrangements. Immigration authorities normally check for appropriate documentation, verify that a person is entitled to enter the country, apprehend people wanted by domestic or international arrest warrants, and impede the entry of people deemed dangerous to the country.

The most complete guidelines for customs security functions implementation is provided in the World Customs Organization Framework of Standards to Secure and Facilitate Global Trade (SAFE),[8] which has had five editions in 2005, 2007, 2010, 2012, and 2018, respectively.

Customs as a public service
Main article: Public service

Customs are a public service provided by the government of the respective country that collects the duties levied on imported goods as well as providing security measures through which people enter and exit the country. A public good/service is defined by being non-rival and non-excludable.[9] One cannot avoid customs when exiting or entering a country thus making it non-excludable.[10] There is some congestion when going through airports, with the average wait time in customs in American Domestic airports being 75.1 minutes, however, the congestion doesn't discriminate based on rival-consumption thus making it a public service.[11]

Privatization of customs
The customs-and-duty house at the port of Haifa, Israel

Customs is part of one of the three basic functions of a government, namely: administration; maintenance of law, order, and justice; and collection of revenue. However, in a bid to mitigate corruption, many countries have partly privatised their customs. This has occurred by way of contracting pre-shipment inspection agencies, which examine the cargo and verify the declared value before importation occurs. The country's customs is obliged to accept the agency's report for the purpose of assessing duties and taxes at the port of entry.

While engaging a pre-shipment inspection agency may appear justified in a country with an inexperienced or inadequate customs establishment, the measure has not been able to plug the loophole and protect revenue. It has been found that evasion of customs duty escalated when pre-shipment agencies took over.[12] It has also been alleged that involvement of such agencies has caused shipping delays.[4] Privatization of customs has been viewed as a fatal remedy.[12] In many countries, import and export data are issued on the basis of national laws (Transparency Laws / Freedom of Information Act).[13]

There has, however, been some speed bumps when transitioning customs over from the public to private sector. Factors such as an incompetent private sector, government's reluctance to change the traditional roles of customs, neglecting priority-setting and lack of transparency in the transition process have slowed the rate at which the public to private transition has taken place.[14]

Red and green channels
Customs control zone at Sheremetyevo International Airport, Moscow Oblast, February 2019

In many countries, customs procedures for arriving passengers at many international airports and some road crossings are separated into red and green channels.[15][16] Passengers with goods to declare (carrying goods above the permitted customs limits and/or carrying prohibited items) go through the red channel. Passengers with nothing to declare (carrying goods within the permitted customs limits and not carrying prohibited items) go through the green channel. However, entry into a particular channel constitutes a legal declaration, if a passenger going through the green channel is found to be carrying goods above the customs limits or prohibited items, he or she may be prosecuted for making a false declaration to customs, by virtue of having gone through the green channel. Each channel is a point of no return, once a passenger has entered a particular channel, they cannot go back.

Australia, Canada, New Zealand, and the United States do not officially operate a red and green channel system; however, some airports copy this layout.

Blue channel

Airports in EU countries such as Finland, Ireland or the United Kingdom, also have a blue channel. As the EU is a customs union, travellers between EU countries do not have to pay customs duties. Value-added tax and excise duties may be applicable if the goods are subsequently sold, but these are collected when the goods are sold, not at the border. Passengers arriving from other EU countries go through the blue channel, where they may still be subject to checks for prohibited or restricted goods. Luggage tickets for checked luggage travelling within the EU are green-edged so they may be identified.[17][18] In most EU member states, travellers coming from other EU countries can simply use the green lane.

Red point phone

All airports in the United Kingdom operate a channel system, however some don't have a red channel, they instead have a red point phone which serves the same purpose.

Summary of basic custom rules

Europe

The basic customs law is harmonized across Europe within the European Union Customs Union. This includes customs duties and restrictions. Customs tax from €22 to €150. In addition, see regulations of each member state.

For customs declarations in the EU and in Switzerland, Norway and Iceland, the "Single Administrative Document" (SAD) is used as a basis.[19]

Germany
Main article: Bundeszollverwaltung

Up to €22, there are no taxes. From €22 up to €150, it is necessary to pay VAT (EUSt in Germany), which is 7% or 19% depending on the goods. From €150 it is necessary to pay VAT and customs.

Romania
Main article: Financial Guard (Romania)

Customs may be very strict, especially for goods shipped from anywhere outside the EU. Up to €10 goods/package.

Italy
Main article: Guardia di Finanza

Customs in Italy takes additional 22% VAT (Value-added tax) for goods imported from outside the European Union even if the VAT is already paid to the origin country sender.

Czech Republic and Slovakia

Up to €22, there are no taxes. From €22 up to €150, it is necessary to pay VAT (DPH in Czech/Slovak), which is 21%. From €150, it is necessary to pay VAT and customs. Customs may range from zero to 10% depending on the type of imported goods.

Ukraine

Ukraine has had 5 reforms of its customs authorities. The recent one, in 2019, reorganized State Fiscal Service into the State Customs Service. The reform attempt seeks to digitize customs procedures, get market-level wages, innovate customs checkpoints, integrate into EU customs community, open reference database of customs inspections.[20]

The Americas

United States
Main article: U.S. Customs and Border Protection
Predicted US customs revenue
Year Predicted revenue (billion USD)
2017
35
2018
38
2019
41
2020
43
2021
46
2022
47
2023
49
2024
51
2025
52
2026
54
2027
56
2028
58

Source: Congressional Budget Office (April 9, 2018). The Budget and Economic Outlook: 2018 to 2028 (PDF) (Report). p. 72.

Every person arriving in the US is subject to inspection by Customs and Border Protection (CBP) officers for compliance with immigration, customs and agriculture regulations. This public service is administered on almost a million visitors who enter the US daily.[21] Travelers are screened for a number of prohibited items including; gold, alcoholic beverages, firearms and soil.[22] A wide range of penalties face those non-compliers.[23]

The United States imposes tariffs or "customs duties" on imports of goods, being 3% on average.[24] The duty is levied at the time of import and is paid by the importer of record. Individuals arriving in the United States may be exempt from duty on a limited amount of purchases, and on goods temporarily imported (such as laptop computers) under the ATA Carnet system. Customs duties vary by country of origin and product, with duties ranging from zero to 81% of the value of the goods. Goods from many countries are exempt from duty under various trade agreements. Certain types of goods are exempt from duty regardless of source. Customs rules differ from other import restrictions. Failure to comply with customs rules can result in seizure of goods and civil and criminal penalties against involved parties. The CBP enforces customs rules. All goods entering the United States are subject to inspection by CBP prior to legal entry.

Uruguay

Uruguayan Customs place a cap on the importation of personal packages to up to 3 packages of a nominal value of no more than $200 USD which can be entered into the country without extra charge. For a package to be included in the 3 free slots, the addressee must register the package with the Uruguayan Postal Service linking the tracking code, their address, national ID number phone and email address. Should a package arrive prior to registration the package must pay the 60% tax and no less than $10 USD. Any personal package worth more than $200 USD or after the 3 free packages, must pay a 60% tax. This severely limits the public's ability to buy products online. Due to Uruguay's small population and market, many popular and specialty products are unavailable in the regular marketplace, forcing Uruguayans to strategically pool several purchases together and max each one of their free slots.

Argentina

Customs may be very strict. Goods valued up to $500 USD[25] brought in by plane and up to $300 USD by sea or land are free of duties and taxes, cellphones and laptop computers are duty free regardless of their value only one per passenger, clothing and other personal use items are free of taxes. Above those values, tax is 50% of the value of all acquired goods summed up.

International Customs Day
Customs, Tolls or Duties of the Corporation of Kinsale (1788)

International Customs Day recognizes the role of agencies and customs officials in maintaining border security around the world. In focuses on the workers and their working conditions as well as the challenges that some customs officers face in their job.[26] Custom agencies hold employee appreciation events where custom officers are recognized for their work. Several agencies also hold events for the public where they explain their jobs and responsibilities in a transparent manner.[26]

Each year, at the end of January is celebrated the International Customs Day with a particular theme, as follows:

  • 2019, the chosen theme was 'SMART borders for seamless Trade, Travel and Transport'.[27]
  • 2018, the chosen theme was 'A secure business environment for economic development'.[28]
  • Chosen theme for previous editions 2009 - 2018.[29]

Magic mail

Juan Pablo Escobar writes, in My Father Pablo Escobar, "At the time Pablo Escobar was trafficking cocaine, Colombia's major airports had what was known as "magic mail," a sort of parallel customs system that made it possible to bring anything into the country without leaving a paper trail – in exchange for a fat bribe."[30]

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See also

References
  1. "customs". WordReference. Retrieved 2013-09-16.
  2. "International Convention on The Simplification and Harmonization of Customs Procedures".
  3. Kormych, Borys (2018). "The modern trends of the foreign trade policy implementation: Implications for customs regulations". Lex Portus. 5 (5): 27–45. doi:10.26886/2524-101X.5.2018.2.
  4. Chowdhury, F. L. (1992) Evasion of Customs Duty in Bangladesh, unpublished MBA dissertation submitted to Monash University, Australia.
  5. "Transport Securities Administration – Budget Overview" (PDF). Retrieved 2019-03-11.
  6. "UN/CEFACT. Recommendation No. 4 National Trade Facilitation Bodies. ECE/TRADE/425".
  7. "Determining if a relative / friend who is missing is being held or detained by CBP". Retrieved 2019-03-11.
  8. "WCO SAFE FRAMEWORK OF STANDARDS" (PDF).
  9. "Symposium: The Public Service as Institution - ProQuest". ProQuest 197199863. Cite journal requires |journal= (help)
  10. "Know Before You Visit – U.S. Customs and Border Protection". Retrieved 2019-03-11.
  11. "13 US Airports With Longest Customs Lines – Business Insider". Retrieved 2019-03-11.
  12. Chowdhury, F. L. (2006) Corrupt bureaucracy and privatization of Customs in Bangladesh, Pathok Samabesh, Dhaka.
  13. "How to find new customers by using import and export data". Retrieved 17 January 2020.
  14. "Challenges of Privatizing Customs Affairs – Financial Tribune". Retrieved 2019-03-11.
  15. "Dual-Channel System (Customs Clearance)". Ica.gov.sg. Archived from the original on 2015-09-06. Retrieved 2015-09-02.
  16. "Wayback Machine" (PDF). 19 March 2009. Archived from the original (PDF) on 19 March 2009. Retrieved 31 December 2017.
  17. "EUROPA - Taxation and Customs Union / Baggage controls". Ec.europa.eu. 2007-02-21. Retrieved 2012-01-06.
  18. "Archived copy". Archived from the original on 2007-03-28. Retrieved 2007-01-19.CS1 maint: archived copy as title (link)
  19. "The single administrative document (SAD) - Taxation and customs union - European Commission". Taxation and customs union. Retrieved 31 December 2017.
  20. 5 STEPS TOWARDS TRANSPARENT CUSTOMS SERVICE, BY MAX NEFYODOV
  21. "Know Before You Visit – U.S. Customs and Border Protection". Retrieved 2019-03-11.
  22. "Prohibited and Restricted Items – U.S. Customs and Border Protection". Retrieved 2019-03-11.
  23. "Penalties Program – U.S. Customs and Border Protection". Retrieved 2019-03-11.
  24. "Federation of International Trade Associations, country profile: United States". Fita.org. Retrieved 2012-01-06.
  25. "Customs: Government raises tax free limit from U$S300 to U$S500 for imported goods (in Spanish)". infobae.com. Retrieved 2019-01-24.
  26. "timeanddate.com". www.timeanddate. Retrieved 2019-03-11.
  27. "World Customs Organization". www.wcoomd.org. Retrieved 2019-02-24.
  28. "World Customs Organization". www.wcoomd.org. Retrieved 2019-02-24.
  29. "World Customs Organization". www.wcoomd.org. Retrieved 2019-02-24.
  30. Escobar, Juan Pablo (2016-08-30). Pablo Escobar: My Father. Colombia: Editorial Planeta Colombiana. p. 68. ISBN 9781250104632.
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