Nepal | May 24, 2019

‘Adjustment in customs tariff must to control under-invoicing’

Himalayan News Service

Kathmandu, September 13

The government’s recent raid on the outlets of branded products in Durbarmarg has revealed that under-invoicing in imports is rampant. Following the incident, traders have been criticised for hurting the government’s revenue. However, the fact is, the Department of Customs and importers are equally responsible regarding this issue.

Under-invoicing in import has not only been hurting government’s revenue, but it also creates breeding ground for shadow economy as importers can easily evade value added tax and income tax as they are able to get clearance from the customs points declaring far lower price for the goods compared to their actual value.

The Department of Customs (DoC) carries out a market survey every year to update the reference value of the goods being imported into the country for the customs valuation purpose. Customs officers take reference from the reference value of the products published by DoC, if they suspect that the declaration made by the importer is false (in terms of price). As per DoC, the reference price of the products is being published and circulated to each customs point for uniformity in valuation.

However, according to traders, the reference price of the customs is not justified for the branded products, which is tempting traders to opt for under-invoicing.

“If an importer genuinely declares the actual value of the goods, he or she simply cannot compete with the under-invoiced goods available in the market,” as per traders. “High customs tariff is the major reason because of which traders declare false specifications of the products so that they can clear goods with low customs tariff.”

“DoC needs to adjust the customs tariff first to encourage traders for the actual declaration of the products during
import,” a reputed importer told The Himalayan Times seeking anonymity. “As long as the tariff rates are kept high, it will be difficult for the government to control such practices.”

Traders have urged for the justified tariff rates to provide equal level playing field and control of under-invoicing and unauthorised trade as well.

However, DoC officials are unwilling to entertain such requests claiming that customs valuation process is ‘scientific’.

 


A version of this article appears in print on September 14, 2017 of The Himalayan Times.


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