Some members of the private sector have been removing goods from warehouses without paying the relevant duties and taxes to the Customs and Excise Department, according to the latest Auditor General’s Report.
The 2018 report, which was presented to Parliament at the end of last month, examined the financial year April 1, 2017 to March 31, 2018. It pointed out that during the review period more than $300,000 in duties and taxes due to breaches of agreements was still outstanding.
Highlighting issues specific to ministries and departments, the auditor general’s office said in relation to the Customs Department there were several warehouses kept by members of the private sector.
“These warehouses store goods on which the relevant duties and taxes have not yet been paid. The duties and taxes are due forthwith on any goods removed from these warehouses,” Auditor General Leigh Trotman said in the report.
“However, in one instance, a firm removed goods with duties payable of $9,741,044 without informing the Customs Department. This matter was subsequently observed by the Financial Controller. It is therefore important to monitor these warehouses to ensure that the relevant payments for goods removed have been made to the Customs Department,” he said.
This monitoring, he said, is usually done through field audits, but no evidence was provided to indicate that field audits were carried out on these warehouses during the year.
In its response, the Customs and Excise Department said it was “severely short-staffed” and therefore does not have enough officers assigned to the field audit unit to conduct audits.
“It is however, erroneous to state that the warehouses were not being monitored for non-payment of duties. The office of the Financial Controller run reports via the ASYCUDA++ System and takes necessary action to recover the outstanding duties and taxes if goods are removed from said warehouses without payment,” the department added.
However, Trotman pointed out that no bonds were presented for audit inspection for 26 private warehouses and 26 in-bond warehouses.
Quoting section 143 of the Customs Act, CAP 66, the auditor general said “No building or place may be used as a private warehouse . . . until a bond in such sum as may be required is provided to the Comptroller.”
“Therefore, the Audit Office was unable to verify whether the operation of these warehouses was in conformity with the Act,” he said.
In relation to the recovery of duties, Trotman pointed out that there were breaches of agreements under the Act in relation to the importation of vehicles free of duties.
The law allows for individuals to be granted permission to import vehicles free of duties, but they must retain ownership of those vehicles for a period of five years, otherwise the duties pertaining to the unexpired portion of years become payable.
“During the year under review, the Ministry of Finance reported duties
totalling $476,651.44 which became payable due to breaches of agreements. Audit efforts to verify whether these unexpired duties were collected were unsuccessful due to a lack of cooperation from the Refunds Manifest and Control Board Unit,” said Trotman.
“It should also be noted that outstanding amounts for the above duties and taxes payable were not reported in the Statement of Arrears of the Department,” he added.
However, the Customs department reported that a search of the ASYCUDA++ records revealed that $174,810.98 has been collected so far, leaving an outstanding balance of $301,840.46.