Valuation fraud rampant in foreign-used industry

THE FOREIGN-USED car industry is responsible for the majority of valuation fraud cases in Trinidad and Tobago, according to the acting Comptroller of Customs and Excise, Joseph Renaud. Renaud, who had earlier addressed the monthly meeting of the American Chamber of Commerce (AmCham) on the issue of Customs reform, noted that import duties and taxes contribute a great deal to the economy of the country. He said heavier penalties would be imposed on persons found committing breaches under the Customs Act, especially as it related to valuation fraud. He explained that the country did not have any fixed penalties at present to deal with the situation, noting that when someone is found in contravention of the Act, they are either taken to court or tried administratively by the Division. Once found guilty, the fine is fixed according to the breach that was made. In the case of valuation fraud, the guilty party is charged twice the value of the goods.

Giving some insight into the kind of losses the country faces as a result of valuation fraud, Renaud explained that if the value of the goods is actually 1,000 at a cost of 20 percent import duty fee, then the Government would actually be receiving $200. But what happens is that importers tell you that they paid $200 for the item and then the loss incurred on fees by the Government is $160. That figure, he said, is from one importer who brings in one item at $1,000. “Could you imagine the losses that have been incurred by the country, given the number of businesses that exist?” he asked. Renaud emphasised, however, that not everyone engages in this type of “dishonesty.” He said competition was one of the main reasons for people presenting false valuations to the Division. To keep a step ahead of the competition, these importers bring the value down so that they could pay a smaller fee in order to give discounts to customers.

Renaud said the Customs and Excise Division was now contacting other governments to investigate the practice importers engage in, so that memoranda of understanding could be signed to deal with the situation. Renaud noted that the important thing at present is to get the value of the imported goods, so that importers would not be able to cheat the government. He said the main area of contention was on second hand imports. With new goods, Renaud stated, Customs and Excise was able to find the real price value, since it is a fixed figure, but with second-hand items, like cars for instance, the value varies.

Renaud explained that Customs and Excise, in collaboration with the Chamber of Commerce and the Customs Brokers Board, would also be embarking on an education drive, to extol the merits of complying with trade issues that involve Customs procedures, and Customs declarations. The drive would also seek to familiarise the business community and the public at large with the fundamentals of the GATT Valuations Code, and the sixth schedule of the Customs Act Chapter 78:01. He noted that the whole issue of trade facilitation was reliant on a culture of compliant trade by the business community.