Legal & Institutional Issues

Presented byMr. Rod Ettridge

Fiscal Affairs Expert

IMF

26 August 2014

SESSION OUTLINE

• Work through some terms we use • Take a look through the eyes of a business operator

• Opportunities for greater collaboration

• Identify legal and institutional issues, constraints and opportunities • Explore some matters of CONTEXT

LEGAL & INSTITUTIONAL ISSUES & CONSIDERATIONS “For the purposes of this Act…..”

Laws written for the purposes of the administration of the Taxation

or Customs regimes Would they have seen the ease of facilitating trade as a potential

outcome of the laws they were drafting?

SOME TERMS & DEFINITIONS Across our various areas of jurisdiction there are many component parts, described in laws and regulations. Customs Warehouse Resident / non-Resident Domestic / Local Consumption Excise Equivalent or Like Goods Value Added Tax (VAT) Importer / Exporter Import / Export Agents Customs Duty Tariff

THROUGH THE EYES OF BUSINESS: THEIR OPERATING AND REGULATORY FRAMEWORK

STAGE 1: Registration. To do business means being able to work inside the system; Customs Licence Excise Like Goods Importer Importer Licence Tax File Number VAT Registration Others?

• What are the requirements we must meet to register?? • From these registration processes, what information obtained from

one administration may be useful for other administrations?? • For what purpose?? (E.g. General intelligence, compliance, ease of the

client doing business) • What do your current laws allow for this information to be shared??

STAGE 2: Ongoing business operations & Obligations File Import / Cargo Declarations Seek Periodic Settlement Permissions Obtain permission to move goods to Domestic Consumption

or Export Make Duty payments File & pay VAT File & pay Income Tax Seek refunds for duties and VAT paid Others??

• From this list of obligations / activities, which pieces of information obtained by one administration may be useful to other administrations?

• For what purpose? • What do your current laws allow for this information to be shared?

A COMPLETE CHANGE OF TACK: POLITICAL & ENVIRONMENTAL CONTEXT CONTEXT in which, INTERNATIONALLY, Customs and Tax Revenue agencies are

operating.

REVENUE STREAMS

The mix of revenue streams on which governments rely is an ever changing and evolving beast

The ratios of Direct to Indirect Taxation revenues continue to show growth in the Indirect Taxation

THE ROLE OF CUSTOMS AGENCIES Border Protection is becoming an ever increasingly important role for Customs

Agencies

POLITICAL REALITY

MACHINERY OF GOVERNMNENT

QUESTION

“to what extent does the revenue role of your Customs Authority compare with the Border Protection role in terms of relative strategic importance ?”

Are these roles in competition?

Do they create tensions?

Do they present opportunities?

CONTEXT: MY AUSTRALIAN EXAMPLE Review of all of the revenue functions undertaken within the Australian Customs &

Border Protection Authority

I worked for the Australian Taxation Office The context was a greater focus on the protection of Australia’s borders

AND looking at ways to make government revenue collection more efficient I had always thought that the main role of Customs was to collect my VAT revenue on

imported goods; full stop! I discovered a whole new world of functions and priorities within our Customs

Authority.

“ Please Sir, can I have some more?”

CARGO EXAMINATION Prevent illicit drugs, weapons & other harmful goods

Minimize Smuggling

Protect honest businesses from non-compliant importers & exporters

Improve security of the sea cargo trade.

BORDER PROTECTION AGAINST MARITIME THREATS Illegal maritime arrivals

Prohibited Imports & Exports

Piracy, Robbery & Violence at sea

Compromised Bio-Security.

OPERATION SOVEREIGN BORDERS Combat People Smuggling, and protect Australia’s borders

A joint agency taskforce

Disrupt & Deter: Australian Federal Police

Detect, Intercept & Transfer: Customs & Border Protection

Offshore Detention & Return: Immigration & Border Protection.

1 July 2015

Australia’s Customs & Border Protection Authority and Department of Immigration are being merged into a new force:

DEPARTMENT OF IMMIGRATION & BORDER PROTECTION

Political, environmental and strategic matters are of critically important context

Especially relevant if we are looking to promote discussions and look for opportunities for greater interactions between customs and revenue agencies

It is not only the arrangements needed for today that are

important, but also look at tomorrow.

BACK TO PRACTICALITIES: AN INTEGRATED PAYMENT SYSTEM CONCEPT A single “portal” that taxpayers / clients can use to meet their payment obligations

and also to apply for and receive refunds

Custom Duties;

Excise payments

Other Fuel / Clean Energy grants and rebates

VAT

Wine Tax

Passenger Movement Charges

VAT & Customs Duties Refunds.

Arising from this are various options; All revenue streams go directly to consolidated government

revenues

Revenue is sent to the particular administration

There may be other options

Does it change the way the Accounting function operates within each administration?

How do agencies generate payment notices and issue receipts?

Is the Debt Collection function now one for each agency or does / can it

operate in a more “whole of government” capacity?

OTHER INSTITUTIONAL ISSUES In a world of greater collaboration; Revenue administration Compliance initiatives Integrated payments system Information sharing Joint task force operations Prosecutions Covert operations And many others.

Potentially, there are a number of other institutions that become key stakeholders; The Judicial System; Federal Security and Police Agencies;

The Postal Service;

Others?

For example, the Judicial System may be hearing cases brought by the government agencies involving both Customs & Taxation fraud. • Would / could these be heard as a single, dual revenue stream matter?? • Would there need to be a separate case for each charge?? • Do the current Administrative Appeals laws and arrangements sufficient for greater

cross revenue issues?? • What is the capacity of your Judicial System to handle potential increases in

caseloads??