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17.04.2012 Baku, Azerbaijan GEORGIA Institutional Reforms in Georgian Customs Tax and Customs Administration of Georgia

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17.04.2012

Baku, Azerbaijan

GEORGIA

Institutional Reforms in Georgian Customs

Tax and Customs Administration of Georgia

Tax Administra

tion

Customs Administration

Georgia Revenue Service

2007

SPS Control

2006

passport control (drivers of lorries)

2010

Georgia Revenue Service

Director General

Deputy Director General

Customs Clearance

Department

Tax Prevention Department

Dispute Resolution

Department

Legal Department

Service Department

Customs Border Protection

Department

Audit Department

Administration Department

HR Department

IT Center

International Relations

Department

Public Relations and Marketing

Department

CCZ land and railway BCPs

BCPs on the occupied territories airport BCPs

Sea Port BCPs future BCP

BATUMI SEA PORT

POTI SEA

PORT

Vale

SADAKHLO

RED BRIDGE

MTKVARI GARDABANI

LAGODEEKHI

SARPI

BATUMI

AIRPORT

NINOTSMINDA

GUGUTI

AIRPORT TBILISI

KAZBEGI

Kartsakhi

AIRPORT KUTAISI

AKHKERPI SAMTATSKARO

KULEVI SENAKI

GANTIADI

ROKI

Institutional Reform

Past

Customs Department of the Ministry of Finance of Georgia

Border Police of the Ministry of Internal Affairs of Georgia

Phyto-sanitary Service of the Ministry of Agriculture of Georgia

Veterinary Service of the Ministry of Agriculture of Georgia

Transport Administration of the Ministry of Transport

Customs Broker

Cargo Carrier

Insurance Company

Today

Patrol Police

Revenue Service

Control System

Past

100 % control

“Blind Control”

No risk analysis or assessment

8 Different agencies on the border

Today

Relevant Access to the database of

1) Patrol Police

2) Public Service Hall

Risk management system

Risk profiles

Random selection

Tomorrow

Joint use of BCPs

Turkey

Armenia

Azerbaijan

Ukraine

•National Agency of Public

Registry

•Civil Registry •Notary Chamber of

Georgia

Border Crossing Points

Sarpi BCP

Smooth running of goods

Single window principle

Presenting the documents and passport control without leaving the transport means

Vale BCP

Customs Point

SPS/Veterinary Control

Border Police

Border Crossing Point “Red Bridge” (Azerbaijan)

Border Crossing Point “Red Bridge” (Azerbaidjan)

Border Crossing Point “Red Bridge” (Azerbaijan)

In the nearest future

Border Crossing Point “Ninotsminda” (Armenia) In the nearest future

Border Crossing Point “Sadakhlo” (Armenia) Border Crossing Point “Sadakhlo” (Armenia)

Border Crossing Point “Sadakhlo” (Armenia) In the nearest future

Border Crossing Point “Sarpi” (Turkey)

Border Crossing Point “Sarpi” (Turkey)

Border Crossing Point “Akhaltsikhe (Vale)” (Turkey)

Border Crossing Point “Kartsakhi” (Turkey)

Border Crossing Point “Kartsakhi” (Turkey) In the nearest future

Border Crossing Point “Kazbegi” (Russia) Border Crossing Point “Kazbegi”

(Russia)

Border Crossing Point “Kazbegi” (Russia) In the nearest future

Red channel (Physical inspection)

Yellow channel (Documentary check)

Green Channel

(No prerelease check)

Blue Channel (post clearance audit)

’’ASYCUDA”

Automated System of Customs Data

Risk Criteria Random Selection Module

ASYCUDA World

Risk Distribution

35%

5%

42%

18%

Import

Export

Customs Reforms Customs duty

Before 2007

(16)

12% 14% 15%

16% 17% 18%

20% 25% 30%

5% 6% 7%

8% 10%

4% 0%

After 2007

12%

5%

0%

Tariff lines

• 1 503 −12% ad valorem

• 229 − 5% ad valorem

• 466 – specific

• 8 410 - 0%

14.19% 2.16%

4.21%

79.42%

In total 10 608

12%

5%

specific

0%

Customs Reforms

• Before 2005

import and export

procedures

required

54 documents

• In 2009-2010

import and export

procedures

required

4 documents

• Since 2011 import

and export procedures

required

2 documents

According to the legislation economic agent is authorised to

submit the bill of lading and invoice either electronically or on paper basis; both forms are

equally acceptable

Customs Reforms

• Special VAT Regime

• Golden List

• Unified personal tax and customs liability account

• Clearance and registration of transport means in accordance with single window principle

• Tracker 7 – automated system of issuing licenses/permits in accordance with single window principle

• Creation of Customs Clearance Zones

• Authority of issuing permits related to customs procedures

• Certificate of origin

• Simplified export procedures

Before Creation of Customs Clearance Zones

Border Crossing

Point

15 – 30

minutes

Warehouse

1 -2

hour

Bank for

Payment

30 minutes

hour

Broker

For

Declaration

45 minutes

-

hour

Clearance

Service Center

10-30

minutes

Examination

(in case of red

corridor)

2 – 3

days

Warehouse

(in case of red

corridor)

30 minutes

Clearance Service Center

10-30

minutes

Warehouse

30 minutes

Release of goods

After Creation Customs Clearance Zones

Border Crossing Points

In case of standard procedures – in average 15 minutes

In case of red corridor – average 45 minutes

Advance Declaration Case

In case of green corridor - average 5 minutes (passport data registration control and customs procedures)

Customs

Clearance Zones

In case of standard procedures – in average 15 minutes

In case of red corridor - up to 1 hour

Payment of Customs Duty, Import VAT and Import Excise can be deferred for 5 days In case of advance declaration Customs Duty, Import VAT and Import Excise can be deferred for 15 days

Batumi Tbilisi Poti

Customs Clearance Zones New Infrastructure

Customs Clearance Zones

Cargo Clearance

Different options for cargo clearance

5 ways

Commodity Expertise

Bank Services

X-ray detection

Free Parking

Barcode instead of seal

Declaration in English for

foreigners

5 options for cargo clearance

Physical submission of B/L and invoice to the Customs Clearance Zone (CCZ) where the goods being subject to customs clearance are located. The officer will finalize the clearance process at the CCZ. The payment of import duties and taxes can be deferred for a period of 5 days

Electronic submission of customs declaration and supporting documents by economic agent accessing ASYCUDA system, by that time the goods being subject to customs clearance are located at CCZ. The officer will finalize the clearance process at the CCZ; In case of advance declaration the payment of import duties and taxes can be deferred for a period of 15 days

Advance electronic submission of B/L and invoice. Economic agent will electronically submit B/L and invoice via www.rs.ge before the goods, being subject to customs clearance, will enter the customs territory of Georgia. Customs officer of Border Crossing Point (BCP) will finalize the clearance process at the BCP. The payment of import duties and taxes can be deferred for a period of 5 days after the finalization of the clearance

Using electronic signature economic agent can submit B/L and invoice at the "A" CCZ by that time the goods are located in the "B" CCZ (“distant declaration"), while having in result saving of time and avoiding the travelling from one part of region to the other part of region within the customs territory of the Country. The payment of import duties and taxes can be deferred for a period of 5 days

Local clearance - Possibility of local clearance of goods has been introduced (economic agent can clear goods at its warehouse), this procedure may be conducted with three options. The payment of import duties and taxes can be deferred for a period of 5 days

Local Clearance

Electronic submission of customs declaration and supporting documents by economic agent accessing ASYCUDA system, CCZ officer will visit the economic agent’s premise in case of declaration will be rerouted by the risk module of ASYCUDA into red line (physical and documentary control)

Economic agent will submit B/L and invoice via www.rs.ge, CCZ officer will visit the economic agent’s premise in case of declaration will be rerouted by the risk module of ASYCUDA into red line (physical and documentary control)

CCZ officer will visit the economic agent’s premise and Economic agent will physically submit B/L and invoice and officer will finalize the clearance at the economic agent’s premise

Export Procedures Before (Two step export procedures)

• Physical presentation of goods in the customs clearance unit (goods being the subject to clearance used to be presented in the customs warehouse)

• Declaration used to be presented in the clearance unit and if the deceleration used to be rerouted by the risk module of ASYCUDA into red line, the goods used to be transferred to the warehouse for the physical control

• After the clearance procedure customs officer used to seal, insert the information about sealing into the declaration and issue the internal transit document (similar to T1)

• The integrity of seals was checked at the Border Crossing point while comparing it to the seal items mentioned in the declaration

Simplified Export Procedure

Physical submission of B/L and invoice to the Customs Clearance Zone (CCZ) and givng the possibility to the econmic agent to present the goods in CCZ being the subjet to export. (this is the option for the economic agents who do not have the opportubity to keep the goods in their warehouses). In this case the sealing is conducted by CCZ;

Electronic submission of customs declaration and supporting documents by economic agent accessing ASYCUDA system. The economic agent can obtain a number of customs seals at once while giving them the possibility to seal lorries themselves. Customs officer of Border Crossing Point (BCP) will finalize the clearance process at the BCP, the integrity of the seals will be checked at the exit point of Georgia

Advance electronic submission of B/L and invoice. Economic agent will electronically submit B/L and invoice via www.rs.ge before the goods. The economic agent can obtain a number of customs seals at once while giving them the possibility to seal lorries themselves. Customs officer of Border Crossing Point (BCP) will finalize the clearance process at the BCP, the integrity of the seals will be checked at the exit point of Georgia

•No physical presentation of goods in the internal customs clearance unit •Exemption from customs duties •0% of VAT •Clearance of goods in accordance with the three options:

Integrity Policy

Customs officers’ and brokers’ “institute of friendship bribery”

Overlapping of responsibilities - “bribery chain”

I step

Customs Code - general provisions lacing the detailed customs procedural manuals

recruitment of staff - non-transparent having in result inexperienced and uneducated staff

Discretion policy

Customs - bastion of corruption

I I step

In 2006 the new Customs Code

brutal reality conveying in itself the fighting against the corruption and the detection of corruption schemes, eradication of crime and punishment

modernised system: the new Customs Code with the corresponding secondary legislations providing with the detailed customs procedures

Customs duties – elimination of 16 customs duty dates, replacing them with a zero rate for 79. 42% of imports and two other rates (5 percent and 12 percent)

unhealthy environment for the business sector important obstacles for the business sector - the absence of advance ruling practice

Border control- Georgia Revenue Service and Border Police (Border Police later replace by Patrol Police)

non-existence of the qualified staff

intensive searches, inspections, and passport checks - this strict approach created frictions that eventually led to confrontations.

I I I step

Consolidation of Primary Legislation

fair, simple and reliable customs system:

Electronic administration system

TRACKER 7 and integrated tariff

personal tax and customs liability account

Modern infrastructure

Simplified customs procedures and target customs control

Liberalized trade

First generation of non-corrupted customs officers 24 hours supporting toll free

Thank you for your attention

Georgia Revenue Service (Tax and Customs Administration)

www.rs.ge