Electronic payment of customs duties and taxes

Definition/Scope

Electronic duty/tax payment refers to the use of e-payment methods such as credit and debit cards, electronic funds transfer or online payments for the settlement of duties, taxes and fees associated with the clearance formalities of goods declared for import or export.

Problem statement

Without a choice of methods of making payment for duties, taxes and fees associated with the import, export and transit of goods across international borders by electronic means, the majority of payments would still be made in cash. Depending on the value of the goods and the duty rate, the amount of duties, taxes and fees to be paid can be substantial. This poses a heavy logistic burden on the trader in terms of making the cash available and ensuring the secure transport of the cash. Most importantly, however, cash payments provide an enabling environment for corruption, as they require a face-to-face encounter between the trader/broker and Customs for handing over the cash, making it difficult to differentiate between cash payments for duty collection or cash payments for “facilitation fees”.

Implementation guidance

Customs administrations should seek to cooperate with commercial banks to leverage existing or develop tailored credit and debit card solutions for duty/tax payment purposes. The amounts to be paid can be substantial (depending on the value of the goods and the duty/tax rates), so it is essential that the payment charges are reasonable and do not present an unnecessary burden.

Standard 4.6 of the Revised Kyoto Convention (RKC) requires Customs administrations to specify the methods of payment allowed for duty/tax payment purposes by national law. The Guidelines to this RKC Standard strongly recommend that Customs should accept payment of duties and taxes in forms other than cash, such as travellers cheques, money orders, certified cheques, uncertified cheques (in specified circumstances), bonds, credit cards, securities, etc. The Guidelines to Standard 4.6 also strongly encourage the use of electronic funds transfer as an important method for quick and efficient payment. As part of the overall corporate integrity programme and as part of their automation developments, Customs should also consider using EDI (UN/EDIFACT or XML messages) to expedite the entire payment process, including providing an official receipt of payment, as stipulated in Standard 4.12 of the RKC. The WCO Revised Arusha Declaration also recommends that automated systems should be configured in such a way as to minimize opportunities for the inappropriate exercise of official discretion, face-to-face contact between Customs personnel and clients, and the physical handling and transfer of funds.

With the emergence of e-government programmes, making all relevant administrative services available over the internet, online payment methods were required. As part of these e-government programmes, e-payment platforms were developed to enable all government entities to leverage such a plaftform without having to develop their own e-payment platform. These e-payment facilities have become a corner stone in any Single Window programme, as they provide a tremendous trade facilitation measure to offer the payment of all duties, taxes and fees associated with a given import, export or transit transaction in a single payment across all border agencies, thus accelerating the release process.

Additional information (references, examples, etc.)

The ICC Customs Guideline # 32 provide relevant business perspectives on electronic payments.