CUSTOMS SERVICES DIVISION

1. CUSTOMS SERVICES DIVISION CUSTOMS ROLE IN TRADE FACILITATION

2. OUTLINE • Introduction • Achievements • Challenges • Remedy Proposals

3. INTRODUCTION • WTO defines trade facilitation as “the simplification and harmonization of international trade procedures” where international trade procedures are defined as the “activities, practices, and formalities involved in

4. collecting, presenting, communicating and processing data required for the movement of goods in international trade”

5. INTRODUCTION • Sohn (2001) defined trade facilitation as “all activities or policies that reduce transaction costs arising from eliminating or simplifying excessive and complex procedures, practices and processes related to trade, thus increasing efficiency, which results in increased trade”

6. INTRODUCTION • The most intuitive definition may be that given by Staples (2002), who stated that “trade facilitation involves reducing all the transactions cost associated with the enforcement, regulation, and administration of trade policies.

7. INTRODUCTION In the end, the objective of trade facilitation is to “reduce the cost of doing business for all parties by eliminating unnecessary administrative burdens associated with bringing goods and services across the borders” (Staples, 2002).

8. INTRODUCTION • These definitions make it clear that trade facilitation refers to a wide variety of activities, such as import and export procedures (e.g., customs or licensing procedures, customs valuation, technical standards, health and safety standards etc.)

9. ACHIEVEMENTS • Widespread Presence It is acknowledgeable that Customs has widespread presence throughout the Country.

10. ACHIEVEMENTS • Four offices are at International Airports • Twenty-six are at borders and Eight are at inland ports

11. ACHIEVEMENTS Blue points denote customs presence

12. ACHIEVEMENTS • Wide spread Use of automated Customs System. Most of our Offices are automated with the Asycuda System which we keep improving on.

13. We started with Asycuda 2.7 in 1998, moved to Asycuda ++ (1.18e) in 2001 where we still are, and we are currently considering moving to more advanced versions of the System.

14. ACHIEVEMENTS 3. Reduced Number of Forms. Since implementation of Asycuda, 24 processing forms that used to be used for different procedures have now been replaced by only one form, the CE20, on which the various procedures are differentiated by codes.

15. ACHIEVEMENTS 4. Risk Based Clearance In our efforts of improving the speed of clearance, time spent on a consignment is dependent on the level of risk attached to that particular consignment. Less risky goods are cleared faster and may not even be subjected to inspections.

16. ACHIEVEMENTS 5. Authorised Economic Operators facility Business entities with high compliance and minimum risk levels are given the facility of not clearing at the borders. Minimum intervention is made at the border and the operator is audited much later after imported goods have even been put to use.

17. ACHIEVEMENTS 6. Integrated Cashiering As from November 2011, taxes can be at any ZRA Office. Gone are the days when clients were required to pay at the office where the transaction was started.

18. ACHIEVEMENTS 7. Remote Declarations Businesses can connect to Asycuda System and be making declarations from their offices. They need not take declaration documents physically to Customs as that can be done electronically.

19. ACHIEVEMENTS 8. E-Payment facility ZRA has started a facility with some Commercial banks where tax payments are done electronically. Clients do not have to walk to ZRA offices to pay their taxes but have an option of instructing their banks to do transfers.

20. TAXES, LEVIES AND FEES ADMINISTERED CONT’D 9. One-Stop Border Initiative Zambia can boast of running the first successful One-Stop Border arrangement in Africa; and this is being done at the Chirundu border with Zimbabwe. Under this arrangement, commercial trucks stop only once, and that is done in the Country of importation.

21. ACHIEVEMENTS 10. Availing Information to the Public ZRA has an external website where information is availed to the Public. That information includes: legislation, applicable tax rates, sample calculations of taxes, --- and forms.

22. CHALLENGES As with any other Institution, ZRA also has its own challenges. These challenges include: 1. Insufficient funding: like any other grant funded Public institution, ZRA is short of finances to facilitate all its dreamed & desirable improvements. It cannot recruit as many technical staff as it requires, and cannot make as much capital investment as desired.

23. CHALLENGES 2. Infrastructural Constraints infrastructural constraints prevent ZRA from making certain improvements to its operations. A lot of commercial consignments cannot be cleared at Kazungula, for instance, because of inadequate parking and inspection space.

24. CHALLENGES 3. Low National Tax compliance Given the generally poor tax compliance levels in the Country, ZRA has been constrained in according facilitative treatment to everybody as it is always faced with the challenges of balancing facilitation with adequate controls.

25. CHALLENGES 4. Smuggling smuggling has been a problem as it robs the Government of its much needed revenue and it also introduces unfair competition in the business environment.

26. CHALLENGES 5. Corruption Rent seeking also adds to unfair competition in the economy when other competitors do not pay correct taxes. Those underpaying manage to undercut legitimate prices.

27. CHALLENGES 5. Willingness and Ability of Neighbours to connect to Zambia’s systems One of the major draw backs in some innovative procedures, say regarding transit, is the neighbours’ willingness and ability to connect to ZRA systems to facilitate advance knowledge of incoming cargo.

28. CHALLENGES 6. Country’s continued Dependence on Import Trade Revenue. Zambia still has heavy reliance on import revenues and that makes ZRA to put a lot of emphasis on revenue collection. This focus in itself pulls back on trade facilitation initiatives.

29. REMEDIES Customs has adopted Best Practices as stipulated in the Revised Kyoto Convention for purposes of modernising our core business areas with a view to embrace transparency, integrity and improving service delivery.

30. PROPOSED REMEDIES It is hoped that improvement of processes by full implementation of the Revised Kyoto Conversion will mitigate the challenges highlighted above.

31. REMEDIES We have already started such implementation and what we have done so far include; • Enforcement of the Taxpayer Identification Number provision to enhance compliance • Centralisation of ASYCUDA ++ system

32. REMEDIES • Simplification of clearance process through the use of Single Administrative Document (SAD) • Taxpayer Charter • Client Accreditation Program • Pre-Clearance Facility (five days before importation or exportation)

33. REMEDIES • Automated Clearance for Commercial Imports through ASYCUDA ++ system • Use of Non-Intrusive Inspection Equipment in our enforcement process

34. PROPOSED REMEDIES • Provision of Remote Direct Trader Input onto the ASYCUDA ++ System to stakeholders ( i.e. Importers, Exporters and Customs brokers) • Implementation of the E-Payment System for settlement of tax obligations on imports and exports

35. THANK YOU FOR YOUR ATTENTION