Legal & Institutional Issues

1. Legal & Institutional Issues Presented by Mr. Rod Ettridge Fiscal Affairs Expert IMF 26 August 2014

2. 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

3. 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?

4. 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

5. 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?

6. 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??

7. 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??

8. 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?

9. 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

10. THE ROLE OF CUSTOMS AGENCIES • Border Protection is becoming an ever increasingly important role for Customs Agencies  • POLITICAL REALITY • MACHINERY OF GOVERNMNENT

11. 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?

12. 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.

13. “ Please Sir, can I have some more?”

14. 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.

15. BORDER PROTECTION AGAINST MARITIME THREATS • Illegal maritime arrivals • Prohibited Imports & Exports • Piracy, Robbery & Violence at sea • Compromised Bio-Security.

17. 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.

18. 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

19. 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.

20. 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.

21. 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

22. 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?

23. 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.

24. Potentially, there are a number of other institutions that become key stakeholders; • The Judicial System; • Federal Security and Police Agencies; • The Postal Service; • Others?

25. 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??