In modern trade, a Customs Revenue Benchmarking Database seems to be the Holy Grail that several nations seek. Disproportionate treatments and product classifications across various countries lead to different applicable duties on products in each country. Therefore the decision to export or import is one that is fraught with complexities. Technological advancements have facilitated the streamlining of the import/export process to a great extent and have made it easier for companies to engage in international transactions. Developments such as the Harmonized Tariff Schedule have made the process of product classification easier as well. However, difficulties and complexities in international transactions still exist.

Customs Receipts: Are they about to be eliminated?

There are many surveys that have been conducted by organizations in Switzerland to investigate the advantages of developing a Customs Revenue Benchmarking Database. Upon investigating the current scenario, one of the primary challenges to overcome in developing the database, arises from the fact that customs receipts are beginning to lose their importance. This situation prevails in several countries which are members of the World Customs Organization (‘WCO’). The ever increasing number of free trade agreements plays a significant role in this development. As of now, customs receipts comprise a small part of the total receipts that the administration of a country receives. For example, in Switzerland, the Customs Administration received CHF 20 million in customs receipts, which comprised approximately 33% of the total receipts that the Confederation received. Import duties comprised a mere 5% of these total receipts. Similar situations prevail in several countries. As of now, eliminating customs duties on goods in totality is being considered.

Changing duties of customs administrations

The tasks that customs administrations perform have vastly changed with the passage of time. Apart from the collection of customs duties, protection and promotion of domestic economies are also tasks that have become their responsibility. Ensuring public safety and security through border protection is another responsibility. Recently customs administrations have to perform tasks which are for the purpose of protecting the environment. This is done by imposing incentive fees and taxes on consumption. Customs administrations are also creating other duties and taxes to generate revenue that will compensate for the decline in customs duties.

How a Customs Revenue Benchmarking Database would help

A well developed CRBD would provide information on the receipts that a customs administration gets irrespective of the reason for collection. Ideally the database should allow for countries to gain an overview of the duties and taxes that the customs administrations of different countries collect. This information should ideally be public knowledge in order that nations and businesses may benefit from it.

The database would be of great use as countries will be able to easily understand all the taxes and applicable duties that each country imposes on all manner of international transactions. The WCO would be an excellent platform for countries to exchange this information and provide the impetus for beginning the development for the database. A database would also facilitate in coming up with an exemption limit for importing consignments that aren’t that big.

As of now, a harmonized collection of import taxes and duties seems to be a distant and lofty goal. However, an overview would facilitate common understanding and the development of common goals between countries, which in turn, will provide the impetus for the development of the database.