1. High Level Meeting on Customs & Taxation Brussels 19 June 2001

2. ANDREW WEBB HEAD OF INTERNATIONAL TAX HM CUSTOMS & EXCISE

3. VAT & CUSTOMS WORKING TOGETHER?

4. 1. The Argument

5. The Argument Tax and Customs administrations face many similar demands and challenges Need for closer co-operation between managers and officials in the two organisations or departments International organisations in the customs and tax areas (eg WCO and OECD) should increase mutual awareness and regularly exchange strategies and work programmes

6. 2. The Environment

7. The Environment (a) Globalisation of supply of goods and services Increased volume of international trade Growth of e-commerce/Internet trading Increase in number of small and medium sized enterprises trading internationally Pressure to harmonise and simplify

8. The Environment (b) Pressure on administrations to increase revenue and reduce operating costs Increase in popularity of VAT Decrease in importance of import duties/taxes International trade agreements/tax frameworks to manage trade and to prevent double or no taxation

9. The Environment (b) Pressure on administrations to increase revenue and reduce operating costs Increasing use of electronic systems for taxpayer registration, declarations and revenue accounting Use of risk management and audit Simplification and harmonisation of systems and procedures

10. The Environment (c ) Extent of fraud and avoidance E-commerce/Internet trading creating new products and methods of delivery Increased volume, speed and complexity of trade Challenges to traditional concepts such as “borders”, “goods” and “controls” Exploitation of gaps between countries and systems

11. 3. The Administrative Response

12. The Administrative Response (a) System re-design using new technology and commercial records Development of integrated (ie taxes and duties) electronic systems for taxpayer registration, declarations and accounting Use of customer service concepts based on single point of contact Contracting out and use of trusted third parties

13. The Administrative Response (b) Harmonisation and Simplification Commercial systems to identify trader and consignment (UCR) Standardised description of goods Standardised Invoicing (eg EU proposal) Capturing data only once (eg import/export) Standard rules for valuation and duty calculation

14. The Administrative Response (c ) Enhanced Administrative Co-operation OECD International Taxation Principles (for e-commerce) Multi-lateral and Bi-lateral Administrative Co-operation Agreements (Memorandum of Understanding) OECD Mutual Assistance Convention Information exchange pilots(OECD WP8/9)

15. The Administrative Response (d) Development of best practice guidelines OECD General Administrative Principles (eg Taxpayer rights and obligations; Risk Management; Compliance Measurement; Principles for managing Ethics in the Public Service) EU Fiscal and Customs Blueprints

16. 4 The Case Study

17. Case study: Fast Freight The Problem Vast increase in traffic volume (Internet trading) Goods subject to both duty and taxes Different types of operator working to different legislation (Post Offices/ Express Couriers) Different administrative requirements Widespread use of technology v manual administrative systems

18. Case Study: Fast Freight (b) The Express Courier Industry Over 6 million shipments per day Operates in 220 countries Employs 187,000 people 1200 aircraft Volume of fast freight increasing by 40% a year

19. Case Study: Fast Freight (c ) Revenue and Customs implications Manual systems (Post Offices) require manual risk assessment Proportion of anti-smuggling and revenue checks have decreased Increase in smuggling and revenue loss Conflict with Post Offices and Express parcel operators over different laws and requirements (discriminatory?)

20. Case study: Fast Freight (d) Main Issues Efficient and effective facilitation of legitimate parcel trade Proper account taken to ensure tax and duty paid Risk assessment of fraud and smuggling Equity of treatment between operators Global, integrated and automated systems

21. Case Study: Fast Freight (e ) Vision for the future Global automation/data capture (bar coding) Link automated system to harmonised system for description, duty/tax calculation and lodgement of declaration Changes to legislation Risk assessment by recipient and transit countries using global system

22. Case Study: Fast Freight (f) Steps to be taken A solution requires co-operation between customs, tax, enforcement personnel to research problem, assess revenue loss and identify viable models Work closely with operators to make use of their systems and records Continue to actively participate in projects looking at the issue (eg SAMPLE-Finland and USA)

23. 5 The Conclusion

24. The Conclusion Globalisation of trade and e-commerce has fundamentally changed the environment Many of the key issues and challenges faced by customs and tax administrations are very similar Current gaps in knowledge and administrative co- operation arrangements are being exploited Need for administrations to increase awareness of each others agendas and work programmes to prevent revenue loss and to find solutions

25. The Conclusion Need international organisations working in the customs and tax areas (eg WCO, OECD) to regularly share strategic visions and objectives Need a joint forum (representatives with observer status) where cross cutting issues can be regularly and routinely discussed even though there may not be common solutions

26. Thank you Questions?