1. Combating Illicit Flow of Excisable Products
Revenue Benefits of Comparing
Customs and Revenue Data

2. Introduction
A good Customs IT system and database have significant benefits:
Tax/revenue, fiscal, monetary, statistical, and macroeconomics;
Facilitation of domestic [direct and indirect] tax administration; and
Enhancing support to, and compliance by, taxpayers.
Border controls: links security of nations and bilateral/multilateral cooperation
However, these depend on efficient & effective interfaces and integration of systems supporting tax, customs, and other operational functions.

3. Elements of Customs Operations
Registration, filing and payments
Same TIN/NIN used for domestic tax and customs registration
Tax office codes or numbers: assigned to all importer/exports
Valuation and classification
HS/Customs Tariff schedules: recognized & comprehensive nomenclature for goods (trade and protection); and revenue flows (import duty, tax and levies);
Useful for BoP (forex flows and measurement); and other statistics
GDP [C+I+(E-M)]; BOP [E-M]; Deficit [R-Expenditure

4. Elements of Customs Operations
Compliance and enforcement (revenue)
Customs compliance: based mainly on invoice manipulation and false declarations
Customs databases can support domestic tax collection, audits and investigations
Customs post-clearance audits and integrated risk management modules
Physical inspections: verification and validation of goods and records

5. Elements of Customs Operations
Compliance and enforcement (non-tax)
Post release audits already a recognized collaborative tax/customs function
Customs data and information can support investigations into illicit and criminal information in many areas
Border and immigration controls: illicit financial flows and money laundering [and manipulation]; people trafficking, drugs, arms; terrorism etc.

6. Elements of Customs Operations
Interface of organization, systems and process
Customs is now part of revenue authorities in many countries
Makes it easy to merge and interface revenue databases
Data-match of values on returns
Automatic comparison of import/export and domestic tax declarations
Turnover or sales levels [import/export values and sales/profit declarations]
Taxpayer support
Primary or frontline services to assist taxpayers to comply
Intermediation: third party assistance to taxpayers [records and accounting]

7. Example of Ad Hoc Exercise
Ghana: case study of ad hoc exercise
Selection of import and export data for top 5,000 importers (scaled down to 2,500)
Data sent to domestic tax offices for importers
Some importers did not have a TIN [registration] or code to show their domestic tax offices [LTO, MTO, LTO]
Comparison with domestic turnover declarations showed significant differences

8. Example of Ad Hoc Exercise
Ghana: case study (continued)
Similar with declarations for VAT Input Tax Credit (ITC) and refunds
Non-compliance notices (with additional assessments) were sent to taxpayers
Majority did not contest the assessment and paid up
Voluntary compliance: word got round and several taxpayers appeared in offices to pay assessment and penalties

9. Example of Ad Hoc Exercise
Ghana: case study (continued)
Some fundamental problems
Tax and customs systems not fully integrated and lacking interfaces
TIN & Tax Office numbers not on Customs declaration or databases
Major customs offices not helping to enforce registration of taxpayers
No program exists for such exchange of information (but domestic tax offices have read only terminals

10. Further practical examples
Important to have customs integration to work with
VAT administration
Threshold: use of import/export values to check violation of VAT threshold
Import VAT: import VAT collected as though it were an import duty
Input Tax Credit (ITC): use of customs declaration support the validation of zero-rating [exports] and ITCs
Excise administration
Use of customs databases and stamps (banderols] to monitor domestic stocks and sales activities

11. Further practical examples
Post-clearance audits
Acceptable tax compliance practice involving domestic tax officials
Financial flows and money laundering
Customs processes involves significant global movements of funds in different currencies and at different exchange rates [declaration and invoicing]
Borders controls
Customs institution monitor the physical movement of goods (e.g., manifest, invoices, declarations etc.,) and persons (e.g., customs/immigration declaration);
Many involvw criminal and illicit activities

12. Conclusions
The use of customs data for administration and compliance may be impeded by a number of factors, including
Poor integration and interface of tax and customs IT systems
Absence of useful informations (e.g., tax-office numbers or codes)
Absence of critical modules and use of different platforms in tax and customs
Absence of programs and management information reporting
Poor coordination, even within revenue administrations