The country is going to implement the new customs act on June 6, the day the national budget for fiscal year 2024-25 is placed.
This law, the Customs Act-2023, replaces the 55-year-old Customs Act-1969 and boasts features aligned with international best practices and a simplified goods clearance process.
A key feature of the new act is the introduction of “self-clearance”, which allows businesses to release goods without customs assessment, provided they declare them under a specific method.
Customs officials will accept the declared customs value, product specifications, source country, customs duty rate, payable duty taxes and other charges as defined by importers or exporters, according to the new law. This will help businesses seamlessly avail the green channel facility.
The act incorporates a provision, as per the Trade Facilitation Agreement (TFA) article 6.2.3, that waives penalties in case of “voluntary disclosure” of goods.
Businesses can avoid penalties if they furnish specific information, including volume, categories, value and other details, before customs launches an investigation.
The features of the new customs act, passed in the Jatiya Sangsad in November last year, can be amended more easily in case of urgent national situations, without requiring parliamentary consent.
The detailed pros and cons of customs compliances have been shifted from the law itself to the Customs Rules, allowing the National Board of Revenue (NBR) to amend them with the finance minister’s consent, said a senior customs official.
The act also accommodates binding provisions of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA), ensuring compliance to international best practices, the official added.
The new law reduces the discretionary power of field-level officials by empowering the central authority in the NBR to make decisions, he noted.
A gazette published by the NBR on May 30, 2024, announced that the new act will be effective from the day the national budget for FY25 is placed.
However, the Finance Act-2024, to be proposed on June 6, will introduce some amendments to the new act.
“We have streamlined some provisions of the new act in the upcoming finance act to make them more compatible with business needs,” the senior customs official added.
The new act can only be amended after mandatory consultations with the Bangladesh Trade and Tariff Commission, other government entities and the private sector.
A new provision has been incorporated to address money laundering, terror financing and the spread and import and export of dangerous weapons.
The new act introduces a 10 per cent annual penalty for late payment of duties and taxes, which was not present in the current law.
For repeat offences, the new act empowers customs officials to impose a double penalty. However, the number of customs-related offences has been halved from 103 to 45.
Before implementing the new law, the NBR conducted awareness sessions with businesses and stakeholders.
Still, former NBR chairman Dr Mohammad Abdul Mazid said the stakeholder consultations were “not adequate”. He said the lack of thorough consultation could lead to issues similar to those faced with the Value-Added Tax (VAT) law.
Besides, the former revenue board chairman called for proper training and stakeholder workshops.
Ferdous Ara Begum, CEO of the Business Initiative Leading Development (BUILD), criticised the new law for granting customs officials broad and open-ended discretionary powers.
This allows them to reinvestigate any import or export goods at any time, even years later, according to Ms Begum.
“The law should specify criteria for reinvestigations to prevent harassment by customs officials, possibly motivated by revenge,” she said.
Ms Begum said businesses should not be held solely accountable for releasing goods. Rather, customs officials who release goods should also share this responsibility.
Ms Begum said the law does not include consultations with border agencies, a key stakeholder group. She also identified aspects of the Post Clearance Audit, mandated by the TFA, that are missing from the new customs act.
She also noted that some provisions of the act may not be fully aligned with the TFA, a possible concern for the country’s trading partners.
The NBR began work on the new customs act in 2014. However, the progress was hampered by several issues, including a proposed provision granting customs officials “magistracy power”.
The World Bank (WB), Asian Development Bank (ADB) and USAID all assisted in drafting the new act.
The new act incorporates international best practices as outlined by the World Customs Organization (WCO) and WTO. These include: authorized economic operator, electronic declaration, record payment, risk management, single window, PCA, inward and outward processing, non-intrusive inspection, advance ruling, national enquiry pony, advance passengers information, passengers name record and provision for voluntary disclosure.
The new act incorporates provisions for amending and withdrawing customs declarations, as per the Revised Kyoto Convention, to facilitate businesses.
The new act extends the timeline for claiming refunds or repayments of duty and taxes to three years from three months in the Customs Act-1969.
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