Changing Customs: Challenges and Strategies for the Reform of Customs Administration

IMF Special Issues, October 20, 2003

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Canonical URL: Changing Customs: Challenges and Strategies for the Reform of Customs Administration

Paper based on the considerable practical experience of the IMF’s Fiscal Affairs Department.
Presents a successful strategy for modernizing customs administration centered on:
- establishing transparent and simple rules and procedures,
- fostering voluntary compliance by building a system of self-assessment supported by well-designed audit policies.
Discusses in depth requirements for: trade policy, valuation procedures, dealing with duty reliefs and exemptions, controlling transit movements, organizational reform, use of new technologies, private sector involvement, and designing incentive systems for an effective customs administration.

Core modernization strategy:
- Transparent and simple rules and procedures.
- Voluntary compliance through self-assessment.
- Supportive, well-designed audit policies to ensure compliance.
Operational and policy areas requiring attention:
- Trade policy.
- Valuation procedures.
- Dealing with duty reliefs and exemptions.
- Controlling transit movements.
- Organizational reform.
- Use of new technologies.
- Private sector involvement.
- Designing incentive systems for an effective customs administration.

Adopt transparent and simple rules and procedures to facilitate compliance.
Build and institutionalize a system of self-assessment for taxpayers/importers.
Design and implement well-designed audit policies to support self-assessment and foster voluntary compliance.
Reform organizational structures and incentive systems to align staff behavior with policy goals.
Leverage new technologies and engage the private sector to improve efficiency and control.

Reforms span legal, procedural, organizational, and technological domains.
Attention is required to manage duty reliefs and exemptions and to control transit movements effectively.
Effective implementation relies on coherent trade policy and accurate valuation procedures.
Private sector involvement and appropriate incentive systems are essential complements to administrative reform.

Source: IMF Special Issues page for "Changing Customs: Challenges and Strategies for the Reform of Customs Administration".