Do we Open or Close the Customs

FROM THE REDACTION

Our dear readers, “Sakartvelos Ekonomika” magazine and non-governmental organization “The Institute of Free Economy and Business”, together with Georgian Chamber of Commerce and Industry, continues the project – consideration at a round table of the case of the government’s economic reforms.

This time, on behalf of this debating-society, we offer you a discussion on some important postulates of the new Customs Code. We hope you will also take an active part in the discussion in order to adopt an optimal code that, on the one hand, will contribute to integration of Georgia in the world market and attraction of investments, and on the other one – will protect our economic space and facilitate doing business.

Those taking part in the discussion:
Jemal Inaishvili – Vice Speaker of the Parliament,
Shota Makatsaria – Vice President of the Georgian Chamber of Commerce and Industry,
Gela Khanishvili – expert
Akaki Chargeishvili – expert,
Giorgi Epitashvili – lawer,
Nino Arveladze – journalist
Nino Arveladze: Two projects
are presented: the first one –
of the Customs Code, and the second one – concerning liquidation of customs taxes. To a certain extent they contradict each other since with cancellation of the customs tax we promote import and want to make Georgia a transit junction. On the other hand, complication and toughening of transit and re-export regimes is envisaged by the Code.
Jemal Inaishvili: – The Georgian government is going to cancel the customs tax on import. This idea belongs to Mark Laar, the former Prime Minister of Spain. However, traditions and culture of Spain and Georgia differ. At first glance, the idea may not seem bad, but, first of all, we will have to look at what we shall deal with, and what problems cancellation of the customs tax will entail. From my point of view it would be good to form a group that will carry out mathematical analysis of the situation. We have to find out what kind of result we shall get when the customs tax will be equal to zero, what fate is in store for the local production, what will happen to incomes, and what cancellation of these taxes will bring to the budget. Each day changes for the better take place in Georgian industry and this reform will create a lot of problems to the local production. In my opinion, first of all, we should give preferences to any import, which will be related to technologies. However, we must give incentives to the local production. Otherwise, Turkey, which is among the seven most rapidly developing countries, will subjugate the Georgian market. This country’s economy is the twentieth largest one in the world, the country is the sixth largest partner of the EU and its trade turnover makes up 189 billion USD. Out of it. export makes up 52 billion USD, and import – 42 billion, which means that Turkey sells more than buys. That is why we have to think everything over well before taking the decision. It is clear that we are supporters of liberalization, but one should not take decisions in a hurry.
Gela Khanishvili: – The Ministry of Finance declared that with cancellation of the customs taxes on import 80 million GEL will be lost, but they are going to make this sacrifice.
Emzar Jgerenaia: – Here are the approximate calculations – in 2005 we received 125 million GEL out of customs taxes. That is the sum which can be lost makes up 125 million GEL. If we take into account that, in comparison with 2005, 5,5-6% GDP growth is planned, and import will increase by approximately 25%, by means of which the 3 billion budget is replenished, then based on it the losses in 2006 will make up 150 million GEL. The real problem is that now there are three different approaches to this problem. The first – CIS countries with which we have a free trade agreement and which do not pay the customs tax. The second group constitute the WTO countries that, in accordance with an agreement with WTO, pay the customs tax according to the “Law on customs taxes and tariffs”. There is also the third group to which belong the countries that are neither WTO nor CIS members. They pay a 12% customs tax. Here is their ratio in the import basket – 50% of Georgian import falls on CIS countries, the matter concerns the full import basket, including energy resources. These are Russia, Ukraine, Kazakhstan, Azerbaijan, Armenia, etc. 45% falls on WTO countries that have no preferences and 75% of the 45% falls on Turkey. If we do not take into account energy resources, Turkey will be Georgia’s import partner equal to Russia. These are general figures. As to the concrete ones, in accordance with the WTO memorandum, trade taxes on computer technique, electrical equipment and communications and other technique are equal to zero. If we want to promote investments for technical equipment, installations and raw materials, we can cancel the customs tax. The basic 12% rate will be retained for dairy products, wurst and meat, vegetable oil and fats but not for alcoholic beverages, construction materials and some machinery, and all this will happen according to the agreement with WTO. This is the 1st group of the harmonized system of commodity classification – animals and birds, trotters and also import of sharks and octopuses. But dairy products, sugar, fats, cheese, tomatoes, onion, carrot, haricot, potatoes, citruses, canned fruit, greens, wheat, flour, juices, nuts, road metal, gravel, that is a group of goods from description 010290610 to description 280490000, where Georgia has its own interests. Loosing of it means that, besides the 150 million GEL, food industry’s production, which is functioning and developing, will also be lost. Thus, the Georgian market will loose internal incomes as well. I have a question – how these losses will be compensated for. The Minister of Economy declares that this will happen at the expense of business activity. It is unclear, whether more chocolate, sour milk and wurst will be imported to Georgia? And the second question, how are we going to protect the market.
Interesting is the fact that no one speaks about the objective of these measures exactly. Increasing of investments is impossible to be the objective, since this kind of market will not be interesting and attracting for investors. Cancellation of the import tax will not render assistance to investors, except for the case when we shall release machinery and raw materials.
Jemal Inaishvili: – The author of this idea Mark Laar says that with cancellation of the import customs tax, corruption in his country was eradicated. But I think that struggle against corruption is possible by means of other methods as well.
Gela Khanishvili: – This decision will have a very bad effect on the Georgian economy. The general formula and postulate of zero customs regime is good, no one argues with the theory of this issue, but in practice each country protects its segment. During the quadripartite negotiations Switzerland made no concessions for us concerning chocolate and laid a claim on us concerning retaining of 25% customs regime, in spite of the fact that Switzerland was not in danger of exporting Georgian chocolate there. By this I would like to say that when some person or department comes up with an initiative, they have to produce arguments and documents that clearly explain what kind of initiative it is, its objective, and what result it will bring. Cancellation of the customs tax is not as simple as it seems, very serious calculations should made for this. It should be clarified what raw material is and for whom it is a finished product, whether there is a possibility to produce this raw material in Georgia. Our country achieved certain results during a four years’ membership in the WTO, and now lifting of this protection in such a primitive way is inadmissible.
Unfortunately, the Georgian economy has not make use of the five years’ transitional period. I would like to say that it is easy to enter WTO if any country declares that it will set a zero regime for all countries. It turns out that we do not want to produce anything any more. As soon as we confirm and say that we do not want production, we shall be acceptable for everybody. I repeat once again that the local production will face a serious danger with cancellation of the customs tax.
Shota Makatsaria: – A document concerning this was published in the press. It says that any rate that will exceed 12% will be equaled to 12%. Any of the rates that will exceed 5% will be 5%, but the rates that are lower than 5% will be equaled to zero. This will happen from 2007, and from 2008 all the taxes will be equal to zero. They say that 80 million USD will be lost as a result of cancellation of these taxes, but they say that is all right. In my opinion, with cancellation of the customs taxes Georgia will turn into a free warehouse.
Jemal Inaishvili: – It will take a long time for Georgia to turn into a free warehouse. The country will not be able to assume the name of a free warehouse in a short period of time. If we take the example of Dubai, they started this activity 30 years ago. Georgia will not become Dubai since there business is absolutely free and no one interferes with it. You should be free in order to become a warrehouse. When Abkhazia is closed and there are other problems in the country, it is impossible to turn into a free warehouse.
Emzar Jgerenaia: – The main question is what objective the country should achieve by means of this code. If Georgia wishes to become a center of “warehouses” like Hong Kong, the state should first of all regulate the issue of facilitation of transit and re-export. If the re-export regime will be buried with the purpose of eradication of corruption, as it is written in the code, the talk of success will not take place. If the country’s purpose is to turn itself into a distribution center, then the code should be regulated, so that the duties should not be paid in the regimes of customs warehouse and export and re-export. In this case the objective will be clear. But, according to this code, re-export is turned into a secondary regime.
Jemal Inaishvili: – Yes, first of all customs should be put in order, otherwise any reform becomes senseless.
Emzar Jgerenaia: – I would add one more thing, we shall never achieve any result if we consider issues in a snatched away manner.
Gela Khanishvili: – I would like to raise a rhetoric question – is there the Ministry of Economy in the country. The same applies to the Ministry of Agriculture. Let me draw a concrete example, I needed an expert and a state policy in relation to fishery. There was not a single man in the Ministry of Agriculture who could give me a consultation.
The real situation is as follows: the zero regime applies to the CIS countries. Regimes close to the zero regime apply to the WTO member-countries. Thus, mainly remain the countries with which we do not have active relations. The President pointed out that we tax America and do not tax Russia. This is serious work and we have to determine what introduction of the zero regime will bring to the Georgian population and economy. It should also be clarified what a blow will be delivered by this regime on the sectors that are still protected by the existing regime. I do not rule out that the existing regime does not protect anything thoroughly. For instance, I know that chocolate production in Georgia is protected since we have a parity with Switzerland. At the same time it is not so, since we have no chocolate production in the country. But if it will gradually develop, then the 12% customs tax will be advantageous and obligatory.
Shota Makatsaria: – There are also other aspects, are you sure that with cancellation of taxes our economy will suffer a great deal?
Gela Khanishvili: – Let us draw the following examples. Products of “Sadia” are imported and products of “Koda” are produced in Georgia. If “Sadia” will be released from the 12% tax, “Koda” will suffer, since the giant “Safia” will swallow it up. But if similar products will be imported from Russia, the 12% tax will not have an effect. That is why I say one should not take any decisions that until all the calculations are made. This is a rather large-scale economic problem. The state says that it loses 150 million GEL but gives the country an opportunity to develop the economy, to make investments in the country, but in fact it is nothing but coming of a foreign investor. However, if the tax on raw materials and installations is cancelled, real investments will be made in the country. Then this will also require additional economic levers. It must be clear why a foreign investor should come, and why his income in Georgia will be more flexible than in some other country. In this case not everything will depend on the customs tax.
Shota Makatsaria: – You say that raw materials should be released from the customs tax. First, we have to clarify what raw material is. What is meat? A finished product or a raw material? Currently production works on the imported meat. The matter concerns wurst production in which, sometimes, there is no meat at all. A question is heard – do we need this kind of production? That is why we do not say that we should bring all taxes to zero, but we should not think that we can produce everything, we shall never be able to grow cacao or coffee. Then why taxes cannot be brought to zero? And, generally, what specific share does the European budget have out of the customs tax rate?
Gela Khanishvili: – Here the matter does not concern the budget revenues, it concerns the economy on the whole and its further development.
Shota Makatsaria: – Let us draw Topadze’s beer as another example. Approximately in 1995 we created favorable conditions for him and practically liquidated imported beer since many importers left Georgian market because of high taxes. As a result, production developed but quality has worsened.
Gela Khanishvili: – This happened not because of the law. Import stopped because of break-up of business schemes that existed during that period under the Ministry of Foreign Affairs and the Patriarchate, when import could be carried out more freely. In fact, in 1995 beer was imported either by the Ministry of Foreign Affairs or in free regime. Beer has never had preferences and does not have them now. When there is Georgian beer on the Georgian market and also “Baltika” is imported, this 12% tax will be a kind of barrier for development of some spheres. If we want to lift the barriers, this should be a result of a policy. What do we want today, which sphere we want to protect? America translated books into Georgian and Russian so that we should understand what kind of country America is. We can read in them that America protects the interests of its entrepreneurs by means of customs tax rates regimes. But, unfortunately, we do not know what to protect. Why we want that tax on installation should be a zero. If we know the state strategy, then we shall be able to say what regimes will be acceptable for securing of this strategy.
– Why cannot wurst be produced in Georgia? Gurjani wurst was the first one that appeared on the Georgian market, it contained meat and was tasty. Wurst from Erevan was also sold in Georgian well, meat for which was bought in Akhalkalaki and Bogdanovka. It turns out that the meat purchased in our country returns. Thus, the development if production in Georgia is possible.
Emzar Jgerenaia: – Analysis shows that cancellation of customs taxes has no effect on import of juices since most of them are imported from Russia and the taxes does not apply to them. Besides now, Georgia has no potential case as far as juices are concerned. As to mineral waters, the transportation of which is expensive, it will have no effect on the Georgian Market either. There are also soft drinks the market of which is dominated by Coca-Cola and, to less extent, Pepsi. Their transportation is expensive as well, that is why foreign drinks are imported in small amounts. As to lemonade, it is a perishable drink and is not imported to the Georgian market either. As of butter, Georgia has no possibility of producing it. Bananas, chicken trotters, construction materials can be easily imported. As for agriculture, we have never used season prices. “Grebi” says nothing either, since it imports goods and does not use local products. It turns out that Georgian production is not interested in protection of its interests. Proceeding from this, this project was adopted in the Business Federation without any obstacles. As to the very project of the new Customs Code, in my opinion, the Code, first of all, should be a single one, without any addenda. The regime of rendering services to importers should be directly written in it. Otherwise the institution of brokers will be brought to naught. A broker that is not allowed to the customs will not a real brokers. At the same time no one explains why he is not allowed to the customs territory. It should written in the code that duties on transit, customs warehouse and re-export regimes should be cancelled, and the country should undertake it since 0.2% does not mean anything. It is a pity that this code is not considered from this point of view.
Shota Makatsaria: – In case of cancellation of Customs Tariffs, this Code will lose any sense. What sense the regime will have when the customs tax is cancelled, and VAT will be put off till selling process.
Giorgi Epitashvili: – We have prepared certain remarks in relation to the Customs Code. In working out of them we took into account several principles and wanted the Code to be brought in conformity with them. The rights of declarers should be protected to the maximum, implementation of procedures – available, efficiency and simplicity of customs procedures as well as strict regulation of the customs authorities should be secured, that is their authority should be exactly formulated.
Akaki Chargeishvili – I have the following proposal – customs authorities should not have any authority at all, that if right is written somewhere, obligation should be written as well, so that regulation should not be used at their discretion.
Giorgi Epitashvili: – The conclusion is as follows – if these remarks are not taken into account, we believe that this draft law has considerable shortcomings that require revision and determination. We already have remarks from a purely editorial point of view, though there are some issues that can be raised to a principle level. These are the relations of declarers and the tax authorities, which we find in Article 60. Concrete figures are included in the Customs Code, and if there is a mistake for one lari more or less, the matter will concern violation of the customs procedures and corresponding sanctions.
Shota Makatsaria: – I think there should be a certain backlash. Customs authorities have the right of re-checking of the amount, and if the amount of cargo exceeds the declared one, in accordance with the Code, the importer will be directly liable to fining. Insignificant increase should not entail a number of fines.
Emzar Jgerenaia: – I think that this is illogical. An invoice is issued about a month and a half in advance, then it is sent to a beneficiary, and after that money is transferred, but if a container does not hold the cargo or, on the contrary, there is extra space in it, the cargo may weigh 2 kg more or less. It is not serious to consider this as a violation. If this kind of increase is more than 3% of the total cost of goods, it is a serious violation, but a mistake up to 3% is quite admissible. It contains articles that need specification and regulation. Not only here but in the Tax Code as well. It is Article 3 in which it is written that the Chairman of the Customs Department has the right of issuing orders. At first glance it is a harmless article, that does not contradict the Tax Code, introduction of turnover register and 40 standard acts did not contradict to it either, since it was based on the Code and was considered as a mechanism of its fulfillment. But the moment as to how doing of business becomes complicated, which will torment an entrepreneur, was transferred to the standard act. As it is written here, it is Parliament that determines the customs policy, and the Customs Department will not pass any additional documents unless it gets an order that has to do the work of its personnel and management. Then it in no circumstances should concern the owner of the cargo since it will be switching over to policy. That is why it is the most dangerous article both here and in the Tax Code.
Akaki Chargeishvili: – As to instructions concerning customs regulations, in my opinion, it should be done not by the Ministry of Finance and the Customs Department but by the Ministry of Economy, since it will still remain in the executive power. There is another aspect – there is a certain competition between the two ministries. The Ministry of Finance is a real curator of the Customs and Tax Departments.
Emzar Jgerenaia: – In general, these provisions are a copy of the old Code in which there are a lot of unusable paragraphs. Moreover, in accordance with the norms of our lawmaking, writing of this kind of lapsuses is inadmissible. It is a funny situation. Let us take a look at Article 5, Paragraph 2, in which the matter concerns theterritory of the Georgian customs and customs boundaries – Georgian customs territory also includes the territories of artificial islands created in the special sea economic zone, the territories of installations and constructions to which special Georgian jurisdiction. Who will tell me, what artificial island was created in Georgia? In Dubai there is an artificial island that has not been completed yet. If there is no artificial island in my country, the creation of which will take at least 10 years and billion, and which should be planned 20 years in advance, why this absurd is written in the law? It is also written that territorial waters are a customs territory, that artificial island will in all cases in the territorial waters. This phrase worries for me since it has been copied from another country’s act and it is not adapted to the Georgian reality. All subsequent articles are tied to it, for instance, explanation of Article 6 concerning the status of the customs is written very unclearly. We have an example, if a firm is a foreign one and goods are Russian ones, the goods are taxed as foreign ones. If we do not clarify now what the customs status means, the goods and their carrier or receiver, we shall get the same nonsense as we currently have. Let us say that wheat is Russian and the firm is on Seychelles, the firm is taxed is a foreign one. Then, Article 7: the explanation of codes used in this Code – the terms of this Code that differ in meaning from the terms of other spheres of the Georgian legislation are used in regulation of customs relations only, if it is not envisaged otherwise by the legislation. This is just copying, and this means that we are indenting terms for the customs, and this is absurd. Let us take a look at the definition of a declarer – a person that makes customs declaration on his behalf or on whose behalf declaration is made. It is not clear, does “declarer” means something else in the Tax Code? Paragraph b) export payments – customs duties, customs tax, other taxes and duties the payment obligation of which originates in relation to exporting of goods from the Georgian customs territory. That is, export payments are duties. First of all, if we want to help the country, we should cancel export duties. Then there comes the explanation of goods – any movable property being transferred on the Georgian customs territory, including money, electric and thermal energy, gas and water. I believe that this is a bad explanation since our legislation includes the definition of goods, I think that the explanation existing in the “Law on standardization and certification” should be transferred here. Paragraph 9 – trade policy arrangements need complete improvement. Paragraph 16: concerning customs authority – it implements procedures related to customs control. This is a remarkable provision – that is the customs authority is the executor of customs procedures. Proceeding from this, it should implement the procedures that will be indicated to it. Thus, the customs authority has no right to issue orders that do not concern its management. What happens around the cargo should not concern the customs administration as an interested body. Otherwise we shall be like Russia where customs administration has the right of tax changing. That is why I agree with the opinion that everything should be included in the Code by legislative acts that will be perfect and strong, and then we shall not need up to forty standard acts. This code should to the maximum extent rule out issuing of regulatory standard acts, besides it should envisage the form of declaration, etc. This must be done by the Ministry of the Economy, but the customs should only carry out procedures. The customs authority should not even deal with description of the procedures. The trouble is that the Code is written in unclear language. It is wrong when the customs that deals with procedures tells us how we should carry out custom clearance of goods, etc. It should be written in the Code – if a customs officer detain cargo for longer than a reasonable period of time, the state is obliged to make a compensation to the importer in the amount of 1% of the cost for each overdue day.
Shota Makatsaria: – In relation to the customs authority, we have altogether withdrawn Article 12. Fulfillment of customs authority’s decision – a decision taken by the customs authority should be fulfilled immediately if the Code does not envisage otherwise. It is not written what decision is meant and who should fulfill it. Maybe it is implied that by an importer, exporter or transitor. Let us pay attention to the phrase “any decision”, this kind of things were not written even in the decisions of the Communist Party of the Soviet Union. Then there comes recognition of customs authority’s decision as invalid and paragraphs are enumerated as to in what cases decisions of the customs authority can be recognized as invalid, and b) paragraph is among them – if this decision or its part was taken based on wrong or incomplete information and the declarant knew or should have known about it, and this decision or its part would not have been taken based on correct or complete information. Thus, importer or exporter that will not give a correct or complete information are blamed for everything again. In this relation we wrote a remark that customs decision represents an administrative act passed by the customs authority whose fulfillment, recognition as invalid as well ass introduction of changes in it is envisaged by general administrative provisions of the Code. Correspondingly, recurrence of the same provision in several legislative acts is undesirable. Based on it, Articles 12, 13, 14 should be withdrown.
Emzar Jgerenaia: – A very interesting thing is written in this Code, in the explanation of customs terms – the quota of customs tariffs – in exporting from or importing to the Georgian customs territory, the amount of goods to which preference is given in relation to the rates of the customs tariff. Show me a legislative base of this provision, is it written in the “Law on the tariffs of customs taxes” that customs tax is tied to quota? Georgia has no quotas. There is no point in this entry. We shall end in absurd with such provisions.
Shota Makatsaria: – Let us write concerning quotas that there is no such practice in Georgia. Article 32 – tariff classification of good is liable to improvement from the viewpoint of content, and we believe that tariff classification should be determined by the declarer in accordance with the goods’ code. This is right, then the customs is obliged to accept the declaration, and if it does not agree with the code, it should familiarize the declarer with it. In this case the code of goods is determined by a neutral export organization, and fulfillment of its conclusion is obligatory for the parties. By this we want to include a mediator at least here. We believe that a customs officer should not imperatively determine the code. The Ministry of Economy determines independent export organizations. This is a novelty, there was nothing of this kind in the Code before.
Emzar Jgerenaia: – I would like to return to Article 9 that concerns a customs broker, here everything is left unchanged. In accordance with it, the customs considers some firm as a broker. It is written in Paragraph 7 that, as it turns out, a customs broker carries out his activities in accordance with qualified cooperation, and this qualification is confirmed by a competence certificate of a specialist in customs procedures issued by the Customs Department. Why does the Customs Department, a state structure, certifies attestation of a private firm’s employees? Article 10 – a license in Georgia has become an unassailable fortress, a customs broker does not need a license. If we follow the path of deregulation, the license should be cancelled. Article 11 customs decisions, Paragraph 1 – in application of the customs legislation, the customs authority takes a decision according to its initiative or based on application of a person. In application of the customs legislation for taking of customs decisions, a declarer is obliged to submit all the necessary information and documents to the customs authority. A very important thing is not written here, that the customs authority a) according to its initiative, takes a decision, certifies and fulfills it within two calendar days, but no longer than one tenths of the goods’ serviceable life since the goods may be perishable ones. Secondly, if a customs officer does not give a reply to applicant with a 48 hours’ period and does not carry out customs clearance of the goods, then the state should pay the terminal tax. Moreover, if a customs officer does not give a code within the fixed period of time or for some other reason will not carry out customs clearance of goods and will stop the goods for further investigation with interference of some third organization, even finance police, and the violation is not confirmed within a reasonable period of time, he pays 10% of the goods’ cost. Another funny thing is written here, that details must be given in writing a letter. It is not clear what was the purpose of writing this. In short, the customs will have all possibilities to torment the goods’ owner. Article 15, Paragraph 2 – if special expenses are in store for the customs authority, which are related to expert examination then the applicant should pay a corresponding sum. It is not right if the applicant will turn out to be uwrong as a result of the expert examination. If the applicant turns out to be wrong, the applicant will have to pay, but if the state is wrong, then the state will pay. If you believe me, Article 16 is the most significant one in the Code, in which it is written that the Customs Code should limit the period of implementation of procedures. It should be written there that the customs must not conclude an agreement with any customs terminal in whose rules it will not be written that taking of goods into the terminal will be released from any taxes for the first 48 hours. This is how it happens all over the world.
Shota Makatsaria: – Article 36, Paragraph 3 – postponement of taking of final decisions concerning customs value. A declarer is given a possibility of taking of goods from the customs authority if he gives necessary guarantees envisaged by the Code, which includes the sum of customs taxes calculated based on the maximum cost of the goods. Rechecking of this data and taking of final decision should not inhibit carrying out of a customs procedure, while the recipient of goods should produce a bank guarantee for the corresponding sum or equivalent deposit to the account of the customs authority. The period of data rechecking should not exceed 30 calendar days, after expiration of which the matter is decided in favor of the importer and the deposit is returned. Paragraph 4 – the customs authority has no right to delay carrying out of a customs procedure in case of doubts concerning the customs value. Article 37 – the methods of determination of goods’ customs value and legal basis. Paragraph 1, Subparagraph v), the reserve method should be withdrawn as an unclear one. Here we should take into account that using of the previously fixed prices by the customs authority in respect of declarers is inadmissible. However, determination of customs value of goods imported according to the so-called off-shore scheme is a special case, or when it is aimed at lessening of taxation. In this case, with the purpose of determination of the amount of taxes, the customs authority has the right, within the period envisaged by the law, to recheck the fixed value at the customs of the goods exporting country, and use it in accrual of customs liabilities. Paragraph 3 of the same article is insignificant. The act of this agreement should be either formalized of withdrawn. Paragraph 4 – the order of determining of goods’ customs value is established by the order of the Ministry of Finance of Georgia. What is the use of the order when the methods are enumerated?
Emzar Jgerenaia: – The order is necessary and it will be good if it introduced. Let us consider Subparagraph b) of Paragraph 1 – contract price of identical goods. It is unclear for an importer, and it should be written in it in detail what “identical goods” means, the notions of lot and date as well as the mechanisms of their calculation should be written. A customs officer is obliged, in using other methods, to produce concrete calculations to the importer. There must be a concrete scheme of determining of identical goods.
Shota Makatsaria: – There is another article in accordance with which the customs authority can any time demand to transfer the goods to the location indicated by it, as well as to load, unload, overload, pack and unpack them. This is too much – either the purpose of all this should be specified or this provision should be withdrawn. Article 60 – implementation of trade control – is absolutely unfair to business. It must be pointed out that if implementation of control over the goods and their rechecking is made under the initiative of the customs authority, it is obliged to carry out the planned arrangement at its own expense. In case it was established that the amount of goods is within the permissible norm that may be up to 2% of the total amount of goods, and no more than 300 GEL of trade tax, then this mistake is resolved in favor of the declarer and he does not compensate for the service expenses. In case the amount exceeds this indicator, the declarer is obliged to secure compensation of expenses. Article 8 should be supplemented – the customs authority, based on the declarer’s demand, is obliged to introduce corresponding changes in the declared income data, if exceeding or underestimation of the amount of goods is established within the permissible amount. The customs authority is obliged, based on the declarer’s demand, to be present at unloading of the goods, and, according to the results of it, correct the data of customs taxes. By the way, it used to be the customs authority’s obligation. Article 64 – the form of customs declarations and additional documents. The customs authority has no right to demand additional documents. Article 65 – registration of a customs declaration. We believe that a customs declaration is the basis of launching of the customs procedure, the customs authority is obliged to accept a customs declaration produced by the importer and register it. This obligation is not written here and it must be introduced. This is the basis of everything when a customs officer does not take a declaration from the importer. A customs officer should be prohibited to drag out accepting of a declaration with the purpose of changing of the data on the goods’ code, customs value, amount and origin. In case of doubt, a customs officer, within the framework determined by the Code, demands bank guarantees or a deposit from the declarer till clarifying of the matter. It is inadmissible to charge a declarer with giving of a registration number for the declaration, as well as with introducing of this declaration’s data in the customs information server (which takes place now), and also with some other activity related to implementation of customs procedures being the function of the customs authority.
Emzar Jgerenaia: – It should be added that it is inadmissible that the customs authority should demand additional certificates from the declarer. Declaration and its handing over to the office is considered as the beginning of the procedure.
Shota Makatsaria: – Article 70 – checking of the registered customs declaration – with the purpose of the registered customs declaration, the customs authority has the right: a) to check compliance of the customs declaration to the enclosed documents and produced goods; b) to demand addition materials from the declarer related to the produced documents; c) to carry out examination of goods and take samples from them. Article 71 is tied to this article – examination of goods and taking samples from them.
Emzar Jgerenaia: – It should be written that taking of samples from goods should be implemented at the expense of the state, and the period during which it should be done should also be indicated, but if this cannot be done the customs has the right of further control of custom clearance, that is it is possible to set the goods in free turnover and continue the investigation.
Shota Makatsaria: – Besides, we also add that the customs authority, with the purpose of examination of goods and taking samples from them, should determine the time and place suitable for the declarer. Then there is an article on struggle against smuggling, in which it is written that a person that bought or concealed the goods that turned out to be smuggled bears the same responsibility as the smuggler. I think this should not concern purchasing of goods. It turns out that we oblige all firms and persons to carry out investigation. Article 83 – taking into account or return of extra paid customs taxes. We add that if the sums liable to payment exceed the accrued sums, a payer has the right to demand its return, and the customs authority is obliged, within 10 calendar days, to return the extra paid sum. In case of the payer’s agreement, the customs authority can accredit the extra paid sums to the following customs obligations. Article 224 – it should be written that 20% of customs incomes should be placed on the return sub-account, while currently this sum makes up 10%.
Emzar Jgerenaia: – Article 176 – re-export is an operation of customs processing of goods, with application of which the goods previously imported to the customs territory of Georgia will be taken from this territory without paying customs taxes. Re-export is included in the article on export. That is, export is regime, and free trade, as it turns out, is its sub-regime.
Shota Makatsaria: – Chapter IX – settlement of customs disputes. After familiarizing with this chapter, we came to a conclusion that it fully contains provisions of formal character, since, in case of arising of a customs dispute, written decisions of the customs authority are ineffective in most cases, and compelling of a declarer takes place in an informal way. It would be acceptable if beginning and settling of a dispute took place based on the data fixed in the documents. That is, illogicality of what is written in the document should be the basis of beginning of a dispute. Otherwise Chapter IX will always work in favor of the state, will contribute to blackmailing of business as well as of the state by means of introducing of illegal extra sums in the budget. Then there come articles on fines and we have written that they are unclear and should be withdrawn. In accordance with them, if one takes a car abroad and will bring it back in 56 days, it will be liable to fining in the amount of 800 GEL. Turkey admits you in the country for 2 months, but your country gives you your own car only for a month and a half.
Emzar Jgerenaia: – Let us pay attention to the board for settling of disputes in Chapter IX. The work of the Tax Code has shown that this article does not work. The period of giving a refusal must indicated. These articles have been copied and does not work at all. Chapter X – customs offence and responsibility – should be completely withdrawn. These articles should be included in the administrative and criminal parts. After reading the Code I have not seen the spirit that used to be in canceling of the customs tax. In short, I did not understand the purpose of this Code. Its purpose should be: 1) contribution to development international relations including facilitation of trade and integration; 2) creation of business environment and facilitation of business from the viewpoint of investments. There should be an article in the Code that in certain cases, based on the interests and entrepreneurs, the customs authority is obliged to render services in the place where it is convenient for a businessman. This concerns special cars, perishable goods, installations of non-standard dimensions, etc. Let us draw the following example: Azerbaijan supplies sheep’s bowels, out of which high quality sausages are produced, to the whole of Europe. Everything, starting from slaughter and ending with sending is calculated to a minute, and all this takes 3 hours. Let us imagine that the customs delays these goods and says that it will not be able to carry out custom clearance of them for two days. I repeat once more that the purpose of the Code is unclear. It is also unclear what kind of assistance it renders to business. The fate of transit is very obscure as well. It does not need declaring at all, it should be carried out in accordance with the accompanying forms. A profound work at these remarks is necessary, otherwise adoption of this Code is senseless.

The discussion will be continued in the following issue