A review of New Zealand’s Customs and Excise Act 1996 (“the previous Act”) commenced in 2013, to address parts of the previous Act that dated up to 100 years old. After extensive discussions with stakeholders and industry professionals, the new Customs and Excise bill was introduced in November 2016. On the 22 March 2018, it passed its third reading in Parliament and has now received Royal assent.
Why the change?
As mentioned, the previous Act was, in many respects, outdated and in need of review. The Customs and Excise Act 2018 (“the Act”) will enable the New Zealand Customs Service (“NZ Customs”) to keep up with the rapid changes in international trade, travel, security, and technology.
This will allow NZ Customs to provide greater protection of their borders, support the collection of Crown revenue and effectively manage the movement of people, craft, and goods in and out of New Zealand (“NZ”).
The legislation is easier to understand, more transparent, and importers and exporters will benefit from a greater understanding of their obligations at the border.
The three most notable changes from our perspective are the following:
1. Calculation of transaction value
Historically, based on NZ case law, it was possible for there to be more than one sale for export to NZ, which could be considered the basis for calculating the transaction value for customs purposes. Following a proposal by NZ Customs to define the term ‘sold for export to New Zealand’, it now unambiguously states that this is the last sale of the goods occurring prior to the importation of the goods into New Zealand.
2. Provisional value
If the importer does not know the final value of goods at the time of import due to the nature of the transaction, they may provide a provisional value declaration if certain conditions are met. This removes the previous requirement to notify NZ Customs of changes to the final value through the voluntary disclosure provisions.
The eligibility conditions include, firstly, if the importer is a party to a transfer pricing arrangement subject of an applicable binding ruling obtained from New Zealand Inland Revenue, and it has been established that it is not reasonably practicable to finalise the customs value at the time of entry.
Amendments to provisional value must then be amended later within the prescribed time and specified rules.
3. Customs Rulings on Valuation Matters
Historically, binding advice could not be obtained from NZ Customs in relation to Customs valuation matters. The new legislation provides for the application of binding Customs Rulings in respect of facts or circumstances concerning the application of valuation provisions of the Act, as well as several other matters such as tariff classification, origin, and concession eligibility. Importers relying on the ruling in relation to specific goods or specific matters will be protected from liability for any short-paid duties identified in relation to those goods or matters, and any penalty otherwise able to be imposed for identified short-payments.
With the Act being implemented on 1 October 2018, please contact us at Tradewin to find out how your business could be affected by the upcoming changes. NZ Customs will be releasing more information in the coming months so watch this space for further updates.