Sri Lanka Customs to accept online docs, e-signatures from 1 June
ECONOMYNEXT – Sri Lanka Customs Director General Sarojini Charles says the department is ready to accept online documentation and e-signatures and is committed to reducing time and costs related to cross border trade, despite constant pressure to squeeze more taxes from the border.
The Customs Department is ready to accept online customs declaration forms and related documents and will recognise e-signatures. Online document processing is currently being trialled and will be officially launched on 01 June.
"This was long overdue and a dream-come-true for traders. We are ready for paperless documentation. The goal is to maximise cross border trade facilitation," Charles said, speaking to a packed forum at the Customs Headquarters.
By the end of 2019, it will be made mandatory for importers and exporters to submit customs declaration forms and supporting documents online.
"Our goal is to minimise the time and costs at the border, but we need the support of the private sector and other border agencies to make this work," Charles said.
A former Batticaloa Government Agent, Charles was appointed to head Customs in 2017, but was removed under murky circumstances in 2019. She was reappointed soon after when Customs trade unions threatened strike action.
Since 2015, the government has attempted to reform the customs department and update centuries-old laws, but influential unions have blocked these moves. A key reform the government is trying to introduce is an independent dispute settlement body. Currently, Customs are the judge and jury of all disputes brought for arbitration.
Charles is now under heavy scrutiny to increase collections at the border.
"She’s singled out at weekly meetings at the Treasury and the department is under constant pressure to increase the collections," said Sunil Jayarathna, a Director at Customs heading its planning, policy and international affairs division told the forum.
"Duty structures are complex and rates are high, but we have no control over that," he said.
However, cross border trade is the lifeblood of the economy and impacts long term sustainable development and wellbeing of citizens, "which is why we are committed to improving trade facilitation, which is a delicate balancing act," he said.
"We have no control over trade policy but we can lighten the burden on traders and consumers by doing all we can to reduce time and costs at the border," Jayarathna, who also heads the National Trade Facilitation Secretariat said.
Online submission of Customs declaration forms and supporting documents, which can number over 500 for a single consignment, is the first phase. Sri Lanka Customs hopes to go entirely paperless, but the private sector is slow to respond.
There around 25,000 importers, 5000 exporters, and 3,000 clearing house agents. But less of than 100 of these had applied for digital signatures from LankaClear, a unit of the Central Bank of Sri Lanka.
Customs had already introduced electronic payments into its system and streamlined document checking processes bringing down the number of days to complete a border transaction from the time customs documents are handed in till goods are cleared from 4-5 days to under three days, Jayarathna said.
"Time is money, we recognise that," he said.
In 2014, a container took an average 2 days to clear the border.
"We’ve brought this down to about 17 hours in 2018," Jayarathna said.
Sri Lanka Customs is also in talks with Colombo’s three port operators: private sector South Asia Gateway Terminals and the Colombo International Container Terminal, and the state-controlled Jaya Container Terminal to streamline their document processing and link up with the department.
"When they come on board the average time to clear a container can be brought down to 12 hours or less," Jayarathna said.
"One day’s delay at the border can lead up to a 10 percent increase in costs. This is a huge cost," he said.
Jayarathna said the authorities were planning to widen and automate the only gate giving trucks access to and from the port. An elevated highway will also improve road connectivity to the port.
Customs documents were checked at multiple points, but have been reduced. Online document processing will eliminate the need for wharf clerks to run from pillar-to-post, he said.
"These are bottlenecks we’ve been dealing with for years but steps are being taken to remove them," Jayarathna said.
According to the latest available annual report, Customs collected 918.59 billion rupees in duties and other taxes in 2017, up 10 percent from the previous year, which accounted for 55 percent of the government’s total tax revenue.
Duties amounted to 369.8 billion rupees, while the rest was accounted for by taxes like excise duty, VAT, export cess, nation building tax, social responsibility levy, a port and aviation levy and special commodity levies.
In 2017, authorities took steps to phase out-para tariffs in line with World Trade Organization (WTO) commitments.
By the end of that year, over 1,200 para tariffs in the form of Cess Levy and Ports and Airports Development Levy (PAL) were removed in addition to the removal of para tariffs of Cess Levy applicable to over 100 imported items in the previous year, according to the Central Bank of Sri Lanka
However, ad-hoc changes to protect domestic industry or to support a failing soft-pegged currency continues have kept duty structures complex.
Disputes over Customs valuations are constant. Participants at the Customs forum asked if valuations can be given online.
"Let’s take things one step at a time," Jayarathna told them. (COLOMBO, 16 April 2019-SB)