Understanding the Blue Channel facility offered by the RRA/Customs Services
Blue Channel/Gold card facility is one of the international best practices that is customized by Customs administrations across the globe. It is one of the recommended trade facilitation schemes advanced by international reputable institutions such as the World Trade Organization, World Customs Organization, the World Bank and the International Monetary Fund to facilitate compliant taxpayers by not making a physical and documentary verification at the time of importations when goods are in Customs territory, but rather subject them to Post Clearance Audit. How can we better understand this facility? Below are the highlights.
Qn. What is Blue channel?
Ans. Blue channel is a facility accorded to compliant taxpayers by not subjecting their consignments to physical and documentary verification during the customs clearance process but rather allow their goods to clear faster and follow up with a customs post clearance audit.
Qn.What are the criteria for being selected for a Blue channel facility?
Ans.For a taxpayer to benefit the above facility, the following are considered:
•Volume of transactions;
•maintaining proper books of accounts;
•Past compliance records in Customs and Tax matters;
•To have a well established physical and permanent address;
•Compliance to quality standards.
Qn.Who is entitled to blue channel?
Ans.Every importer who fulfills the above criteria is entitled to blue channel.
QnHow this facility benefit Taxpayers?
Ans.The following are the benefits from the facility:
•Quick and faster clearance of goods through customs;
•No payment of port and handling charges;
•Guaranteed delivery of goods and services in time to your customers – otherwise ‘Just in time deliveries’;
•Time saving and therefore reduced cost to your business;
•Improved trust and reliability by tax administration and its key stakeholders;
•Built reputation and probable brand name for your business;
•And so much more all leading to your business growth.
Qn.How does the RRA/Customs Services benefit from this facility?
Ans.Customs Services is delivering the following benefits from blue Channel:
•Increased turnover leads to increased revenue collections and therefore more resources available for Government to deliver on its functions;
•Proper allocation of scarce resources by focusing on high risk transactions which pose a great threat to loss of revenue and society;
•Sets the stage for further application of advanced risk management principles in the region;
•It is a signal to international community that Rwanda and in particular the RRA is rewarding Compliant taxpayers;
Qn.What should Taxpayers do to maintain this facility?
Ans.Importers who benefit blue channel should maintain the following:
•Preserve their compliance record and comply with the requirements of both tax and customs laws and standards and security of goods requirements;
•Present genuine commercial invoices and any other trade documents that may be required by customs and other stakeholders involved in the customs clearance process;
•Establish and maintain systems within their organizations that promote compliance to tax and customs laws including keeping books of accounts;
•Develop proactive and pragmatic approaches to comply with the tax and customs laws and any other laws that impact on the trade supply chain.
QnWhat may lead to a taxpayer being denied this facility;
•Maintain books of accounts;
•Comply with tax and customs laws and any other laws that impact on the trade supply chain;
•Cooperate with the tax administration staff when their discharging their mandate;
Qn.What is the impact of Blue Channel to Port Operators like Magerwa and SDV?
Ans. Importers who are in blue channel are not supposed to offload their consignments in the warehouse or subject to port and handling fees by Magerwa or any other port be it an internal container deport or a Dry Port. Nevertheless, as business saves time and reduces cost and grows, Port operators clientele is likely to grow as the economy prospers. Additionally they become more innovative as they become competitive in service delivery and business is attracted.
Qn.What is the Impact of Blue channel to Clearing Company?
Ans.Since blue channel has reduced clearance steps, the activities involved in the clearance process have been reduced for taxpayers, clearing agents and Customs. Activities like offloading and on loading that were done by Clearing agents before introduction of Blue channel are no longer performed by Clearing agents consequently, they should not charge for those activities.
As the turnover of their clients grows, their business also grows and everybody’s business in this process improves.
Qn.Does blue channel lead to loss of Government revenues?
Ans.Not at all. The Blue Channel facility is extended to Compliant Taxpayers. The selection of Companies to benefit Blue channel is done basing on past performance record (Retrospective method). Customs do also exercise control mechanisms to ensure that any abuse of the facility by any Taxpayer is dealt with swiftly.
In addition, Customs Services do carry out the following to evaluate the effectiveness of the facility;
•Surprise checks on selected companies are done by Customs and Revenue Protection Departments. The selection of the company to be surprised is based on risk indicators such as the commodity under importation, country of Origin, customs rate, valuation;
•A comprehensive Post Clearance Audit is done by Customs to ensure that compliance level of taxpayers is kept improving;
•Rwanda Bureau of standards carry out an inspection of goods to ensure standards of the goods;
•There is a Customs Intelligence function gathers information on a daily basis to ensure that any loophole is identified and treated accordingly;
•Quality checks on blue channel declarations is done daily to ensure quality and genuine documents presented to Customs;
In Conclusion, Blue channel facility is for the benefit of the trading community and encourages other Taxpayers who are not in blue, to become compliant and benefit the facility. It should not be looked at as a means to deny someone a job rather it should be looked at as a means to improve the way of doing business.
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