In the early days of international trade, when merchants refused to pay the high duty rates ransomed by monarchs, they were typically whipped or flogged publicly. Customs officers were not yet civil servants. Instead, the practice of tax-farming meant the job of collecting duty was chartered to the highest bidder, typically a private firm with little interest in the welfare of its clients.
Today’s merchants should be happy we no longer live in such a tumultuous era. While the bureaucracy of Customs may be challenging, an importer’s rights are enshrined in law (see the Customs Act) and one can re-determine or appeal any decision made by a Border Services Officer.
Since the current Customs regime is based around expedited clearance, more and more Customs verification activity is taking place in the importer’s premises rather than at the port of release. Combing through books is an easy way for Customs to find lost revenue.
Generally, if you are an importer concerned about their compliance record, here are some easy steps to sleep soundly at night:
- Customs cares about primarily about revenue. This is never directly stated, but the logic is behind every regulation in the Act. If you paid a foreign vendor for something, chances are it was taxable and you should have included it in your customs declaration (a.k.a. a form B3).
- Keep your records for six years!
- Avoid undervaluation: Customs keeps track of selling prices for each vendor and commodity in the world. They know its value and its origin. It is easy for them to discern when an importer has been dishonest about a declaration.
- Keep your sellers honest too: if you seller declare’s less than what was paid for the goods to save on insurance, you–the importer–will be held responsible rather than the shipper. Be sure to buy from sellers with experience in international markets, or to double-check the paperwork for any new vendors you may purchase from.