9 Sep 2013

Customs finds many imports evading tax

9:02 pm on 9 September 2013

The Government will consider new ways of cracking down on people undervaluing imported goods - including the possibility of confiscating that property

A five-month sting by Customs found more than a quarter of the low value parcels coming into the country are evading duty tax and the lost revenue could be millions of dollars each year.

Only goods coming into New Zealand worth less than $400 are exempt from duty, GST, and other taxes.

A Customs operation examined 2,562 parcels with a declared value of less than $400 and found 733 were undervalued and were actually above the threshold.

Customs Minister Maurice Williamson says $158,000 of what would have been lost revenue has been collected as a result.

He says based on that random sample, the Government is missing out on millions of dollars each year.

Mr Williamson says undervaluing goods is tax evasion and people are cheating the system.

He gave the example of some electronic parts imported from the United States in April that were declared as being worth less than $400 but were in fact worth $24,304.

"The system was put in place to be fair, to allow you if you are bringing in the value of good under $400, to not have to face all of the compliance costs and now it's pretty fair from this operation that a huge number of people are rorting that system."

Mr Williamson says the system is now being policed more closely and the Government will look at ways to make it even tougher but it's not simple.

He says it will be up to legal experts to determine what action can be taken.

Importers condemn abuse

The Importers Institute says the findings are staggering and the operation clearly shows the express system is being abused.

It says the Government needs to crack down on couriers, suppliers and importers.

"Until now people are very happy and very smiley when they receive the goods worth several thousand dollars and not paying a cent of GST," says secretary Daniel Silva. "In the future they might be so smiley if they get a huge fine or it they have the goods seized."

Mr Silva says buyers must be beware as they will end up being held responsible if the goods they import are undervalued.