KUALA LUMPUR: The Royal Malaysian Customs Department’s assessment of import duty of completely built up (CBU) vehicles and monitoring activities on the movement of vehicles from designated areas (Labuan and Langkawi) were less than satisfactory.
According to the Auditor General Report 2014, a total of 213 K1 Forms (5.4% from audit sample of 3,931) have errors in assessment that resulted in under collection of taxes amounting to RM1.29 million and over collection of RM499,296.
“A total of 111 K1 Forms (2.8% from audit sample of 3,931) contains insufficient vehicles information which involves duties/tax amounting to RM1.85 million and vehicles value of RM2.86 million,” it said.
It also noted that the Malaysian Association of Malay Vehicle Importers and Traders did not apply for extension of time for keeping unsold imported vehicles for more than 36 months without payment of duty/tax.
The estimated duty due from those unsold imported vehicles amounted to RM12.65 million as at Dec 31, 2014. In addition, seven licensed warehouses (12.3% of audited licensed warehouse) were not insured for fire and theft which involved 725 vehicles with an estimated duty of RM38.22 million.
In terms of monitoring of movement of vehicles from/to designated areas, the report highlighted the lack of comprehensive and immediate measures to penalise vehicle owners who violated the laws.
Examples of these measures are forfeiting bank guarantees, enforcing penalties and detaining vehicles by Customs in WP Labuan and Langkawi.
“However, the Enforcement Division in Customs Headquarters had taken proper measures in locating and detaining vehicles from Designated Area that overstayed in Principal Customs Area (Malaysia exclusive of Designated Area),” it said.
In order to ensure the assessment of import duties of CBU vehicles are properly and effectively carried out as well as to avoid any revenue leakage, five recommendations were made for Customs’ consideration.
Firstly, the Post Clearance Audit Branch (under Customs’ compliance management division) should reassess the Custom Declaration Forms with errors highlighted and reported to the National Audit Department by June 2016.
Secondly, Customs officers should ensure that only quality Custom Declaration Forms with sufficient details on vehicles information and first registration date are accepted.
Thirdly, the Warehousing Management and Control Unit should tighten control over unpaid duty/tax vehicles in the licensed warehouse.
Fourth is a review by Customs Headquarters of Customs Standing Order No. 53 regarding storage period for vehicles without duty/tax payment and the necessity of annual 100% inspection in the licensed warehouse.
Lastly, Customs in WP Labuan and Langkawi should tighten controls in the movement of vehicles from/to Designated Area by taking comprehensive and immediate measures such as forfeiting bank guarantees, enforcing penalties and detaining vehicles if necessary.
Customs, the second largest revenue collector after Inland Revenue Board of Malaysia, collected RM100.642 billion in revenue from 2012 till 2014.
Revenue collected in 2012 was RM32.319 billion. The amount rose 2.5% to RM33.127 billion in 2013. In 2014, the collection increased by 6.24% to RM35.196 billion.
