The Customs Department has recently uncovered several instances of invoice under-reporting as some individuals sought to evade paying the correct level of taxes on imports.
Minister in the Ministry of Finance Ryan Straughn made the disclosure in Parliament on Friday, pointing out that some evidence of “altered information” was recently discovered due to newly required post-clearance audits following upgrades of the Customs Department and the full roll-out of the ASYCUDA World system.
“As you know, as part of the modernization of Customs and the upgrade to ASYCUDA World, we have transitioned to implement a number of reforms including something called post-clearance audits. So whilst goods are being cleared faster and processed using a risk management process, the Customs Department is using this process called post-clearance audit to validate and verify that the information I may have submitted to the Customs Department and what I have paid by way of taxes into the Customs Department is actually true and correct,” said Straughn.
“Through a number of those post-clearance audits it has been revealed that some persons have submitted information, invoices that have been altered in some instances, which is in effect tampering with the report in the context of what is here. That is done to avoid the level of taxes that one would ordinarily have to pay,” he said.
Straughn, who opted not to give further details on the matter, did not disclose how many companies or individuals were guilty of the practice, the period for which the discrepancies were discovered or how much taxes Government likely forfeited as a result of the information tampering.
However, he suggested that the relevant corrective measures were being pursued.
“Having recognised that is an issue for some people, as you would appreciate the process you would expect that having discovered it, the department then obviously would seek to rectify the issue and seek to recover the said taxes that would be due and owing to the department,” he said.
The Customs Act, which was passed earlier this year, makes provision for fines ranging from $50,000 to $150,000 or three times the value of the goods, whichever is greater, against individuals who give false declarations or falsify documents, seals and stamps. It also makes provision for the option of jail terms.
“I think it is important for the public to appreciate that the provision of information to tax authorities is a very important requirement, and not just the provision of information but provision of the right set of information,” Straughn cautioned.
He was speaking in Parliament on Friday, as he introduced the Income Tax (Country by Country Reporting) Act, and while zeroing in on section four of that Act, which speaks specifically to offences, penalties and appeals.
The Income Tax (Country by Country Reporting) Act requires international enterprises earning $850 million in a financial year to report their revenue, profit or loss before income tax, income tax paid and accrued, number of employees, and tangible assets other than cash in each jurisdiction.
Locally, the Barbados Revenue Authority (BRA) will then be able to effectively exchange the relevant tax information with the other countries in which the firm operates.
Under this Act, an individual who is found guilty of knowingly submitting a false country-by-country report is liable on indictment to a fine of $50,000 or imprisonment for a term of ten years, or both.
Someone who is found guilty of tampering with reports is liable on conviction to a fine of $10,000 or imprisonment of one year, or both.
The Act also makes provision for a pecuniary penalty of $10,000 on an enterprise that fails to comply with the filing of a country-by-country report; fails to give notification to the competent authority; fails to meet the deadline for filing the report and who fails to maintain records.
Failure to pay the pecuniary penalty will attract an additional charge of $5,000 “for each day or part thereof for which the failure continues after the date on which the original pecuniary penalty became due and payable”.
Straughn said he expected that individuals who do not comply with the Income Tax (Country by Country Reporting) Act would pay the price as outlined by the law.
marlonmadden@barbadostoday.bb
