Provisional Values Scheme
With the introduction of the new Customs and Excise Act 2018 on the 01 October there is now the requirement to use Provisional Values on Imports, We have attached the Importers guide supplied by NZ Customs with the proviso that details shaded in grey have not yet been finalized, However we have also prepared the below summary which we trust will assist in navigating this document and deciding if you are required to apply for inclusion in the provisional Values scheme.
What is a Provisional value
A provisional Value is a value used at the time of importation by an importer that ;
• Cannot determine the Final value of their goods at Importation and
• The importer expects the Customs Value is likely to change post importation
If an importer can provide a customs value that will not subsequently change post importation then they do no need to use the Provisional values scheme.
Who should use the Provisional values scheme
There is an eligibility test under the new act for importers wishing to participate in the provisional values Scheme which provides for the following ;
1. Importers that have advanced pricing agreements, Transfer pricing arrangements or remit further proceeds to the seller for resale disposal or use of the goods
2. Importers that make valuation adjustments E.G. Royalties, or uplifts, which are Not Known at the time of import
3. Importers that get approval from Customs to use the provisional values Scheme
Importers who qualify under notes 1 or 2 above have grounds for automatic inclusion into the scheme but will still need to apply. Applications should be completed within 5 working days.
Importers who opt to apply under note 3 will also need to submit an application and cite the reasons why the final value cannot be provided at the time of importation, these applications should be completed within 30 working days.
What is the benefit of Provisional values scheme
An importer on the Provisional value scheme who adjusts their Final value post importation to more than the provisional value will not be charged compensatory interest on the additional crown revenue paid.
Importers not on the provisional values scheme who make similar adjusts to their customs value will be liable for compensatory interest on the shortfall in crown revenue.
What is involved in using provisional values
There are three components to the Provisional Values Scheme ;
1. Your initial registration to be part of the scheme and this is a one off application
2. Your import entries are lodged by us as the goods arrive and we note on the entries that you are part of the Provisional Values Scheme.
3. You provide NZ Customs with a final value within the prescribed time period of the Scheme and they will issue an invoice or refund
I currently have an agreed uplift with NZ Customs
The uplift scheme ceases to exist on the 01 October 2018 when the new Customs and excise act come into effect. For those importers who can provide a customs value that will not change after importation then they need not apply to join the provisional values scheme, However it is recommended that they regularly review their uplifts to ensure they are accurate.
For those importers who expect their customs value to change after importation then they should look to apply for inclusion in the provisional values scheme.
What questions should I ask about my business With the change in legislation coming into effect now is a good time for importers to review their importing models to ensure compliance moving forward and we suggest the following questions ;
• Am I currently in the existing New Zealand Customs Uplift Scheme
• Do I have a royalty or license fee agreement on imported products
• Does my business have a transfer pricing arrangement
• Do we have any advance pricing agreements
• Will we remit any further proceed to the seller for Resale Disposal or use of the goods
• Do I have any upcoming shipments or situations where I may not know the full value of the goods at time of importation E.g. A major project or capital item being imported
If the answer to any of these questions is yes then we recommend your contact your Mondiale key account manager or Customs broker for further discussion on this topic.