Developments of Afghan Customs Department
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- Claude Welch
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1 Developments of Afghan Customs Department Tax and Customs administration reform was and is high on the agenda of the government. Mobilization of fiscal resources is essential for a prudent fiscal management of the government finance, even as donor funding continues to act as the main instrument for development. In order to meet the twin objectives of providing protection to society and raising revenue to fund government s operating expenses and as a means of achieving fiscal sustainability, it is necessary to develop an efficient and accountable customs service. To address the needs for timely changes in policies, and activities emanated from internal and external economic forces, Afghanistan Customs Department (ACD) embarked on a major restructuring process in both policy as well as operational fronts. Policies and activities of ACD were very critical in creating an environment that will facilitate trade and Investment and make a major contribution to the economic and social development of Afghanistan. A reform activity was initiated in Afghan Customs department in the year It gained momentum in the successive years and some major Milestones were achieved in recent years. Some of the more important ones are narrated below: Major Achievements: a) Progressive Revenue collections Customs revenues have increased considerably due to Consistent reforms activity in the Afghan Customs department. In year 1383 the Revenue collection was 7.75 billion AFS, in year 1384 it was billion AFS, in year 1385 the collection was 15.5 billion AFS, in year1386 the total revenue collection was Billion AFS and revenue collection in year 1387 was19.64 Billion AFS. The total revenue collected in the year 1388 is Billion AFS and it is expected that the revenue will further surge if consistent reforms activity persists in Afghan Customs department. b) Legislative and Procedure Development: A modern Customs Law was enacted based on international best practices of Customs. The Law covers all Customs operational and legal needs. The Customs Law is being revised as per the Interim ANDS strategy and Strategic Five year Plan of ACD. A team of Customs legislative experts are finalizing the necessary changes as per the identified objectives of I-ANDS, International best practices and MOF strategy. The 27 Customs procedures were finalized, approved and circulated to all regional Customs for implementation. The Exemptions regime has been revised and a new Exemption procedure with more checks have been drafted, approved and implemented. The temporary Admission procedure has been developed and approved. Different future projects have been identified for Legislative and procedural development for aligning the Customs operations for ASYCUDA implementation as well as international Best Practices. The latest version HS 2007 of Harmonized System of classification of goods (HS- 2007) has been successfully implemented in Afghan Customs. The latest version HS
2 2007 has been provided in both Dari and English Language. A well organized broker program has been implemented nation wide. c). ASYCUDA Implementation (Automation): Automation is the base for the customs reforms and trade facilitation. It does not only speed up the processing of the customs documents but it also reduces physical interaction between officer and traders. The Automated System for Customs Data (ASYCUDA) software designed by the UNCTAD for automation of customs processes has been introduced in the ACD. This has already resulted in enhanced revenue collection and compliance. ASYCUDA Transit module has been implemented at 5 major Transit routes. Recently Sher Khan Bandar-Kabul and Hairatan Mazar - Kabul routes have been operationalized for ASYCUDA transit module. The ASYCUDA Declaration Processing module has been implemented at Jalalabad, Herat, Sher Khan Bandar, Kabul Customs, Nimroz & Kabul Airport and arrangements for introducing Declaration Processing System (DPS) at Mazar Customs have been finalized. In the coming years, the rollout of all modules of ASYCUDA is planned at all ACD customs stations. The implementation of ASYCUDA has resulted in Revenue enhancement and trade facilitation as revenue leakages have been minimized and clearance times reduced significantly. d). Capacity Building The ACD does have the single most valuable resource as is in every customs administration that resource is now and always will be the customs officers or more specifically the collective knowledge of the members of the organization. This collective knowledge is a capital asset of the organization and like all assets must be properly maintained and expanded. A MOU has been signed with MOI for sharing the Modern Training Institute for imparting training on Customs laws, procedures, Tariff classification, Valuation, ASYCUDA and so on, to Customs officers from all regions of the country. In the year 1388 about 1235 employees/ officers of ACD were imparted training on customs laws, Tariff, valuation, drug interdiction, anti-smuggling, precursors, Ozone depleting substances (ODS) and ASYCUDA operations at the Customs Training Institute. Additionally different foreign trainings were attended by the ACD officers. In the future strategy, specific focus on Capacity building has been made. A Knowledge Management Unit has been established at ACD head quarter and will be working on Training Need Assessment, Training Plan and development of training Modules. The Knowledge Management Unit will also provide Customs trainings for head quarter and regional Customs station. e). Construction and Improvement in Customs Facilities: To improve the working/operational environment of Customs sufficient attention has been given to build infrastructure facilities for Customs. The new building of Afghan Customs Department Head Quarter at Kabul has been completed. The main Customs Building at Tourkham has been completed, a cargo 2
3 scanner has also been installed at Tourkham. Construction / renovation work at Jalalabad, Tourghundi and Mazar has been completed. The new Customs building at Hairatan (Phase I) and Sher Khan Bandar has been completed. The construction of customs building at Islam qala and Nimroz are in progress. The Construction work at Weish ( Canadian Embassy) and Khost (World Bank) Customs Station will soon be started. Cargo handling equipment worth 2.4 million US$ are being procured for facilitating the Customs operations at various Customs stations. A huge amount of money is being allocated for construction/renovation of Customs facilities in the Strategic Five year Plan of ACD. f). Enforcement: To develop the enforcement wing of ACD an Enforcement Directorate was created at ACD. The enforcement Directorate has now seven operational Mobile verification teams in different regions. The enforcement activity is picking up and numbers of seizures have increased. All Mobile teams have been connected through the communication/ wireless system. A comprehensive reforms and restructuring activity have been undertaken in the area of enforcement. The focus of reforms in enforcement directorate is on Intelligence Based interdiction without creating hindrances to legitimate trade. h). Combating Corruption: A multi pronged strategy has been devised to combat corruption amongst the ACD ranks. This includes focus on HR management, Performance based rewards, revised pay structure, transparent recruitment and posting mechanism, formulation of integrity unit, powers for disciplinary actions against corrupt officials etc. This strategy also involves specific focus on the strengthening Enforcement, functionality of Customs Labs, and Audit mechanism of ACD. The structure for the reformed audit teams has been prepared by ACD.The operational mechanism and reporting formats were also prepared. The Post Clearance Audit has been established in eight major Customs stations. The valuation data base has been developed, updated and the new values of the goods communicated to the regional customs stations. The ASYCUDA valuation module (for top two hundred revenue earning commodities) and international transit module are ready for implementation and will be implemented in near future. i). Strategic Planning of ACD: The ACD five year Plan ( ) was finalized after a detailed exercise involving national and International advisors, ACD Directors and above all the senior Management of ACD. The Finance Minister approved the Strategic Plan on Nov 15, The work on the reforms project has been initiated. The Strategic focus of the ACD strategic plan is in line with Interim Afghan National Development Strategy (I- ANDS) as well as Ministry of Finance Strategic Plan. The annual plan for year 1388 has been developed for Afghan Customs Department with specific benchmark. 3
4 j) WCO Membership: The Afghanistan is accepted as a full member in the World Customs Organization and is now participating in all activities. Additionally ACD is also coordinating the customs and trade facilitation related activities of the regional and International organizations such as SAARC, ECO, CAREC, WTO and WCO. k) Trade Facilitation: The approach of the reform is not to confront the trade but to enter into a partnership with them for better voluntary compliance of laws. This will benefit the traders by reducing their transaction costs. For the purpose the exclusive customs website has been developed, having all the relevant information. Additionally, the complaints and grievances of the trade also need to be addressed and for this purpose, definite organizational setup of help desk has been established at all regional customs directorates. The Appeals Unit has been formulated at ACD headquarters, where decision taking place regarding the issues and problems to customs clearance and customs operations. Their grievances are heard and accordingly policy actions are taken. The cargo handling equipment of 2.4 million USD has been procured to facilitate the trade. Problems / Challenges: Interference of border police in customs operations. Interference of provincial authorities in recruitments of ACD officials. Interference of provincial authorities in customs operations. Bonded carrier procedure could not be implemented due to non cooperation of other ministries and the transporters /freight forwarders. The non availability of customs laboratories in the customs houses is causing severe loss of revenue as correct classification of goods is not being done. Operational budget of ACD needs to be increased based on its essential needs. Absence of permanent training machinery in ACD. Non availability of specialized training module/curriculum of training. Weak Enforcement Machinery of ACD. Recommendations: Provision of Cargo Handling Equipment in the regional Customs stations to improve the performance of Customs officers. Establishment of Customs Laboratories in the border customs stations and main inland customs stations. Implementation of a livable wage & rewards mechanism for a motivated work force. Establishment & support of a well organized post clearance audit mechanism within ACD, for reduction of tax fraud and revenue leakages. 4
5 Reforming and revitalizing the enforcement regime of Afghan Customs Department. The authority of hire and fire should be given to Afghan Customs Department for good governance of the regional customs station. Providing necessary infrastructure facilities and equipments at all customs stations for effective customs operations. The Reform Implementation committee has been approved by the minister and H.E the minister will chair the committee. This committee needs to be used for regular monitoring of the yearly plan and benchmarks for ACD and strict action against the Corrupt and weak officers. For proper control and to cover all regions, the share of Customs Tashkeel should be enlarged. The training activity and HR policy making is now under the MoF administration, so effective coordination between MoF administration department and ACD is very essential to develop successful training policy. A multi ministries meeting needs to be organized (MOF, MOCI, and MOT) along with representatives of traders brokers, transporters and freight forwarders to help implement the bonded carrier procedure and International Transit module /Inland Transit module of ASYCUDA. Technical Assistance in the Customs Department: S.No Donor Activity Fund 1 World Bank (Emergency ASYCUDA implementation Customs Modernization Legislation & Trade Facilitation Support establishment of the project) Near freight forwarders association ( completion AFCCO), the National Trade and Transit Facilitation Committee ( AFPRO) and the Afghan National Standardization Authority (ANSA) Infrastructure Building and communication 2 World Bank (Emergency ASYCUDA extension and Customs Reform and migration, including infrastructure Trade facilitation Support to new Audit-based project) proposed activities Implementation if Risk Management Address governance and corruption issue Deployed Enterprise Resource Planning (ERP) and office automation. 3 USAID, Chemonics Trade facilitation-regional 5
6 International, TAFA Opportunity Zones (ROZs), Customs technical training Out reach program 4 Canadian Embassy Construction of Customs building at Weish Equipment and capacity building initiative 5 Japan Embassy Construction of Customs Building at Aikhamum, Takhar 6 Border Management Construction of Customs building Task Force (BMTF) at Weish and Islam Qala Mentors at Torkham and Herat Support for training, including funding of three years accommodation at Ministry of Interior training facilities 7 European Commission Construction of Torkham, Sher Khan Bandar and Hairatan border customs Stations Provision of cargo scanning equipment 6
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