World Customs Journal September 2012 Volume 6, Number 2 International Network of Customs Universities World Customs Journal Published by the University of Canberra, Australia and the University of Münster, Germany in association with the International Network of Customs Universities (INCU) and the World Customs Organization (WCO). The World Customs Journal provides a forum for customs professionals, academics, industry researchers, and research students to contribute items of interest and share research and experiences to enhance its readers’ understanding of all aspects of the roles and responsibilities of Customs. The Journal is published electronically and in print twice a year. The website is at: www.worldcustomsjournal.org. Guidelines for Contributors are included at the end of each issue. More detailed guidance about style is available on the Journal’s website. Correspondence and all items submitted for publication should be sent in Microsoft Word or RTF, as email attachments, to the Editor-in-Chief: [email protected]. ISSN: 1834-6707 (Print) 1834-6715 (Online) Volume 6, Number 2 Published September 2012 © 2012 University of Canberra, Australia and University of Münster, Germany Both universities are founding members of the INCU, an association that provides the WCO and other organisations with a single point of contact with universities and research institutes that are active in the field of customs research, education and training. Copyright. All rights reserved. Permission to use the content of the World Customs Journal must be obtained from the copyright owner. Please apply to the Editor-in-Chief. Disclaimer. The views expressed in the World Customs Journal are those of individual contributors and are not necessarily those of the Editorial Board, the INCU, the World Customs Organization or its individual membership, or the publishers. ii Volume 6, Number 2 World Customs Journal Contents Editorial ............................................................................................................................................... v SECTION 1 – ACADEMIC CONTRIBUTIONS Production, holding and movement of excise goods under duty suspension within the European Union Harald Jatzke ............................................................................................................................... 3 The legality of non-harmonised excise duties in the European internal market using the Federal Republic of Germany as an example Sabine Schröer-Schallenberg ....................................................................................................... 9 Trade in goods subject to excise duties which have been released for consumption in other Member States Matthias Bongartz ...................................................................................................................... 19 Tackling cigarette smuggling with enforcement: case studies reviewing the experience in Hungary, Romania and the United Kingdom János Nagy ................................................................................................................................. 29 The linkage between tax burden and illicit trade of excisable products: the example of tobacco Adrian Cooper and Daniel Witt .................................................................................................. 41 Excise taxation of non-alcoholic beverages in Thailand: products, approaches, rates and administration Rob Preece .................................................................................................................................. 59 The role of bilateral and regional trade agreements in the modernisation of taxation and revenue policy in developing economies Leigh Obradovic ......................................................................................................................... 73 SECTION 2 – PRACTITIONER CONTRIBUTIONS Rethinking Customs’ procurement practices to deliver improved business outcomes Tom Doyle ................................................................................................................................... 95 Trade risk management: a global approach Lorraine Trapani ...................................................................................................................... 101 Changes to the role of US Customs and Border Protection and the impact of the 100% container scanning law Trang Nguyen ........................................................................................................................... 109 SECTION 3 – AN EXCISE RESOURCE SUMMARY The Illicit Trade in Tobacco Products and How to Tackle It Elizabeth Allen .......................................................................................................................... 121 SECTION 4 – REFERENCE MATERIAL Guidelines for Contributors ........................................................................................................... 133 Editorial Board................................................................................................................................ 134 Volume 6, Number 2 iii International Network of Customs Universities iv Volume 6, Number 2 World Customs Journal Editorial In June this year, the World Customs Organization (WCO) held its first conference to discuss the administration and enforcement of excise tax, in recognition of the fact that excise duties represent a significant component of government revenue across the globe. Revenue authorities and the academic community have been encouraging the WCO to focus on this neglected area of revenue administration for several years, and not surprisingly, the conference was well attended, attracting some 160 participants from over 60 countries, including representatives of international organisations, government administrations, commerce and academia. An important subject for discussion at the Excise Summit was the increasing incidence of illicit international trade, particularly in relation to alcohol and tobacco products, and we are pleased to provide a useful overview of the topic in Section 3 of this edition of the World Customs Journal. Several of the conference participants are among the contributors to this edition of the Journal, and consequently we are able to bring you a comprehensive insight into current research in the field of excise, including tax policy, harmonisation of duty rates, the impact of trade agreements, excise duty suspension, illicit trade, compliance management and enforcement. Collectively, this represents a significant cross-section of the existing body of knowledge in this important area of research interest. We have also selected a number of practitioner articles which are likely to be of interest to a broad range of readers, including Tom Doyle’s commentary on the need to rethink traditional public sector procurement practices, with a particular focus on customs administrations. On behalf of the Editorial Board, I would like to thank our many contributors, and also our readership for your positive feedback and continuing support of the World Customs Journal which is about to enter its seventh year of production. David Widdowson Editor-in-Chief Volume 6, Number 2 v International Network of Customs Universities vi Volume 6, Number 2 Section 1 Academic Contributions International Network of Customs Universities 2 Volume 6, Number 2 World Customs Journal Production, holding and movement of excise goods under duty suspension within the European Union1 Harald Jatzke Abstract This article provides an overview of the duty suspension procedure under which excise goods can be produced, held and moved within the European Union (EU). The harmonisation of special excise duties in the European Union (EU) is well advanced. Member States are obliged to charge excise duties on energy products, alcohol and alcoholic beverages, and tobacco products. Since 1 January 1993, following the realisation of the internal market and the related abolition of border checks between Member States of the then European Community (now the EU), new legal rules allow trade in excise goods which have not yet been taxed. The examples included provide some guidance on the interpretation of current EU regulations. 1. Introduction The harmonisation of special excise duties in the European Union (EU) is well advanced. According to EU law, Member States are obliged to charge excise duties on energy products (mineral oil, natural gas and coal), alcohol and alcoholic beverages (beer, wine, intermediate products and spirits) as well as tobacco products (cigarettes, cigars, cigarillos and fine-cut tobacco). Since the realisation of the internal market on 1 January 1993 and the related abolition of border checks between the Member States of the European Community (EC) (now the EU), certain legal rules have been created which make it possible to trade in excise goods which have not yet been taxed. Since goods are stored and moved without duties being charged, there must be adequate supervision to prevent tax evasion. This is ensured by means of special procedures first established in Articles 4 (c) and 15 to 20 of the Directive 92/12/EEC.2 This was superseded by Directive 2008/118/EC3 (Excise Directive), which entered into force on 1 April 2010. Directives do not produce direct effect and are only binding in terms of their aims. Accordingly, Member States must transpose them into their national law. Member States therefore had to amend their tax legislation to reflect the aims of these