A number of incorrectly entered customs import tariff codes may have resulted in people being overcharged for goods brought to the Cayman Islands, Finance Minister Marco Archer said Friday.
According to Mr. Archer, who spoke about the issue in a statement to the Legislative Assembly, the extended tariff code list – which took effect in March 2014 – resulted in nearly 200 pages of dutiable items being added to the Customs Law.
The harmonized tariff code system now used by government lists 5,000 items which are charged various rates for importation.
“The customs department and the Ministry of Finance … have found a number of instances where, during the exercise of inserting the 5,000 tariff codes into the law, some of the duty rates were incorrectly transcribed or excluded from the law,” Mr. Archer said.
Mr. Archer said the law is being “periodically reviewed” by Cabinet, which has been amending the law to correct “errors and anomalies.”
The finance minister gave several examples where the law was amended to reflect the actual duty rates:
Netting and fencing: The duty rate should have been listed as 17 percent, not the 22 percent standard duty as was listed
Mowers for lawns, parks or sports grounds: These were charged the standard 29.5 percent duty rate for vehicles, but should have been charged 22 percent standard rate
Fork-lift trucks and other trucks fitted with lifting or handling equipment: Import duty was 29.5 percent, not the correct rate of 22 percent.
In other cases, the law is being changed to assign specific tariff codes to imported goods, Mr. Archer said.
For instance, tequila does not have a specific tariff but is listed as “undenatured ethyl alcohol of an alcoholic strength by volume of less than 50 percent.”
Mr. Archer said the changes to the customs tariff code are not being made as an opaque attempt to raise taxes.
“The amendments … are solely being made to regularize and correct the errors and anomalies that have been identified in the law,” he said.
Financial Secretary Kenneth Jefferson was contacted Monday about the potential to refund any potential overcharges from the earlier duty rates. “It is a legal requirement to have the duty collected at the rate specified in the Customs Tariff Law,” he said. “There shouldn’t be a presumption that refunds are automatically due.”
When it was initially introduced, the much more lengthy harmonized tariffs list led to some criticism among members of the Cayman Islands Chamber of Commerce who feared more paperwork and hassle in order to pick up imported items.
However, more than a year later, local merchants said they have either mastered the system or have farmed out the handling of imports to third-party service providers such as the Cayman Islands Customs Agency.
“We’ve been preparing for it for quite some time,” Foster’s Food Fair IGA Managing Director Woody Foster said Monday. “As long as everything [Foster’s has ordered] is in the computer, it should be fine. I haven’t heard any complaints.”
Other importers, such as CEL distributors and Naughty Distributors, use private customs importers to deal with their orders.
“This stuff is just too complicated,” said Prentice Panton of Naughty Distributors, who added that time taken going through the paperwork required to comply with the harmonized code system is substantial.