Gov’t aims to facilitate duty payments for importers of liquor, tobacco products

[Photo; Renato Marques]

The government is aiming to amend the current regulation on the consumption duty paid by importers of liquor and tobacco products.

On the line is a simplification and digitization of the procedures, which officials said are intended to improve government efficiency and benefit importers regarding duty payment timing.

As explained yesterday morning in a presentation by the Economic and Technological Development Bureau (DSEDT) together with sector representatives, which was aimed at collecting opinions on the amendment, the changes do not affect the tax rate but instead aim to promote two main procedural changes.

As further explained by the head of DSEDT’s External Trade Division, Lo Tsz Man, the first change is related to the timing of when importers need to fulfill duty payments, and the second main change is related to the increase in the speed of duty refunds.

Lo explained that, unlike the current situation, where importers must pay the duty in advance while applying for the import license, the new system aims to defer this payment until the merchandise arrives in Macau and undergoes customs inspection and clearance.

She noted that by doing so, companies will benefit from cash flow, as the money would not be retained by the authorities during the time the goods are being shipped.
At the same time, license cancellations or reductions in the quantities of imported products will result in an easier duty adjustment.

She explained that in cases where the quantity of goods or products arriving is lower than the quantity initially declared for licensing, a duty adjustment and refund are required and can take some time. In the new system, which requires a bank account and authorization for the government to hold, transfer, release, and refund amounts, the process is almost automatic and follows the information collected by the Customs Service (SA) at inspection and clearance.

Previously, in an initial presentation of the government’s intention with the amendments, DSEDT director Yau Yun Wah said that the purpose is administrative simplification, aimed at also benefiting local small and medium enterprises, which will not have to fulfill so many administrative procedures and see their funds retained for longer than necessary.

At the moment, the amendments are in public consultation until March 15, with the government aiming to hear the sector to refine the procedures before entering the final stage of the legislative process.

In the session, several representatives from the sector expressed their opinions, and while in general the importers and trade representatives agreed with the facilitation of the procedures, they claimed that there are still some issues to solve regarding specific aspects of the industry, namely tobacco products.

As a representative from the sector mentioned, companies applying for an import license must submit quantities in units and weight, which, he said, sometimes causes problems due to humidity and other factors. When the product arrives in Macau, it weighs more than previously stated.

For this issue, the DSEDT did not provide a clear solution, recommending that importers “overstate” their order by default so that, on arrival, the quantities do not surpass the licensed quantities; otherwise, the SA will not be able to handle the issue.

Another representative from the trade sector also expressed concerns about the stated price of the goods, on which the duty is based. He said there are often large price discrepancies among suppliers, making it difficult to find a fair price for the same product.

In response, Lo said that the DSEDT, under the foreign trade agreements with other counterparties, evaluates these prices against the product’s average price in other taxing jurisdictions, intervening only when the stated price is very divergent from this average.
In Macau, the consumption tax applies to three groups: Group I – Fuels, Group II – Liquor, and Group III – Tobacco products.

The DSEDT noted that in this amendment, only Groups II and III will be targeted, and no changes will apply to fuels.

Officials also clarified that the banking order only needs to be done once and will apply to all licensing, or, if the company chooses, for a set period, with the bank account serving as a deposit, trust, and payment fund for all procedures. As Lo noted, most importers of this type of good typically process an average of 100 licenses per year.

Officials also explained that, contrary to the customs duty, the consumption duty also applies for these types of products if they are produced locally, being exempt only for products sold in “Duty Free” stores or products that will be re-exported to other countries or regions via Macau within six months.