Gov’t proposes consumption tax collection at customs clearance

[Photo: Yuki Lei]

The government is proposing to amend the Consumption Tax Regulation to allow tax collection directly from importers’ bank accounts at the point of customs clearance.

The Legislative Assembly’s (AL) second standing committee has held a closed-door meeting and signed the opinion report on the draft amendment to the Consumption Tax Regulation. The bill will be scheduled by the AL president for plenary detailed deliberation and a vote, and, if passed, will take effect on September 1 next year.

According to a press briefing after the meeting, committee chairman Ip Sio Kai told reporters that the draft amendment proposes introducing a “payment-at-customs-clearance” system. “Even if the goods are not imported, the license can be cancelled immediately and a new license can be applied for,” he said.

Under the system, when products are actually cleared through customs, the Economic and Technological Development Bureau (DSEDT) will collect the corresponding tax from a pre-opened bank account based on the actual quantity imported, without the importer having to pay consumption tax to the bureau in advance.

“The introduction of the payment-at-customs-clearance system should help improve the business environment,” he said, adding that the move was expected to eliminate the need for tax refund procedures when goods are short-shipped or fail to arrive in Macau, thereby reducing the administrative burden and financial pressure on businesses.

Notably, under the existing regulations, importers of dutiable alcoholic and tobacco products are obliged to settle the applicable consumption tax at the time of their license application with the DSEDT. Should the consignment fail to arrive in Macau or arrive in quantities below those declared, the importer must navigate a complex refund procedure, resulting in tied-up capital and reduced liquidity.

Ip noted that under the existing Consumption Tax Regulations, refunds typically take around 15 days, creating cash flow difficulties for importers.

“Previously, if a shipment was not imported, the license had to be cancelled, but the payment remained outstanding. If new goods needed to be imported, another payment was required – so there was significant pressure on the importer’s working capital,” he explained.

Importers will be required to pre-authorize their banks to block and deduct funds under the new consumption tax system. When an import license is applied for, DSEDT will instruct the bank to block the tax amount, with the final transfer made upon actual clearance. The committee has asked for clear rules to govern the process. If the electronic system fails, Customs will allow the goods to be released upon notification from DSEDT.