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Probing export trail tough under WTO rules

Under-invoicing and over-invoicing of export and import goods are major sources of money laundering.

TAX sharing information for customs-related fraud could get tougher under the new norms of the World Trade Organization (WTO).

The chapter dealing with “Customs Corporation” states that a country can defer or refuse to part with information regarding export details if there are domestic laws that prevent their release.

Under-invoicing and over-invoicing of export and import goods are major sources of money laundering. To track such funds,customs authorities often seek information from their counterparts on specifics such as details of the consignments,origin,valuation,bank account details etc.

To make things tougher,the new norm states,“The consent of the exporter is required by domestic law and legal system that govern the collection,protection,use,disclosure,retention and disposal of confidential information or personal data and that consent is not given.”

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Sources cited the recent case of gold imports from Thailand to India under the Free Trade Agreement (FTA),where the Directorate of Revenue Intelligence (DRI) had found that in order to avoid paying duty and exploit the benefits under FTA,importers used the Thailand route.

Initially,the DRI could not access information,since the provisions of FTA only requires the authorities to verify if the documentation is authentic. A source said the WTO agreement,by conceding the clause for provision for refusal of information based on domestic law,could seriously impinge the efforts to curb export frauds,which constitute close to 80 per cent of the money laundering.

“We should re-negotiate this clause to ensure higher level of information sharing since we are opening up the market. Otherwise,this clause,by leaving it open-ended will be exploited to refuse information on investigations,” the source said. The Income Tax Department has suspended benefits with tax havens that don’t cooperate in sharing information.

First published on: 03-12-2013 at 02:34:08 am
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