Audit report: Customs recommended to demand for import vehicle duty shortfall immediately

KUALA LUMPUR: The Royal Malaysian Customs Department (Customs Dept) must make a claim for the customs duty shortfall amounting to RM5.92 million on new and used imported vehicles immediately.

According to the Auditor-General's Report 2020 released today, an audit review of 669 samples of Form K1 found that the value of imported vehicles declared in 28 forms was significantly undervalued by RM2.58 million, causing leakage of customs duty revenue.

This happened due to the mistake of the customs agent in making the import declaration and the weakness of the Customs Dept when the import approval was given, including the vehicle model that was declared wrongly.

According to the report, the physical examination by the inspecting officer was also not done carefully.

Audit checks on the chassis numbers for 12 imported vehicles stated in Form K1 found them to be different from the actual model registered with the Road Transport Department.

The customs agent also did not state the exact model of the vehicle during the declaration in Form K1 involving the value of the vehicle amounting to RM0.94 million and the total customs duty paid amounting to RM1.73 million.

Further review found that the actual value of vehicles as per the Federal Government Gazette according to the vehicle model for the eight declared import transactions was RM0.57 million compared to RM2.61 million that should have been declared.

Therefore, the audit recommends imposing fines as per Section 133, Customs Act 1967 (Act 235) on vehicle importers who make inaccurate declarations/pledges in Form K1 and an investigation into whether customs officers were negligent in approving vehicle import transactions should be carried out.

In addition, the Verification and Profiling branch, Technical Services Division shall conduct periodic physical inspections and review vehicle importer risk assessment reports to ensure that import duty collection is accurate.

For 2019 and 2020, customs duties on private imported vehicles contributed RM6.22 billion or 7.7 per cent of the Customs Dept's total revenue of RM80.60 billion.

Up till July 2021, the Customs Dept had not made any claim on the customs duty shortfall amounting to RM4.01 million.

The rate of duty or tax calculated is stated in the Customs Duty Order 2017, Excise Duty Order 2017 and Sales Tax Order 2018.

The rates for import duty are five per cent to 30 per cent, excise duty between 60 per cent and 105 per cent and import sales tax between zero and 10 per cent.

-- BERNAMA