Within the exciting detail of last night’s Budget, the Government has announced a restructure to the import processing charge (“IPC”) to recover the cost of all import related cargo and trade functions undertaken by the Australian Customs and Border Protection Service (“Customs”).
According to the various commentaries, the increases will be as follows.
- For consignments valued over $10,000 the IPC for electronic sea import declarations will be increased by $102.60 to $152.60 per consignment.
- The IPC for electronic air import declarations will be increased by $81.90 to $122.10 per consignment.
- For consignments valued over $1,000 and up to $10,000, the IPC will remain at current levels, being $50 for electronic sea import declarations and $40.20 for electronic air import declarations.
- The IPC will continue not to be applied to consignments valued at $1,000 or less.
The new charges will come into effect on 1 January 2014.
According to information from Customs, the increase to the IPC will result in additional revenue of $674.3 million over 4 years and will be implemented in accordance with cost recovery policy adopted by the Australian government.
It would appear that Government may be asserting that all its costs have not previously been recovered from importers and that new charges are necessary to recover all services provided. Alternatively, the increases would suggest that the recent reform to anti-dumping regulation and the new measures against crime in the supply chain are the cause of this significant increase in costs for all parties involved in import.
Not only will this be a significant additional impost for importers, it will also be a significant additional impost for exporters who import many of their inputs to manufacture. While there is never a good time to impose additional processing charges, given the state of the economy, these additional costs will make life very difficult for importers, exporters and their service providers who will need to pass on these charges.
The retention of the IPC at current levels for consignments between $1,000 and $10,000 and the failure to impose IPC on consignments below $1,000 may also lead to additional pressure on importers and service providers in determining the value of consignments and the associated IPC.
The next question is how the increases have been calculated and whether increased charges mean improvements to services.
We will keep you informed of developments but suggest that those of you who are service providers should pass details of this increase in charges to clients immediately so that they are aware that these are increased charges imposed by government and not by the service provider.