New trades and import tariffs and regulations to be implemented over the next three years will be published Monday in a 400-page document to appear in the Official Gazette.

The publication of the document forms part of the new Macro-Economic Reform Programme (Merp) launched in June, when it was announced that over the next three years, trades tax will be reduced on a periodic basis to between 0% and 10% on the majority of imported items, with the exception of tobacco, fuel, vehicles and alcohol.
Among other things, the document to be published today include reduced trades tax rates on 3,500 items imported into the country annually, shown for three different periods, namely from September 2003 to end of 2004, for the whole of 2005 and that of 2006.

Reductions to be applied throughout the first period are already taking effect on 200 items, including baby products, accessories for fishermen, canned fruits, powdered milk and others. 35 items out of the 200 now hold a 0% trades tax.
The periods of 2005 and 2006 will see more reductions on a wider variety of items, namely electronic appliances which will be reduced by half from 50% and construction materials, like cement and steel, and timber on which trades tax will be down by between 0% and 15%.
According Mr Ahmed Afif, the principal secretary in the Ministry of Economic Planning, the publication of the new tariffs would give members of the public an idea of how to better manage their spending.

He said that in the first period of reduction, consumers would not necessarily feel the impact of the new tariffs on the prices of commodities.
This, he said, is because with the introduction of the 12% GST (Goods and Services Tax) and other measures under Merp, the economy would be subject to an inflation rate of 7%. The impact of the reductions would only be felt in the periods of 2005 and 2006 when the inflation rate and the cost of living are expected to go down to around 3%, he said, adding
that this would be partly due to the susbstantial reductions in tariffs.
The new regulations also reflect measures being undertaken by the Trades and Imports Division to protect local industries and tighten loop holes in the system with the
introduction of new classification codes to prevent importers from by-passing the system. The Comptroller of Trades Tax and Imports, Mr Charles Morin, revealed that trades tax on imported products which were being manufactured locally such as soap, charcoal, pasta (excluding noodles), liquid and flavoured milk, Christmas and other greeting cards, fish and prawns, have increased by between 50% and 200%. The increases are taking effect immediately. However, trades tax on the basic materials being used in the making of some of these products are either in the process of being reduced or will be brought down.
Mr Morin also spoke about the incidence of cases whereby importers were taking advantage of certain weaknesses in the trades and import system to either make profit on some items like wheels and rims and to assemble second-hand cars.

He noted, for example, that tax on wheels was at 50% and that of rims at 5%. However, tax on the import of wheels with rims amount to 5% only.

Taking advantage of this, some importers were bringing in wheels with rims which carry a 5% tax, then went on to sell those two items on separate tax costs, Mr Morin pointed out.

In order to prevent this from recurring in the future, a new rate of 50% has been introduced for wheels with rims.

In the case of assembly of second-hand cars, Mr Morin said that given the restriction on the imports of such cars, importers were buying parts of a car under the spare parts classification, then proceeded with the assembly of the whole car. He said a new code for half-cuts has been introduced to deter that from happening. 

 

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