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Customs basics: why does Customs exist?

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The purpose of a Customs Administration is to control the flow of goods going in and out of a country. Control can focus on security, taxation or other matters. The following video tells you more about how customs work.

Customs Administrations traditionally focus on the financial aspects of the import and export of goods. Import duties may be imposed on certain goods in order to protect the domestic market. Following the events on 9/11, a considerable focus on security was added. Governments now want to know more about the safety and security of the goods entering and leaving their countries. In addition, the old procedures that focused on fiscal aspects had to be changed or amplified to adapt them to the new security requirements. For example, fiscal examination of goods can be done without risk somewhere in the inland of a country, as long as the nature of the goods cannot be influenced, whereas security control of goods always has to be done at the border of a country to prevent dangerous goods entering your territory.

Customs security

In a nutshell, EU customs procedures work as follows. When goods are being brought into the EU, for example on a containership, the security data of the goods aboard have to be filed at the first port of entry in the EU, even before the goods are loaded on the vessel at the port of departure. The EU security authorities have the option to prevent the goods of being loaded. This procedure does not yet apply to all modes of transport, but will do so in the future. To organize this kind of security controls, the EU has set up the Import Control System or ICS.

Customs taxation

In our globalized world, where all major transactions are recorded digitally, physical checks on goods have become far less important than they used to be. Customs traditionally want to inspect incoming goods and see what their nature is. This is important, because the material a good is made of/from or the specific aspects of the good determine what kind of good it is and whether import duties have to be paid, and if so, how much. However, nowadays goods are always described digitally, for example in a company's warehouse management system, which often provides more relevant information than taking a traditional sample would. For this reason, customs can often make better tax reviews based on a company’s (digital) paperwork than on the basis of its inventory. One could even make a case for a situation in which there are no longer any physical checks of goods for fiscal reasons. The tax declarations that are needed for these purposes are made in the fully automated digital customs declarations systems.

Sanitary and health inspections

Ensuring conformity with sanitary and health regulations for food and animals is of growing importance for societies throughout the world. The uncontrolled transport of insects from one side of the globe to another is a growing concern, as they can cause diseases that have not been seen before in new regions of the world. Also the quality of foodstuff of any kind is an important task for the government. In general these checks have to be done by customs at the borders of a country in order to prevent goods from entering the territory. Many countries have their own declaration systems for health and sanitary controls. They typically function separate from other systems and thus form a bureaucratic system of their own.

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