Now software to select import-export audits, spot irregularities

The customs authorities are going to introduce a software-based system to select which imports and exports need to be audited to find irregularities. 

To accomplish this, at least 27 specific criteria will be set, upon which the software will automatically select import-export files for auditing. 

A system-based audit manual has been prepared for the first time to this end, which is expected to be published in a gazette this week, according to sources at the National Board of Revenue (NBR).

The new system will broaden the scope of audits, the sources said, adding that the NBR has already acquired the software. 

Besides, the manual specifies the timeline within which each government agency is responsible for seeking explanations and collecting applicable duty, tax, and penalties in cases of post-audit irregularities.

In their initial response, traders expressed concern, stating that they would not tolerate any harassment under the guise of automation.

Siddiqur Rahman, former president of Bangladesh Garment Manufacturers and Exporters Association, told The Business Standard that he supported the use of automation to bring irregularities and cheaters to justice.

"We won't accept a selective automation approach that combines automation and manual processes to cause deliberate harassment," he emphasised.

However, Md Neyamul Islam, head of the committee responsible for crafting the audit manual, informed TBS that the manual had been developed in accordance with World Customs Organization guidelines and adheres to the best international practices.

"After the software selects the files for audit, the NBR's risk management unit will determine the audit's scope, encompassing all relevant information about the organisation in question," he explained. 

Furthermore, this manual outlines the procedures for post-audit revenue collection and penalty enforcement, he added.

Md Farid Uddin, former member of the NBR, welcomed the new move. 

He, however, told TBS "The success of this initiative depends on seamless real-time data sharing among all NBR departments, including VAT and tax. Without such integration, it may not yield the desired results."

Audit if prices manipulated

The software will detect if the invoice of imported goods shows a lower price than that of the exporting country, according to the audit manual prepared in August.

The software will consider previous product exposures, sectors with revenue below potential, companies with significantly lower revenue compared to the previous year, and those engaged in both local sales and exports.

The software will target products prone to tax evasion, those with a total tax incidence of 100% or more, companies with rebate facilities, a history of misdeclaration or revenue evasion, substantial government debts, high refund amounts, inconsistent export-import ratios, different exporter and negotiating bank, price variations for the same product, and deviations from supplier business profiles. 

Additionally, audits may be initiated for entities having relationships with suppliers or importers, incongruent goods with importers' businesses, incorrect customs procedure codes, unfulfilled conditions, amended import LCs, and invoice values not complying with customs rules.