Benefits and Challenges of Bonds Management
- The following are the benefits accruing from the usage of Customs security bonds:
- It is sort of credit given to importers as their cash is not tied up in upfront tax payments, thus boosting their cash flow;
- It facilitates international trade, thus conforming to the tenets of the WTO Revised Kyoto Convention;
- It is convenient to manufacturers who import raw materials to manufacture goods for both local consumption and for export, thus boosting the growth of local industries leading to the creation of job opportunities;
- The secured revenue is easier to recover in case of fraud or tax evasion;
- Cargo clearance time is minimized, which is cost saving.
- Tax payment is delayed for a long time, thus denying the Government revenue;
- Guarantors giving unilateral notifications to Customs to their decision to withdraw from guaranteed security bonds to some principals and expecting Customs to exonerate/exempt them from liabilities already incurred;
- Use of forged/fake security bonds leading to loss of revenue;
- Difficulties in recovery of revenue from outstanding security bonds from Principals and Guarantors who have prematurely wound up;
- Tendency of most Guarantors to engage Customs in prolonged correspondences when called upon to honour demand notes on outstanding security bonds
- It increases Customs administrative costs.
Learning Activities
Suppose that you have been hired to a newly registered Clearing and Forwarding Company and you have been assigned the Head of Bonds Unit.
Required
Explain some of the measures that you will put in place to ensure compliance with Customs formalities and procedures.
Assignment
Bond security is one of the instruments provided by the Commissioner of Customs to facilitate trade.
Required:
- Differentiate between general bond and particular bond.
- Explain any three ways in which the usage of bond securities facilitates trade.
- Under what circumstances can the Commissioner require that the owner of goods deposits a bank guarantee.