ENG-2003 — Page 392

PUBLIC ORDER

332

The department also enforces legislation to protect consumer interests, safeguard and facilitate legitimate trade and industry, uphold Hong Kong's trading integrity and fulfil international obligations (See also Chapter 5).

Revenue Collection

The department is responsible for the collection of excise duties derived from dutiable commodities stipulated in the Dutiable Commodities Ordinance. These are liquors, tobacco, hydrocarbon oil and methyl alcohol. During the year, the excise duties collected amounted to $6.48 billion, of which 53.5 per cent came from hydrocarbon oil, 34.2 per cent from tobacco, 12.2 per cent from liquors and 0.1 per cent from other alcohol products, representing a decrease of 2.35 per cent over 2002.

The department also assesses the taxable values of motor vehicles under the Motor Vehicles (First Registration Tax) Ordinance for the purpose of levying first registration tax. In 2003, the department registered a total of 46 motor traders and assessed the provisional taxable value on 36 536 vehicles.

Revenue Control

Dutiable commodities in Hong Kong are stored in warehouses licensed by the department (bonded warehouses) after import or local manufacture. Removal of dutiable commodities is subject to a permit being issued by the department, and the commodities can only be released for local consumption upon payment of duty.

Before April 1, 2003, the bonded warehouses for dutiable liquor and tobacco operated under the physical supervision of the department while the oil companies' and breweries' warehouses adopted the open system whereby no physical supervision by the department was necessary. The Government proposed in 2002 to phase out the physical supervision requirement with an open system, which control is based on risk. management strategies including stricter licensing criteria, random checking, documentary verification, as well as post-transaction auditing. The proposal had the general support of the trade. The necessary legislative amendments were passed by the Legislative Council in February 2003 and the open system was implemented with respect to all liquor and tobacco bonded warehouses from April 1, 2003 and to distilleries bonded warehouses from October 1, 2003 onwards. The system has introduced a more flexible business environment for the warehouse operators and reduced their compliance cost.

Revenue Protection

To strengthen its work in revenue protection, the department has installed an Immigration Control Automation System at control points since February 2003 to verify the eligibility for duty-free concessions of incoming passengers travelling on Hong Kong Identity Cards. As provided for by amendments under a Dutiable Commodities (Exempted Quantities) Notice in July 2002 (Dutiable Commodities Ordinance, 109G), an incoming passenger aged 18 or above who travels on a Hong Kong Identity Card and has spent 24 hours or longer outside Hong Kong is eligible for the concession. Officers of the department stationed at control points can use the system to check quickly whether a passenger is eligible for the concession. The system has enhanced the efficiency and effectiveness of enforcement against abuse of the duty-free concession. In 2003, 53 228 incoming passengers declared possession of excessive duty-free goods and 1 547 passengers were arrested for undeclared excessive duty-free goods, representing increases of 133.4 per cent and 162.6 per cent over 2002.