In recent years, tax and customs administrations have significantly increased their focus on modernizing and optimizing customs audit processes. Central to this shift is the incorporation of advanced technologies such as blockchain and artificial intelligence (AI).

Historically, customs audits were manual, time-consuming and infrequent. The introduction of AI represents a major transformation in auditing approach, allowing customs authorities to more accurately identify high-risk taxpayers, unravel complex structures and flag inconsistencies in fiscal documentation. And by adopting digital processes, they can now conduct more frequent audits with enhanced precision. In countries such as Brazil, Mexico, and the United States, the focus is increasingly on the importance of having accurate trade data.

Strategic preparation for customs audits is not just about avoiding errors and penalties — it is also an opportunity for companies to improve their internal processes. By adopting a proactive approach to compliance, companies can streamline operations, reduce inefficiencies and help improve profitability. 

A culture of transparency and accountability is essential to achieving long-term success in this new environment. Companies that prioritize compliance will not only be better prepared for audits but will also be able to foster stronger relationships with authorities, customers and stakeholders.

Steps to prepare for enhanced audits

• Use data analytics to identify trends and potential areas of risk in import and export data.
• Integrate enterprise resource planning (ERP) and inventory control systems to avoid discrepancies with customs authority records.
• Use machine learning models to adopt a targeted approach to risk management.
• Have all required documents organized and readily available to present to customs authorities.
• Conduct regular internal audits to ensure ongoing compliance with customs regulations.
• Train key personnel responsible for customs compliance.

For more information about the increased use of technology in customs audits read Mexico Strategic Preparation for Enhanced Customs Audits in TradeWatch Issue 3 2024.

Additional information and links to past newsletters can be found in the attached PDF.