Tuesday, June 29, 2010
Classification and rates of customs duty on imports of different types of rice
A (UK) customs information paper on this topic is here
EU-China
High-level International Customs Conference EU-China, 1 - 2 September 2010 in Shanghai
The EU website states:
"Reconciling trade facilitation objectives with the need to safeguard the security of citizens, protect intellectual property rights and combat illicit trade is a core issue in the relationship between the European Union and China in the area of customs. A high-level International Customs Conference will explore this challenge from various geographical and sectoral angles focusing on EU-China." More
The EU website states:
"Reconciling trade facilitation objectives with the need to safeguard the security of citizens, protect intellectual property rights and combat illicit trade is a core issue in the relationship between the European Union and China in the area of customs. A high-level International Customs Conference will explore this challenge from various geographical and sectoral angles focusing on EU-China." More
Saturday, June 26, 2010
Free Trade Zone: Turkey, Syria, Lebanon, Jordan
Reprersentatives of Turkey, Syria, Lebanon and Jordan have signed an agreement to establish a trade co-operation council at the recent Turkish-Arab Economic Forum held in Istanbul.
The four countries intend to create a “zone of free movement of goods and persons.”
The four countries intend to create a “zone of free movement of goods and persons.”
Tuesday, June 22, 2010
Wednesday, May 05, 2010
Save customs duty using the customs rules to help you
Todays blog outlines how to use a key opportunity in customs valuation planning
A major yet significantly under utilised approach to reducing duties is to look at the customs valuation. A key provision in both US and EU customs law permits the customs value to be based on any earlier sale of the same goods in a chain of transactions prior to importation. For this reason it is variously described as the "prior sale", "earlier sale" or "chain of sales" opportunity.
They all mean the same thing, i.e. the opportunity to save customs duty! This opportunity will not be around for whole lot longer as the EU plans to change the law which permits it!
How does this work?
For example, if goods are sold by a manufacturer in the US for $60 to a US export company which, in turn, sells them to an importer in the EU for $100, duty can be paid on a value of $60, providing certain conditions are met. The savings achieved are the difference between duty on the £100 and the duty on $60. Savings of up to 40% on the duty costs are possible.
What are the benefits?
The chief benefit of the approach is to save customs duty by excluding the costs and profits attributable to the non-manufacturing activities undertaken in the country of export from the customs value declared at import in the destination country (US or EU).The approach also uncouples the value of the imported goods for customs valuation purposes from their inventory value for corporate income tax purposes. That's good because tax and customs values are often in tension. Direct tax authorities tend to favour a low import value (i.e. more profit to tax), whereas Customs favour a higher import value (more import duty to collect.)
Using an earlier sale approach, the price paid by the importer is no longer relevant for customs purposes, so that any increase in that price will not cause an increase in the amount of customs duty.
Who can benefit?
Any company or business importing goods into the EU or US can benefit from this opportunity providing 1) there has been an earlier sale and 2) the exporter is willing to provide the relevant invoice relating to the earlier sale.
As this involves disclosure of margins by the exporter, the approach is more attractive to international groups of companies where such disclosure is not an issue and to industries where margins are already widely known. However, exporters can still realise the benefits by importing goods into the US and EU on their own account.
So do you need help with earlier sale planning?
What could you do today to start reducing your customs duty?
A major yet significantly under utilised approach to reducing duties is to look at the customs valuation. A key provision in both US and EU customs law permits the customs value to be based on any earlier sale of the same goods in a chain of transactions prior to importation. For this reason it is variously described as the "prior sale", "earlier sale" or "chain of sales" opportunity.
They all mean the same thing, i.e. the opportunity to save customs duty! This opportunity will not be around for whole lot longer as the EU plans to change the law which permits it!
How does this work?
For example, if goods are sold by a manufacturer in the US for $60 to a US export company which, in turn, sells them to an importer in the EU for $100, duty can be paid on a value of $60, providing certain conditions are met. The savings achieved are the difference between duty on the £100 and the duty on $60. Savings of up to 40% on the duty costs are possible.
What are the benefits?
The chief benefit of the approach is to save customs duty by excluding the costs and profits attributable to the non-manufacturing activities undertaken in the country of export from the customs value declared at import in the destination country (US or EU).The approach also uncouples the value of the imported goods for customs valuation purposes from their inventory value for corporate income tax purposes. That's good because tax and customs values are often in tension. Direct tax authorities tend to favour a low import value (i.e. more profit to tax), whereas Customs favour a higher import value (more import duty to collect.)
Using an earlier sale approach, the price paid by the importer is no longer relevant for customs purposes, so that any increase in that price will not cause an increase in the amount of customs duty.
Who can benefit?
Any company or business importing goods into the EU or US can benefit from this opportunity providing 1) there has been an earlier sale and 2) the exporter is willing to provide the relevant invoice relating to the earlier sale.
As this involves disclosure of margins by the exporter, the approach is more attractive to international groups of companies where such disclosure is not an issue and to industries where margins are already widely known. However, exporters can still realise the benefits by importing goods into the US and EU on their own account.
So do you need help with earlier sale planning?
What could you do today to start reducing your customs duty?
Wednesday, April 14, 2010
Who decides how much customs duty to pay or save?
Many businesses have given up control of their customs duty bill and their customs compliance by failing to manage their freight forwarder or customs clearance agent effectively.
Control - and therefore management - is handed over in the mistaken belief that outsourcing an operation such as making customs declarations and the legal responsibility for their correctness are one and the same.
Which other taxes would a business wholly place responsibiity for into the hands of a third party who was not a tax expert? So who is deciding how much customs duty you pay or save?
So who decides how much customs duty to pay at import? Very often its the import agent. And many businesses continue to struggle with who is actually responsible for what goes on with the customs duty authorities (HMRC). Sometimes this ends up with unnecessary customs audits or demands for customs duty being sent to importers years after the goods were imported, further manufactured, stored and sold. And with no propsect of passing on the additional costs.
It is common for businesses to believe that they have absolved themselves from their responsibility for those import clearance processes because they have outsourced the work to their freight/clearance agent. This is a seriously mistaken view!
A business can outsource the activity of making customs declarations and calculation of customs duty. It cannot absolve itself from the legal responsibility for the completeness and correctness of those customs declarations. (That is of course just like any other tax.) What is submitted on customs entry forms (the SAD, or form C88 in the UK) is the responsibility of the importer or exporter. This includes the customs duty calculation. Many businesses do not even know how much customs duty they pay!
This requirement means that a business should always instruct its agent about what goes on the SAD. A business must have an understanding of customs duty laws and the associated compliance procedures. Clearly, what is not understood cannot be managed effectively.If a business does not know what should be put on the SAD it has to find out and decide what should be submitted … including the customs duty and import VAT calculations. The business - whether importing or exporting - is legally responsible for those decisions.This means that instructions and protocols must exist between the business and its customs clearance agent(s). More, the business must ensure that the instructions are followed by checking and auditing freight agent’s actions.
Additionally the business must take action in cases where the instructions are not followed. This can be challenging because the agent is often geographically distant. Where an entry contains an error, mistake or omission, HMRC are more likely to adopt a light touch with the business if it can demonstrate that it has done everything reasonably practicable in mandating and managing the agent.
Documentation plays an important role here. A business should maintain a customs manual, including instructions to the agent and copies of emails, meetings notes and notes of telephone discussions with the agent. When setting down these procedures, it should also involve someone who has responsibility for the management of risk in the business.
Directors, business owners and managers can take back control of import clearance and calculating customs duty. By doing so they boost profits by:
- reducing the risk of mistakes and the associated costs;
- avoiding the likelihood of time consuming customs audits,
- managing the impact of customs duty on the business; and
- saving unwelcome future customs duty demands.
Control - and therefore management - is handed over in the mistaken belief that outsourcing an operation such as making customs declarations and the legal responsibility for their correctness are one and the same.
Which other taxes would a business wholly place responsibiity for into the hands of a third party who was not a tax expert? So who is deciding how much customs duty you pay or save?
So who decides how much customs duty to pay at import? Very often its the import agent. And many businesses continue to struggle with who is actually responsible for what goes on with the customs duty authorities (HMRC). Sometimes this ends up with unnecessary customs audits or demands for customs duty being sent to importers years after the goods were imported, further manufactured, stored and sold. And with no propsect of passing on the additional costs.
It is common for businesses to believe that they have absolved themselves from their responsibility for those import clearance processes because they have outsourced the work to their freight/clearance agent. This is a seriously mistaken view!
A business can outsource the activity of making customs declarations and calculation of customs duty. It cannot absolve itself from the legal responsibility for the completeness and correctness of those customs declarations. (That is of course just like any other tax.) What is submitted on customs entry forms (the SAD, or form C88 in the UK) is the responsibility of the importer or exporter. This includes the customs duty calculation. Many businesses do not even know how much customs duty they pay!
This requirement means that a business should always instruct its agent about what goes on the SAD. A business must have an understanding of customs duty laws and the associated compliance procedures. Clearly, what is not understood cannot be managed effectively.If a business does not know what should be put on the SAD it has to find out and decide what should be submitted … including the customs duty and import VAT calculations. The business - whether importing or exporting - is legally responsible for those decisions.This means that instructions and protocols must exist between the business and its customs clearance agent(s). More, the business must ensure that the instructions are followed by checking and auditing freight agent’s actions.
Additionally the business must take action in cases where the instructions are not followed. This can be challenging because the agent is often geographically distant. Where an entry contains an error, mistake or omission, HMRC are more likely to adopt a light touch with the business if it can demonstrate that it has done everything reasonably practicable in mandating and managing the agent.
Documentation plays an important role here. A business should maintain a customs manual, including instructions to the agent and copies of emails, meetings notes and notes of telephone discussions with the agent. When setting down these procedures, it should also involve someone who has responsibility for the management of risk in the business.
Directors, business owners and managers can take back control of import clearance and calculating customs duty. By doing so they boost profits by:
- reducing the risk of mistakes and the associated costs;
- avoiding the likelihood of time consuming customs audits,
- managing the impact of customs duty on the business; and
- saving unwelcome future customs duty demands.
Subscribe to:
Posts (Atom)
