How to Reduce Customs Tariff Duties and Taxes

This analysis includes a practical example that shows importers how to save thousands of dollars in customs tariff duties and taxes.

While some products like medical devices are duty-free and tax-exempt, many imported goods are subject to customs tariff duties, excise levies and other taxes. Those charges are calculated based on the transaction value of an imported shipment.

A shipment’s transaction value is the price paid or payable for imported goods where that amount has been adjusted for additional charges. Many of the 22 standard adjustment charges listed under Subsection 48 (5) of the Canada Customs Act must be added to the face amount found on the exporter’s invoice. As part of the accountability of charges, these additions lead to higher tariff duty and tax charges when a calculation is applied to the increased transaction value.

However, there are adjustment charges that can be subtracted from an import’s invoice total. The importing party must be able to provide sufficient evidence that any deduction is legally part of the price paid or payable for the imported products. Categories for these eligible deductions are described below.

Raw materials, semi-finished goods and unassembled products all require manual labor or technical support after they are delivered to the importing country. For example, exporters may ship bicycle components instead of fully assembled bicycles to reduce package volume size and therefore save on shipping costs. Reasonable costs that the importer incurs to pay workers to assemble those bicycles are considered eligible deductions from the invoice total from the original shipment. This deduction is also valid for construction, maintenance or technical assistance charges that the importer has to pay after goods are imported.

Transportation costs required to deliver imported products also comprise a valid deduction. A freight deduction can include associated expenses like loading, unloading and handling charges from point of departure to delivery. Insurance premiums for the shipment may also be deducted.

UNIT IV.

Export Procedures

What are the procedures for export certification? Can anyone apply for this certification? Essentially, anyone can apply for and receive an export certification approval if the proper procedures are followed. That is to say that anyone can obtain approval for a Class I or Class II product. Class three products can only be exported by the manufacturers FAA representative.

Product Classes Explained

Class I product - a complete aircraft, aircraft engine, or propeller.

Class II product - a major component of a Class I product (for example, wing, control surface, landing gear, etc.) whose failure would jeopardize the safety of a Class I product; or, any part, material, or appliance approved and manufactured under a TSO system in the "C" series.

Class III Product - any part or component that is not a Class I or II product, and includes standard parts (nuts, bolts, etc.) and minor assemblies whose failure would not jeopardize the safety of an aircraft.

Procedures

Procedures for export certification result in an export certificate of airworthiness being issued to the applicant. The form for this is FAA Form 8130-4. Once issued, it specifies that an aircraft meets specific criteria of airworthiness prior to being exported to a foreign country. This is only part of the procedure.

Before an aircraft can be accepted in a foreign country, the exporter must comply with any and all outlined and identified special import requirements.

The FAA must comply with these along with their own regulations. The importing country has the right to deny FAA exports if the special requirements are not fulfilled. If the product does not meet the above-specified special requirements, the exporter must obtain a written statement from the Civil Aviation Authority of that country stating they agree to the deviation from the requirements. For each application of Export Certificate of Airworthiness, this statement must be included. Not only that, but the items in question must also be listed in the Exceptions block of the Export Certificate of Airworthiness.

Agreements between the United States and other governments regarding the procedures for export certification and the acceptance of certain airworthiness approvals is outlined here, in the Bilateral Aviation Safety Agreements (BASA). Information is updated as quickly as possible on the FAA's website under the link Current BASA's.

A Few Important Things to Note

The FAA will not approve or issue an export worthiness application to a United States manufactured aircraft that is already in a foreign country unless it either has or can obtain a valid United States airworthiness certificate. In addition, the aircraft in question would have to meet the requirements of FAR 21.325.

The issuance date of a certificate of export airworthiness is based on the date the product was inspected by the FAA and found to comply with the specified requirements. The date the aircraft was deemed airworthy is often the same date.

Date: 2016-01-14; view: 736