Tariff Item
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How to classify the tariff heading and the origin of the goods
The correct tariff classification and determination of the origin of the goods are critical aspects in the field of exports and imports. This classification is essential not only to calculate the taxes and fees that the customer will have to pay, but also to meet the import or export requirements. The tariff heading is a Taric code assigned to a good consisting of ten digits, including chapters, headings and subheadings. The first two digits represent the chapter, the next four the heading and the next six the subheading. Each country can set the numbering from the seventh digit according to their business needs. Therefore, it is crucial to know precisely the position of the product before exporting it to each market.The Taric code was created to apply trade measures other than the Common Customs Tariff, such as quotas, duty-free allowances, suspensions, anti-dumping and anti-subsidy duties, among others.It is essential to classify this item correctly, as an erroneous classification may result in penalties, additional tax payments or even an import ban, which could lead to the return or destruction of the goods, generating additional costs.
Tariff classification
The tariff classification is based on the type of product to be exported and its origin. According to the type of product, the classification is made according to a series of terms:
- Natural products: are classified according to the kingdom of nature (animal, vegetable or mineral) and the degree of processing (freezing, drying, etc.).
- Other products: are divided into two groups: those with commercial relevance, which are classified according to their composition and degree of elaboration, and those without commercial relevance, which are classified according to their function, use or destination.
- Form of presentation: is also considered the form of presentation of the goods, as if disassembled, vacuum packed, with accessories, in bulk, etc.
This classification may seem simple, but in reality requires advanced knowledge, so it is recommended that a freight forwarder or a customs agent do it.
Correctly determining the origin of the goods is essential for applying reduced tariffs, as in the case of the Generalised System of Preferences (GSP). The origin of a good can be established in several ways, and customs legislation imposes certain rules to determine it:
- Entirely obtained products: these products have been completely manufactured in a single country. Examples include minerals extracted in a specific country, game or fishery products produced in a particular location, and live animals born and raised in a particular country.
- Substantial transformation: when the goods have undergone significant transformation, the country of origin can be determined by the place where the last major transformation took place or where the goods were sufficiently processed or processed. In order to determine whether there has been a substantial transformation, factors such as the stage of the production process, whether the materials have been completely obtained in a country, whether significant value has been added in a specific country, or if there has been a change of tariff heading.
- Insufficient processing: there are cases in which the operations carried out do not involve a significant transformation, such as grouping or separating packages, packing the goods or making assemblies.
Determining the origin of the goods can be complex and requires advanced knowledge. It is recommended that this task be performed by a customs agent or experienced forwarder to avoid errors, penalties and problems in the export clearance. Efficient customs management is essential to ensure that foreign trade operations are conducted on time and smoothly. Working with subject matter experts provides security and can result in significant savings in time and money.
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