Tariff Heading
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Everything you need to know about the tariff heading
The correct tariff classification and determination of the origin of goods are critical aspects in the field of exports and imports. This classification is essential not only for calculating the taxes and duties the customer must pay but also for complying with import or export requirements.The tariff heading is a TARIC code assigned to a commodity, consisting of ten digits, which include chapters, headings, and subheadings. The first two digits represent the chapter, the next four indicate the heading, and the following six correspond to the subheading. Each country can establish its own numbering from the seventh digit onward according to its commercial needs. Therefore, it is crucial to accurately determine the product's classification before exporting it to each market.The TARIC code was created to apply trade measures beyond the Common Customs Tariff, such as quotas, tariff exemptions, suspensions, anti-dumping duties, and countervailing duties, among others. Proper classification of this tariff heading is essential, as an incorrect classification can lead to penalties, additional tax settlements, or even import bans, which could result in the return or destruction of the goods, generating additional costs.
The tariff classification
Tariff classification is based on the type of product to be exported and its origin. Regarding the type of product, the classification follows a series of criteria:
- Natural products: they 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 processing, and those without commercial relevance, which are classified according to their function, use or destination.
- Presentation form: the form of presentation of the merchandise is also considered, such as whether it is disassembled, vacuum-packed, with accessories, in bulk, etc.
This classification may seem simple, but it actually requires advanced knowledge. Therefore, it is recommended that it be carried out by a freight forwarder or a customs agent.
Correctly determining the origin of the goods is essential for applying reduced tariffs, such as those under the Generalized System of Preferences (GSP). The origin of a product can be established in different ways, and customs legislation imposes specific rules to determine it, including:
- Wholly obtained products: These products have been produced entirely in a single country. Examples include minerals mined in a specific country, products of hunting or fishing carried out in a particular location, and live animals born and raised in a particular country.
- Substantial transformation: When the goods have undergone a significant transformation, the country of origin can be determined by the place where this last significant transformation took place or where the goods were sufficiently worked or transformed. In determining whether there has been a substantial transformation, factors such as the stage of the production process, whether the materials have been obtained entirely in a country, whether significant value has been added in a specific country, or whether there has been a change in tariff heading are considered.
- Insufficient transformation: There are cases in which the operations carried out do not involve a significant transformation, such as grouping or separating packages, packing the merchandise or performing assemblies.
Determining the origin of goods can be complex and requires advanced knowledge. It is recommended that this task be performed by an experienced customs agent or freight forwarder to avoid errors, penalties and problems in export clearance.Efficient customs management is essential to ensure that foreign trade operations are carried out within established deadlines and without setbacks. Working with experts in the field provides security and can result in significant savings of time and money.
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