Ignorance is not bliss
It is not uncommon for companies to import thousands of different products or raw materials. It is however uncommon for companies to know what the correct tariff codes are for each of those products.
“And as far as SARS is concerned there can only be one correct tariff code with extremely harsh penalties for non-compliance.”
It is not the responsibility of the clearing agents (now known as Customs brokers) to determine the tariff codes for any given client’s products and it almost never happens that the list maintained by the client is actually the same as the list maintained by the clearing agent. The larger the variety of products the greater the risk and so clients need to look at where to focus their attention to get this right.
The primary driver for duty rates
The reasons for SARS’ focus with classification is because it drives the duty rate on any given product and duties are not only levied as normal Customs duties. There are anti-dumping duties, excise duties and levies such as environmental levies. All of these duties are firstly and foremost driven by the tariff code allocated to the product when its imported.
Managing classification risk
As a rule of thumb, if you import more than 200 products, you will find it challenging to accurately classify each product. As it is the importer’s responsibility to ensure that goods are accurately classified, the importer cannot rely on its import agent to perform this function. In practice this is a real challenge representing very real risks of non-compliance for importers.
Importers often ask the exporter to provide a tariff code. This is regularly incorrect and exporters bear no responsibility for the accuracy of the tariff code and so again goods are often misclassified.
XA has developed a process to accurately assess the classification risk on any given product and use that to determine where effort should be expended to bring the risk down to an acceptable level. Our methodology allows clients to focus their efforts where it matters and thus have a level of compliance that is cost-effective.
Need help with a classification matter?
We are sure we can help. Please drop us a note and let’s have a chat.
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