Belgian-Macedonian Business Club

Customs isn’t just paperwork and in the current #TariffEscalation it is a strategic driver of cost. But besides a compliance focus on classification, origin and valuation companies should search for mitigation strategies.

Hub.Brussels organized a webinar with real advice from the US expert and partner Bock Trade Law. The key subject were US imports, but the rules are valid in general.

There is a large range of possible mitigations to improve the customs structure, and many preparations are necessary anyway for documentation purposes. The US approach, somewhat different from other business cultures, is to use them actively and not just as a compliance issue.

Pre-Importation:

• Value:
  • First sale
  • Transfer pricing / related partner pricing
  • Bona Fide buying agency
  • Unbundling
• Classification
  • Indentifying reasonable alternatives
  • Tariff engineering
• Country of Origin
  • Substantial transformations
  • Free trade agreements

Post Importation:

• Duty relief
  • Duty drawback
  • foreign trade zones and bonded warehouses
  • Chapter 98 exemptions

See more details in the attached presentation, courtesy by Bock Trade Law.

With an active management, as shown in the case studies, can reduce the burden. Active management can eg. unbundle the delivery: If the value of the good contains parts with a lower customs duty, eg. for packaging, transport or services like warranty or advertising, the total customs amount to be paid will be much lower than if packaged completely.

Eg. for perfumes, the value of the perfume itself is only a relatively small part of the total value compared to the cost of the bottle or the marketing support of a global brand. An unbundling strategy could reduce the customs cost significantly as the service part is not customizable at all while packaging could benefit from a much lower rate.

Concerning the EU, companies are reminded of the EU “Hamamatsu”-decision about differences of the transfer price for customs and for corporate income tax purposes.

Companies are encouraged to contact the BMBC or their Customs partner for a further study of the possibilities.

Bock Trade Law, US Customs Consultant