Friday, February 28, 2020
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Desiderio Consultants Ltd. is a think tank and a network of independent professional international development consultants established to promote and influence customs & trade-related policies in African nations to achieve trade facilitation reforms aimed at improving international and regional trade
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Customs compliance and the importance of a careful customs planning

Customs compliance is a term often ignored by businesses involved in international trade. It essentially means to understand and fulfil all the requirements related to the execution of an international trade transaction. In order to be “customs compliant”, a trader must be sure that the tariff classification, origin and valuation of goods are accurately declared in accordance with legislative and regulatory requirements, and that the appropriate duties and taxes are paid. Additionally, an essential part of customs compliance is to ensure that all import requirements are met, such as having the appropriate import license or permit, as well as all the authorisations or certificates required by Customs and other cross-border regulatory agencies in connection with the prospected operation. Failure to meet such requirements can lead to penalties, extra fees or even to the revocation of authorizations or facilitations granted by Customs.

Customs planning has become today a necessity for any business involved in the international movement of goods. Carrying out an international trade transaction does not simply mean dealing with import and export procedures, fulfilling customs and other administrative requirements, and paying the related customs duties, levies or charges.

If not properly managed and controlled, this process can generate some “hidden costs” that can lead to significant economic losses for the company and reduce the profitability of the international trade activity that has been undertaken.

Examples of such costs are:

  • Costs relating to the obtention of licenses, authorisations, certificates and permits related to import or export operations or restrictions;
  • Costs for meeting the requirements of Customs and other cross-border regulatory agencies;
  • Costs and liabilities arising as a result of incorrect declarations or improper use of customs simplifications and other procedures.

 

A careful and timely planning of trade transactions can therefore allow companies to minimise or even avoid unforeseen and not budgeted costs. Significant financial savings and operational benefits await those which recognise not only the benefits of customs planning but the necessity of undertaking it as an integral part of the total business planning process.

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