Mitch’s Comments in Intl Trade Compliance Experts

Can compliance be proactive?

Mitch Kostoulakos CTL,LCB

Being proactive starts with implementing best practices such as:

•Review and confirm correct Harmonized and Schedule B codes

•Check EAR regulations for correct exception codes and license or NLR designations

•Check common “Red Flags” such as denied parties lists, entities lists, and unverified lists

These are only the basics but a good step to proactivity.

Mitch’s Comments in International Trade Compliance Experts

Compliance problems of small companies

Marketing & Communications at ComplyGlobal™

A lot of the attention is on the Compliance management problems of the larger companies but the challenge for the smaller companies with their limited staff, budgets and bandwidth is perhaps even greater. Cloud based systems probably offer some help but let me ask the compliance experts here – are the challenges real and if so what can small companies do to stay ahead of their compliance requirements?

Mitch Kostoulakos CTL,LCB

Compliance challenges and risks are real. Fines and penalties can have a bigger impact on smaller companies. Limited staffing means no one is keeping up with regulations. Hiring consulting help is good risk management.

Invoice Value for Customs …A Quick Summary

Customs entries on imported merchandise involve calculating duties and taxes based on commodity classification (HTS), country of origin, and transaction value, along with special notes. In  previous posts we have discussed the importance of making sure that correct HTS codes are used. In most cases the commercial invoice or CI value is used for duty calculation. In situations where the transaction is not so clear Customs has established an “appraisement hierarchy” to determine entry value. The details can be found in US Customs and Border Protection regulations 19 CFR part 152.  Here is a summary:

Appraisement Hierarchy

1) Transaction Value- actual invoice value

2) Transaction Value of identical merchandise- same country, same class and kind

3) Transaction Value of similar merchandise- same country, commercially interchangeable

4) Deductive Value – start with US retail selling price and deduct commissions, transportation, insurance, duty/tax, and value of further processing

5) Computed Value- sum of the following. Importer can request computed instead of deductive.

  • Cost of Materials
  • Cost of Labor
  • Cost of Packaging
  • Profit
  • Overhead
  • G&A

6) Value if other values cannot be determined- if the value of imported merchandise cannot be determined it will be appraised on the basis of a value derived from the methods set forth in parts 152.103 thru 152.106.

Transaction Value cannot be used and the hierarchy comes into play when:

  • There is a restriction on sale (except geographic)
  • Merchandise is sold on consignment
  • There is a barter transaction
  • There is “goodwill” value involved
  • Parties are related, unless relationship did not influence price

Unacceptable bases of appraisement:

  • The selling price in the US of merchandise produced in the US
  • A system that provides for the appraisement of imported merchandise at the higher of two alternative values
  • The price of merchandise in the domestic market of the country of exportation
  • A cost of production other than a value determined under 152.06
  • The price of merchandise for export to a country other than the US
  • Minimum values for appraisement
  • Arbitrary or fictitious values