| |
| |
|
Taxes Information |
|
|
|
How to Cut Duty Cost and Increase Profit as an Importer
Import duties continue to be significant elements in the cost of international trade. Yet many companies and businesses still pay more duties than the law requires - which impacts adversely on landed cost and ultimately on business profitability. A planned approach to managing customs duty costs would look to eliminate, reduce and delay payment of customs duties. How to reduce customs duties in your business There are many ways to reduce customs duties. The amount of duties paid depends on four "whats". Managing the impact of any of these "whats", will improve business profit. 1 What the goods are, (i.e. their nature and characteristics) determines tariff code and therefore the duty rate 2 What the origin of the goods is, (i.e. where dug up, grown, farmed, further manufactured or processed NOT just shipped from) determines whether preferential, standard or additional duties are payable 3 What the structure of the transaction is (i.e. whether sale, leased, loaned, free of charge, under warranty or repair arrangement), determines customs value 4 What happens to the goods once imported (i.e. sold, further manufactured, repaired and returned, stored and re-exported) determines whether various reliefs are available. How to use a key opportunity in customs valuation planning A major under utilised approach to reducing duties is to look at the customs valuation. A key provision in both US and EU customs law permits the customs value to be based on any earlier sale of the same goods in a chain of transactions prior to importation. For this reason it is variously described as the "prior sale", "earlier sale" or "chain of sales" opportunity. They all mean the same thing, i.e. lower duty! How does this work? For example, if goods are sold by a manufacturer in the US for $60 to a US export company which, in turn, sells them to an importer in the EU for $100, duty can be paid on a value of $60, providing certain conditions are met. The savings achieved are the difference between duty on the £100 and the duty on $60. Savings of up to 40% on the duty costs are possible. What are the benefits? The chief benefit of the approach is to save customs duty by excluding the costs and profits attributable to the non-manufacturing activities undertaken in the country of export from the customs value declared at import in the destination country (US or EU). The approach also uncouples the value of the imported goods for customs valuation purposes from their inventory value for corporate income tax purposes. That's good because tax and customs values are often in tension. Tax authorities tend to favour a low import value (i.e. more profit to tax), whereas customs favour a higher import value (more import duty to collect.) Using an earlier sale approach, the price paid by the importer is no longer relevant for customs purposes, so that any increase in that price will not cause an increase in the amount of customs duty. Who can benefit? Any company or business importing goods into the EU or US can benefit from the opportunity providing there has been an earlier sale and the exporter is willing to provide the relevant invoice relating to the earlier sale. Since this involves disclosure of margins by the exporter, the approach is more attractive to international groups of companies where such disclosure is not an issue and to industries where margins are already widely known. However, exporters can still realise the benefits by importing goods into the US and EU on their own account. About The Author © Philip Brigstock-Bates 2004 Philip Brigstock-Bates manages Tariff AXe Services www.tariffaxe.com providing customs duty compliance and consulting advice to global companies, mid markets and start ups involved who import or use/sell imported goods in their businesses. Professionally qualified in tax and import fields, he was previously he was with Ernst & Young and PricewaterhouseCoopers advising on duty planning reduction, compliance assurance and risk management for importers. pbrigstock-bates@tariffaxe.com
MORE RESOURCES:
Taxes - Google News |
|
|
|
RELATED ARTICLES
Fiscal Deity: Tax Consultant Strategic planning throughout the year results in a minimal tax balance. The objective of planning your tax payables is not to prevent paying taxes, it is to pay no more than your fair share of taxes, and keep your money where it earns you the most. Small Business Tax Issues for Self-Employed Individuals The United States is a nation of entrepreneurs. There are literally tens of millions of self-employed individuals that enjoy pursuing their dream business. Need a Copy of Your Tax Return Information? Taxpayers have two easy and convenient options for getting copies of their federal tax return information - tax return transcripts and tax account transcripts - by phone or by mail.A tax return transcript shows most line items from the tax return (Form 1040, 1040A or 1040EZ) as it was originally filed, including any accompanying forms and schedules. Taxing Overseas Firms for SOX Compliance The Sarbanes-Oxley Act, also called the Public Company Accounting Reform and Investor Protection Act of 2002 was signed into law on July 30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global Crossing, and WorldCom, SOX promises greater corporate accountability and transparency. Euro Tax Haven Threat Media reporting of a new EU savings tax directive has left many people wondering whether European tax havens could soon become obselete.The July directive requires banks throughout Europe, including low and no tax areas such as Gibraltar, Monaco, Malta and Andorra, to disclose bank account owner information to their home country's tax authority. E-commerce Taxation The means and types of businesses have transformed with advent of era of e-commerce, resulting in global seller and buyer. The Internet offers consumer choice, business efficiency and recreation. Tips and Simple Guidelines on How to Calculate Payroll Taxes Managing a business small, medium or big requires you to pay your taxes, as well as your employees taxes. Managing a payroll can be an arduous and taxing job, no pun intended. The Tax Man Cometh... To Search You're at your office, or home, and the doorbell rings - it's the Canada Revenue Agency ("CRA").The first thing to do is find out why they've come. Tax Trap #5 -- Ignoring The IRS (and the 5 best ways to contact them!) We all love to criticize the IRS, don't we? And I'm just as guilty as anyone. It's easy to ridicule a huge organization of government bureaucrats who often seem to be Public Enemy #1. Some Folks Pay A Lot Less Tax Than Others On Very Same Income-Did You Pay Too Much Tax In 2004? Someone once remarked, "Next to being shot at and missed, nothing is quite so satisfying as an income tax refund." There's no question that saving money in taxes is high on everybody's list of financial priorities, especially small-business owners. A Taxing Investment April 15 - The most dreaded day of the year is right around the corner. Are you ready? Some of the most neglected (and misunderstood) tax issues are those related to your investments. Taxation of Isle of Man Companies from April 2006 At the present time a company incorporated in the Isle of Man, owned by non-residents and which complies with the other statutory requirements, is not liable to Isle of Man taxation. Whilst locally trading companies pay tax at 18%, a qualifying offshore company pays a flat annual tax of £475 or £1,000. Take Control of Your Taxes As everyone in the U.S. How To Get An Instant Pay Raise As a gentleman was leaving my class recently, he wanted me to clarify something I had said. He was making sure that he should take his four or five thousand dollar tax refund and pay off debt. Business Tax Loophole: Leasing Assets To Your Corporation While there are many equally valid reasons to incorporate, saving money on taxes is a consideration that can yield relatively immediate results. Leasing assets to your corporation is a tax strategy you should absolutely consider if you already have a corporation or are thinking about forming one. Car Donation: An Easy Way to Support Your Favorite Charity and Get a Tax Deduction Most people look forward to getting their tax return, but one of the downsides to filing taxes is that you may find yourself owing the taxman come April 15. What do you do when you realize that you not only owe money, but you owe more than you can pay at the time?The answer is: charitable deductions. How To Set Up A Tax-Saving Bookkeeping System One of the most important, but least understood or appreciated aspects of any business is its bookkeeping or accounting system. And, because very few people know much about the reasons for a bookkeeping system, most people are frightened by the thought of the work involved in setting up such a system, and the drudgery of daily maintenance. Small Business Tax Credit - Americans with Disabilities Act Many small businesses complain when confronted with the expense of complying with the Americans with Disabilities Act. Most do not realize that there are a number of tax incentives available to offset the costs. Tax Jokes and Quotes Do you realize that some tax forms ask you to check a box if you are BLIND?Quote: "Two years ago it was impossible to get through on the phone to the IRS. Now it's just hard to get through. Complaince of Tax Return in Electronic Commerce Taxation Emerging Legal issues of Tax compliance of e-business Self-assessment system relies on taxpayers voluntarily meeting their tax obligations by tax payee. This concept is recognised in all tax statutes, which sets out taxpayers' primary obligations to fill tax return on self-assessment, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.
|
| Good Credit Loans | home | site map | School Bus Clothing | Florida Pool Heating |
| © 2006 |
