Import Basics


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Imports at Technicolor HES

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Import Basics

  1. 1. International Trade: Import Process
  2. 2. Import Process <ul><li>Consists of: </li></ul><ul><ul><li>A Formal Entry Declaration </li></ul></ul><ul><ul><li>Release From Customs’ Custody </li></ul></ul><ul><ul><li>Payment of Import Duties </li></ul></ul><ul><ul><li>Payment of VAT or other Sales Tax </li></ul></ul><ul><ul><li>Recordkeeping/Audits </li></ul></ul><ul><ul><li>Duty Drawback </li></ul></ul>
  3. 3. Entry of Merchandise <ul><li>Prior to importing and entering merchandise into the United States, it is necessary to file an entry with Customs. In general, the most important information for importation of the product is: </li></ul><ul><li>The tariff number of the product </li></ul><ul><li>The rate of duty </li></ul><ul><li>How the product should be marked </li></ul><ul><li>Other Federal Agency requirements: FDA, DOT, EPA, ATF, etc... </li></ul><ul><li>Note: A total of 60 Federal Agencies regulate imports </li></ul>
  4. 4. Right to Make Entry <ul><li>Goods may be entered only by the owner, purchaser, or by a licensed customs broker. When the goods are consigned &quot;to order,&quot; the bill of lading, properly endorsed by the consignee, may serve as evidence of the right to make entry. An air waybill may be used for merchandise arriving by air. </li></ul>
  5. 5. Entry For Consumption <ul><li>The entry of merchandise is a two part process consisting of: </li></ul><ul><ul><li>filing documents to determine whether goods may be released from Customs custody and </li></ul></ul><ul><ul><li>filing documents for duty assessment and statistical purposes. </li></ul></ul><ul><li>Both of these processes can by accomplished electronically via the Automated Broker Interface program or the Automated Commercial System. </li></ul>
  6. 6. Entry Documents <ul><li>Within five working days of the date of arrival of a shipment at a U.S. port of entry, entry documents must be filed at a location specified by the Customs district/area director, unless an extension is granted. These documents consist of: </li></ul><ul><li>Entry Manifest, Special Permit for Immediate Delivery, or other form of merchandise release required by the district director. </li></ul><ul><li>Evidence of right to make entry. </li></ul>
  7. 7. Entry Documents <ul><li>Commercial invoice or a pro forma invoice when the commercial invoice cannot be produced. </li></ul><ul><li>Packing lists if appropriate. </li></ul><ul><li>Other documents necessary to determine merchandise admissibility. </li></ul><ul><li>If the goods are to be released from Customs custody on entry documents, an entry summary for consumption must be filed and estimated duties deposited at the port of entry within 10 working days of the time the goods are entered and released. </li></ul>
  8. 8. Surety <ul><li>The entry must be accompanied by evidence that bond is posted with Customs to cover any potential duties, taxes, and penalties which may accrue. Bonds may be secured through a resident U.S. surety company but may be posted in the form of United States money or certain United States government obligations. In the event that a customs broker is employed for the purpose of making entry, the broker may permit the use of his bond to provide the required coverage. </li></ul><ul><li>Note: Technicolor uses General Term Bonds (GTB) </li></ul>
  9. 9. Value Added Tax (VAT) <ul><li>Similar to our U.S. Sales Tax, except that it is passed on by each party until it reaches the final consumer. </li></ul><ul><li>Example - an import to Brussels: </li></ul><ul><ul><li>We owe VAT on the import value (Std Cost) </li></ul></ul><ul><ul><li>When we sell to Disney, we report the sale to the Tax Authorities. Disney now owes VAT on our selling price, and we claim a VAT refund </li></ul></ul><ul><ul><li>When Disney sells to their customer, they report the sale to the Tax Authorities. The customer now owes VAT on the selling price, and Disney claims a VAT refund…and so forth </li></ul></ul>
  10. 10. Value Added Tax (VAT) <ul><li>Every VAT pass-through, record, etc. is audited routinely by European Tax Authorities. </li></ul><ul><li>The audited firm must provide: </li></ul><ul><ul><li>Purchase Invoice (Commercial Invoice) </li></ul></ul><ul><ul><li>Record of VAT obligation (“Import” Invoice) </li></ul></ul><ul><ul><li>Selling Invoice </li></ul></ul><ul><ul><li>Record of VAT filing </li></ul></ul><ul><li>Monthly VAT filing is allowed if applied for (similar to a “tax return”) </li></ul>
  11. 11. Recordkeeping / Audits <ul><li>Customs may audit import records at any time </li></ul><ul><li>Records must cover the entire “audit trail”, and generally include: </li></ul><ul><ul><li>Consumption Entry - CF7501 </li></ul></ul><ul><ul><li>Purchase Order </li></ul></ul><ul><ul><li>Purchase Invoice and A/P Entry </li></ul></ul><ul><ul><li>Copy of Payment (i.e. check) </li></ul></ul><ul><ul><li>Packing List </li></ul></ul><ul><ul><li>Delivery documents (Ocean BOL, Truck B/L, etc.) </li></ul></ul><ul><ul><li>Inventory Receipt Record </li></ul></ul>
  12. 12. Recordkeeping / Audits <ul><li>Customer Order </li></ul><ul><li>Picking Documents </li></ul><ul><li>G/L Entries or Records </li></ul><ul><li>Packing List </li></ul><ul><li>Shipping Documents (Truck B/L, Ocean BOL, etc.) </li></ul><ul><li>Proof of AES entry </li></ul><ul><li>Forwarder’s Bill </li></ul><ul><li>A/R and Payment Records </li></ul>
  13. 13. Duty Drawback <ul><li>Duty is a consumption tax . If the goods on which duty was paid are not consumed in the United States, up to 99% of the duty paid is refundable </li></ul><ul><li>Only the Exporter may file for duty drawback </li></ul><ul><li>Types of drawback include: </li></ul><ul><ul><li>Rejected Merchandise </li></ul></ul><ul><ul><li>Manufacturer’s Drawback </li></ul></ul><ul><ul><li>Same Condition Drawback </li></ul></ul><ul><li>Inspection waivers and summary reporting are allowed if applied for in advance. </li></ul>