The correct classification of imported goods is vital to apply the corresponding tariff classification, calculate the taxes the importer must pay, and determine if the products must meet certain requirements for export or import. An incorrect classification can result in penalties, return to the country of origin, and even the destruction of the merchandise, with the losses that entails for the buyer.
Imported goods are regulated by a classification system that assigns a tariff classification coded by the TARIC, according to which each product or raw material corresponds to a tariff nomenclature organized by chapters, headings, and subheadings plus tariff duties.
The complexity of tariff classification criteria and the serious economic consequences of a simple error make it advisable to rely on an expert import management company like Bull Importer.
Depending on the assigned tariff classification, the importer must pay the corresponding taxes and comply with the necessary requirements for importation. Any small error in tariff classification can lead to penalties, supplementary tax assessments, return of merchandise, and even its destruction. The complexity in interpreting classification criteria makes it advisable to seek the advice of an import management expert like Bull Importer.
Classification of goods according to tariff classification
Goods are classified for tariff classification based on the type of product and its origin. The classification criteria are as follows:
Natural Products
- Unprocessed. These can be raw plant materials, minerals, or animals.
- Processed. These are those that have undergone a process of freezing or drying, for example.
Finished Products
- According to manufacture. If the raw material is relevant, they are classified according to their composition and degree of processing.
- According to function. If the material has no commercial relevance, they are classified according to their use, destination, or function.
Form of presentation
Takes into account whether the goods are imported in bulk, vacuum packed, disassembled, etc.
Classification of goods according to origin
The determination of the origin of the goods influences the application of tariffs. In this sense, their classification is not without complications, except in the case of products entirely manufactured in a single country. Most imported goods are a combination of different countries in their production process.
The criteria for determining origin are based on customs legislation and, in summary, are:
Wholly Obtained Products
These are products entirely made in one country. Within this category, there are some specific cases, such as minerals, live animals, or those from hunting and fishing.
Products with Substantial Transformation
As a general rule, the country of origin is considered to be where the last substantial transformation occurred or where it has been sufficiently processed.
Products with Insufficient Transformation
This criterion can be applied to goods simply packaged, assembled, or separated by lots.
Although it may seem simple, assigning the origin of the goods and the tariff classification requires deep knowledge of classification methods, so it is usually carried out by customs agents.
