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Application Ranking of the European Union (EU) Tariff Rate
2020-02-25

 

[Application Ranking of the European Union (EU) Tariff Rate]

 

 

Outline

 

Tariff rate is comparatively determined depending on items, trading partners, and application priority according to type of tariffs. Accordingly, you should not make a hasty conclusion that a specific item has a specific percentage of tariff rate.

 

Any country adopts the Notification Principle with respect to the adoption of tariff rate and payment of tax. Therefore, a taxpayer may pay customs duty based on high tariff rate even though such person may be eligible for paying tax by applying low tariff rate for his/her own interests(for example, taxpayers may choose the application of basic tariff rate by giving up the benefits of conventional tariff only for the sake of avoiding hassles of obtaining certificate of origin, etc.).

One tariff rate is generally fixed by a HS code, but same HS code doesn't always have the same tariff rate(often, one HS code has more than two tariff rates by kind of items.).

Generally, multiple tariff rates are applicable to specific goods, but only one tariff rate is determined finally. The final tariff rate is determined by comprehensively taking into account application priority by laws and regulations, international agreements, trading partners, and the compliance of export/import requirements.

 

Application ranking of the European Union (EU) import tariff rate

 

The import tariffs (the ad valorem duty) are calculated by multiplying the tax rate by the tariff rate. The customs value of the goods imported into the EU is based on the CIF price.

 

In the EU, the tariff rate is reported by the TARIC Code.

- The EU HS code system is divided into CN code and TARIC code. CN code consists of 8 digits and TARIC code has 10 digits. The actual code used in the tariff rate is the TARIC Code.

- If the tariff rate applies only to a specific country, the tariff rate is only eligible for import from that country.

 

If multiple tariff rates compete for a particular item, the approximate priority of the application is as follows: (The actual amount of customs duties is subject to various complicated procedures such as conversion into domestic currency, handling of the singular, and consideration of the specific duty.)

 

 

The first place - anti-dumping duty, countervailing duty, emergency tariff (safeguard)

 

Apply first

 

Non-preferential tax rate is higher than the basic tariff rate and is applied first. However, it will be charged only when it corresponds to the item to be imposed, and the target can be limited to specific countries and companies.

 

Anti-Dumping duty

- If the importing country's industry is materially damaged by the export of an unfairly low amount of the exporting enterprise (below cost, dumping price), the importing country will additionally impose a customs duty on the base tariff on the difference between the normal price and the dumping price (dumping margin).

 

Countervailing tariff(Anti-Subsidy)

- If the importing country's industry is materially damaged by the subsidy or subsidy of the exporting country's exported goods, the importing country will levy an additional levy on the basic tariff for the amount equivalent to the subsidy.

 

Emergency duty (Safeguard)

- This measure is an action by the importing country to limit tariff increases or imports on certain items in the event of serious damage to the industry of the importing country due to the surge in imports of certain items.

 

 

The second place - FTA preferential rate

 

Apply first for lower than 3, 4, 5 only.

 

FTA agreement rates are an exception to the MFN rate, and the FTA contracting states preferentially apply mutual tariff rates that are lower than the WTO tariff rate according to the results of bilateral negotiations.

 

The following are the FTA agreements concluded by the European Union (EU).

- EU-Switzerland, Liechtenstein FTA

- EU-Iceland FTA

- EU-Norway FTA

- EU-Syria FTA

- EU-Andorra Customs Union

- EEA(European Economic Area)

- EU-Turkey Customs Union, EU-Faroe Islands FTA

- EU-Palestinian Authority FTA

- EU-Tunisia FTA

- EU-Republic of South Africa FTA

- EU-Morocco FTA

- EU-Israel FTA

- EU-Mexico FTA

- EU-Macedonia FTA

- EU-San Marino Customs Union

- EU-Jordan FTA

- EU-Chile FTA

- EU-Lebanon FTA

- EU-Egypt FTA

- EU-Algeria FTA

- EU-Albania FTA

- EU-Montenegro FTA

- EU-Bosnia and Herzegovina FTA

- EU-CARIFORUM States EPA

- EU-Republic of Cote d'Ivoire FTA

- EU-Cameroon FTA

- EU-Serbia FTA

- EU-Republic of Korea FTA

- EU-Japan FTA

 

 

The third place - EBA, GSP+, GSP

 

Apply first for lower than 4, 5 only.

 

EBA(Everything But Arms)

 

- The EBA tariff system provides 100% import duty exemption for all products except weapons for LDCs (Least Developed Countries).

 

- Unlike the general GSP system, the EBA tariff system does not lose its EBA status by signing a free trade agreement (FTA) with the EU. The "graduation mechanism" of the product also does not apply.

 

Countries applying EBA

Afghanistan, Angola, Bangladesh, Benin, Bhutan, urkina Faso, Burundi, Cambodia, Central African Rep., Chad, Comoros, Congo (DRC), Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao PDR, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar/Burma, Nepal, Niger, Rwanda, Sao Tome & Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, Zambia

 

GSP+ (Generalized System of Preferences +)

 

- It is a preferential tariff favoring developing countries that have signed these special incentive agreements in order to spread the 'Good Governance' principle, such as human rights and labor rights protection, sustainable development, and anti-terrorism.

 

- GSP+ reduces EU import tariffs more than two thirds (66%) of tariff lines.

 

- GSP+ submits reports to the European Parliament and the Council when the Commission makes detailed assessments of each beneficiary's situation under the 27 conventions every two years.

 

Applicable countries

Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, Philippines, Sri Lanka

 

Standard Generalized System of Preferences

 

- Standard GSP for low and lower-middle income countries. This means a partial or full removal of customs duties on two third (66%) of tariff lines.

 

Applicable countries

Congo, Cook, India, Indonesia, Kenya, Micronesia, Nauru, Nigeria, Niue, Samoa, Syria, Tajikistan, Tonga, Uzbekistan, Vietnam

 

 

The fourth place - autonomous tariff, provisional tariff, reduction tax rate

 

Apply first for lower than 5 only.

 

The tax rate is applied as the preferential tax rate, which is lower than the basic tariff rate. o be eligible for this preferential tax rate, you must meet the requirements set forth in the statute. And apply first only if the tax rate is lower than the base tariff rate.

 

Autonomous tariff(Quota)

- If a certain quantity of quota is set for a specific import item and the import quantity is within that range, a tax rate lower than the basic tariff rate is applied.

 

Provisional tariff(Suspension)

- For industrial, economic, or policy purposes, a tax rate that is lower than the basic tariff rate applies if the applicable requirements are met for a particular item.

 

Reduction tax rate

- This is the applicable tax rate if import duty exemption is granted under Council Regulation (EC) No.1186 / 2009.

- If a customs exemption occurs for a specific use, the party involved is responsible for presenting evidence to the authorities.

 

 

The fifth place - Basic tariff rate(MFN rate)

 

The basic tariff rate (MFN rate) consists of the following tariffs, of which the lower tariff rate applies as the base tariff rate.

- Conventional rate: The MFN Rate, which is commonly imposed on all countries that have achieved WTO membership and Most Favored Nation (MFN) status under the WTO Agreement.

- Autonomous rate: The Common Customs Tariff introduced by the EU in 1968

 

 

Other Notes

 

This TCS program provides information, supposing that taxpayers will generally choose the lowest tariff rates.

This TCS program provides information, supposing that more than two tariff rates may be applied simultaneously, and if such tariff rates are the same, a taxpayer has tendency to choose a tariff rate which helps him/her to avoid hassles of business concerned(for example, if both FTA conventional tariff and basic tariff are 0%, a basic tariff which doesn't require certificate of origin may be recommended as final applied tariff under this program.).

This TCS system suggests lower tariff rate and tariff amount in principle if tariff rate varies according to whether specific conditions are complied with or not, supposing that general taxpayers wish to have lower tariff rate be applied by meeting the conditions required as possible as they can.

However, considering that taxpayers may fail to comply with the conditions required, applied tariff and its amount applicable to such circumstance is also available under the TCS program(for example, for FTA tariffs, preferential tariffs for the Least Developed Country, etc. the effects of non-compliance of certificate of origin(C/O) are provided, and if failing to obtain quota for quota tariffs, the effects of failing to obtain quota.).

 

This TCS program provides automated system for application priority of tariff rates, selection of final tariff rate, calculation of tariff amount, etc. by precisely analyzing laws and regulations of countries concerned. However, it doesn't contain some tariffs such as retaliatory tariff, anti-dumping tariff, and countervailing tariff, temporarily applicable to specific countries and enterprises.


This TCS system provides charts relating to kind of tariff rates and their tariff amounts, and tariff rate finally selected and its tariff amount(click competitive tariff button!).