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CHAFTA DUTY RATES TO COME DOWN IN 2017

The nature of retailing is continually changing.  If it’s not the recent growth of online retail and rapidly changing consumer preferences that is keeping you on your toes; then it will be the need to stay on top of distribution chain productivity improvements to remain competitive that’s keeping you up at night.

Although the cost structure of retail goods has been broadly stable over the last 10 or so years, this is in spite of an upward trend in the prices of inputs to the retail supply chain; in particular, those involved in distributing goods.  With roughly half the cost of getting goods from factory to the consumer attributable to distribution, any relief on this front is good news.

The good news – ChAFTA duty rates to come down

As of 1 January 2017, there will be a change in duty rates for most tariff categories covered under the ChAFTA agreement.

For simplicity, we have summarised the tariff classifications as follows:

chafta duty rates

To take advantage of the new reduced tariffs on your imported cargo you will need to lodge entry after 1 January next year.

With this in mind, now might be a good time be thinking about the cost of goods sold in your upcoming shipments and your available options.  Moving your goods into bond until after the New Year might be worth your while.

When the time is right, talk to us to find out if it is the right solution for you.

Magellan Logistics has been navigating global supply chains for Australian fashion, footwear, textiles and retail businesses for 20 years.

We have your back on this and any other customs or freight-forwarding topic.  If you would like to discuss the ChAFTA duty rates reduction and how you can take early advantage of them with me further please get in touch on 1300 651 888 or via alex@maglog.com.au.

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Top Tips for Painless Customs Clearance for Your Freight

Australia has one of the most stringent and highly regulated customs clearance and quarantine procedures anywhere.

While nobody enjoys getting one of their freight shipments sidelined by customs, it can also result in frustrating (and costly) delays, especially if the goods awaiting customs clearance are meant to be sold at retail. Not only that, but with the possibility of some rather steep penalties for non-compliance, it’s crucial to follow correct customs procedure at all costs to ensure no additional costs or charges on your cargo.

Because customs and quarantine clearance can be so complex, it’s important to have an experienced logistics company by your side. That’s why Magellan is proud to provide exacting and accurate advice for all things customs clearance advice to our customers in an effort to make companies run better by getting shipments through customs smoothly. We have a thorough understanding of quarantine regulations in Australia, making it easy to ensure that any and all goods you’re importing will be provided the proper clearances and your business has right the advice to quickly and efficiently clear customs, so you never face a slowdown.

It doesn’t matter if you’re moving a full container load or a partial one, if you’re using airfreight or seafreight, if you’re importing during the seasonal rush or consolidating a single shipment from multiple vendors: Magellan knows how to get it done for you, and how to do it in such a way that you won’t have to deal with red flags when it comes time to clear customs.  We will ensure your cargo is ready to be moved on to the next step in its lifecycle before you even realise it.

No one wants to be stuck twiddling their thumbs while their imported goods languish in depots, in storage that could be costing hundreds or even thousands of dollars per day. That’s why it’s crucial to ensure you get the best customs and quarantine advice you can, as it can easily derail the delivery process. There’s no reason for you know all the regulations letter and verse – let a logistics expert like Magellan handle the heavy lifting for you.

Contact Magellan on 1300 652 888 today to learn how we can ensure your next shipment arrives at your loading dock on time and under budget. Or download our handy e-Guide “How to avoid delays with Australian Customs”.

Sources:
https://www.magellanlogistics.com.au/specialties/
http://www.australia.gov.au/information-and-services/business-and-industry/trade-import-and-export/import-and-export
https://www.border.gov.au/Busi/Impo

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PRODUCTION ASSIST COSTS (“Assists”) Explained

What are Production Assist Costs?

Production Assist Costs relate to tangible and intangible assistance provided to a foreign supplier by an Australian buyer of imported goods. If this assistance is provided free of charge or at a reduced cost then the cost of this assistance (to the extent it is not already included in the price) needs to be included in the value declared to Customs upon importation. The production assist costs that fall within this description are commonly referred to as “Assists”.

Categories of Assists

a) materials, components or other goods that form part of the imported goods;

b) materials consumed in the production of the imported goods;

c) tools, dies, moulds or other machinery or equipment utilised in the production of the imported goods;

d) art work, design work, development work and engineering work (including models, plans and sketches) – the design of which has been undertaken outside Australia;

e) inputs in the production of the goods referred to in (a) to (d) above;

f) overseas transportation and packing costs relating to (a) to (e) above;

g) foreign customs duties, sales tax, or other duties or taxes on production tooling, work goods or subsidiary goods;

h) repairs or modifications to the materials, components, subsidiary goods, tools, dies, moulds, and other goods referred to above.

An example of a transaction involving “Assists” would be an Australian white goods wholesaler providing Australian standard electrical cords and plugs to a Chinese manufacturer for incorporation into Australian imported white goods. If the cords and plugs are provided free of charge to the manufacturer then the value of the cords and plugs would need to be added to the suppliers invoice price to arrive at an acceptable Customs Value.

It should be noted that it is irrelevant whether duty is being paid on the imported product as the importer has an obligation to report accurately to Customs and, as such, any under-valuation would fall within the ambit of the Infringement Notice Scheme.

As always, Magellan Logistics stands ready to assist with determining whether your business is exposed due to non-compliance with the above requirements. If you would like more information on this subject or simply wish to clarify any of the foregoing detail please contact Jeff Kershaw at jeff@maglog.com.au or by telephone on 0418 543 994.

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TRANSFER PRICING explained……

Have you done the due diligence required to ensure compliance?

 

Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the price set for those goods is the transfer price. Transfer pricing does not apply to importers and exporters that deal with unrelated buyers and sellers.

It is a fact of life that multinational companies, from all sectors and in every part of the world, face difficulties with respect to the valuation of goods. These difficulties arise because transactions between related parties are subject to both customs and fiscal examinations and are thereby bound by differing rules and contradictory interests.

There are two reasons for this problem:

Firstly, tax and customs administrations, even within one country and sometimes within the same government department, have different approaches: tax administration focuses on intra-group sales’ prices that may be perceived as higher than they should be; whereas customs authorities control imported goods for which prices may be perceived as lower than the market price. While both administrations seek to achieve the same goal (which is arm’s length pricing) revenue interests in the transaction still remain at odds with each other. An arm’s length transaction is one in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.

Secondly, tax and customs administrations often set rules independently for the same transaction/good. Tax authorities seek conformity with the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines which have been largely codified in many countries. This set of rules provides guidance on the application of the arm’s length principle for the valuation of cross-border transactions between associated enterprises, whereas customs authorities conform to Article VII of the General Agreement on Tariffs and Trade (GATT) Valuation Code – currently the World Trade Organization (WTO) Valuation Agreement.

This dichotomy, present in both developed and developing countries, creates a climate of uncertainty and complexity compounded by economic globalisation. It also leads to increases in compliance and implementation costs, absence of flexibility in the conduct of business operations, and creates a significant risk of penalties. Indeed, even when a company complies with both the OECD guidelines/principles and the World Trade Organization (WTO) Valuation Agreement, there is no guarantee that there will not be a dispute between two countries or two administrations in the same country on the determination of the arm’s length price. This means that valuation conflicts can arise not only prior to but also after an audit.

Given that intercompany transactions account for more than 60% of global trade in terms of value, the divergence of customs and transfer pricing valuation presents an obstacle to the liberalisation of trade and inhibits international development for companies of all sizes.

Magellan Logistics can provide advice on this complex subject. So if you are involved in cross-border trade with a related company and have reservations about the legality of your arrangements you should contact Jeff Kershaw at Jeff@maglog.com.au or by telephone on 0418 543 994.

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Magellan Logistics Christmas and New Year Holiday Trading Hours

Please note our office operating hours over the Christmas and New Year period
______________________________________________________________________

2014:

Wednesday 24th December

Closing at 2pm

Thursday and Friday 25th & 26th December

Closed Christmas & Boxing Day holiday

Mon & Tue 29th/30th December                       

Normal Business hours 8.30am – 5pm

Wednesday 31st December                              

Closed at 2pm

2015:

Thursday 1st January                                        

Closed New Years Day holiday

Friday 2nd January                                             

Resume of normal business hours 8.30am – 5pm

______________________________________________________________________

Due to our staff Christmas function, we will have limited staff available on Friday 19th December
from 1-5pm.

Thank-you for you understanding during this time.

We appreciate all the support shown to us by our clients, agents and friends throughout 2014 and we wish you all the best for the year ahead.

The team at Magellan Logistics

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Department of Agriculture announces increased quarantine fees and charges over Christmas and New Year Period

(Below information provided by CBFCA – Customs Brokers and Forwarders Council of Australia Inc.)

Further to NNF 2014/169 Quarantine Fees and Charges Guidelines (the Guidelines) the Customs Brokers and Forwarders Council of Australia Inc. (CBFCA) has been advised that the Department of Agriculture (the Department) will apply specific  increased fees and charges over the Christmas/ New Year period.

Members should note in  particular  the overtime charges, and the prescribed times that are considered as overtime in Section 8.5 of the Guidelines.

It should be noted that overtime rates will  be applied for any transactions that are performed during the period 27 December to 31 December of each year.  This period is considered as a Departmental holiday.

As  service starts outside of ordinary hours, it is considered as non continuous overtime, with a minimum number of hours to be charged.

Therefore any inspections, or AIMS entries required to be processed during this period will attract the normal fee for service, plus overtime of $288.00 per service provided.

In addition on other issues the Department has  also confirmed that in accordance with Section 8.6 of the Guidelines , reprints of directions involving a change to the direction will incur a $40.00 per quarter hour unit fee from the 25th of November 2014.  Where a reprint of a direction occurs during the Departmental holiday period, the fee will be $40.00 plus $288.00.

Reprints of directions where no changes have occurred are considered as part of the initial payment, and will therefore not incur any additional costs.

Where an inspection is booked with the Department, and subsequently  cancelled with 24 hours notice or more, there will be no fees payable.  However where less than 24 hours notice is given, a fee of a 15 minute service fee unit will be charged for manned depots, and 30 minute service fee for unmanned depots.  Please refer to Section 8.7.8 of the Guidelines .

As bookings are made as AM or PM only, the cancellation must occur more than 24 hours before the corresponding AM or PM slot, for no fees to be charged.

Members should clearly note and understand the implications of this provision  implemented for the Departmental holiday period, as if less than 24 hours notice is provided, the cancellation will also attract $288.00 in overtime fees.

Further information

Refer to below Quarantine Fees and Charges Guidelines link or download attachment.

www.agriculture.gov.au/biosecurity/import/general-info/fees-charges-import/quarantine-fees-and-charging-guidelines

CBFCA – National

Download Quarantine Fees and Guidelines November 2014

For more information please contact the Magellan Logistics customs team on 1300 651 888.

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Australia Korea FTA in effect 12 December 2014

Trade and Investment Minister Andrew Robb has announced that Australia’s Free Trade Agreement with South Korea will enter into force on 12 December 2014.

The Korea-Australia Free Trade Agreement (KAFTA) was signed in Seoul, South Korea, on 8 April 2014 and KAFTA will enter into force when both Korea and Australia have completed their domestic legal procedures.1

Below is an outline of top imports from Korea into Australia in 2012-2013.2  For Magellan customers, this agreement may also affect those importing textiles or other similar products from Korea.

There are a range of products that will have reduced duty rates under this agreement, and to get access to these lower rates, suppliers will have to provide importers a KAFTA certificate.

Four steps to using KAFTA

Step 1: WHAT goods am I exporting or importing? (tariff classification)

Step 2: HOW are these goods treated under KAFTA? (tariff treatment)

Step 3: WHERE are my goods produced? (rules of origin)

Step 4: CERTIFY your goods with a Certificate of Origin

For further information on what items will have reduced rates and the detail behind the KAFTA stepped process above please refer to this media release and/or speak to your friendly Magellan Logistics Customs Broker who can provide more detail on 1300 651 888.

To read more about Free Trade Agreements and how they help Australian exporters, read our recent blog

 

Sources:

1 Customs Brokers & Forwarders Council of Australia Inc. – CBFCA

.2 Department of Foreign Affairs and Trade http://www.dfat.gov.au/fta/kafta/

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News Alert: Allowing more time for your exports due to China pre-export inspections & buyer consolidations.

 

calendar-magellan

Increasing the ratio of Customs Inspections for Export Cargo in China.

The export cargo inspections ratio from Customs in China, and in particular at Xiamen and Huangpu have been increasing during this year for export shipments to all international ports. When cargo is held for pre-export inspection, this affects the export clearance process, to the extent that shipments may not meet the intended booked vessel. We have noted that pre-export inspections by Chinese Customs can take up to 3 days. It is a random process that is done within the complete control and direction of Chinese Customs.

We recommend a further allowance when delivering export cargo to the receival depots and wharf terminals of 3-4 days before the closing date for FCL & LCL shipments.

Single Buyer Consolidations from various suppliers in different provinces

In the case of buyer consolidations (BCN) that may involve various suppliers from different Chinese provinces, we need to allow longer transits for the domestic transfer to the receival depot. We recommend instructions are given to your suppliers to allow at least 4 days prior to vessel close-off to cover any delays, to ensure adequate time to stuff the container and lodge it at the wharf terminals for export.

For more information please contact your account manager or the customs team on 1300 651 888.

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Prepare for import duty reductions now – effective 1st January 2015

5-percent-duty-rate-magellan-logistics

Further to our previous blog, this is a reminder that the duty reduction date is rapidly approaching us: 1st January 2015.

In essence, legislation was passed for a reduction to 5% in the general rate of Customs duty applicable to a range of  products, which in particular includes  garments, some home-wares and other made up textile articles that are imported into Australia from 1st January 2015.

If any goods that you import currently attracts a 10% rate of duty, that rate may now be reduced to 5%. Should you need clarification if your imported goods are subject to the duty reduction, please contact one of Magellan Logistics’ Customs Brokers on 1300 651 888.

If you have shipments planned to arrive towards the end of December 2014, and they are cleared before the 1st January 2015, then the current duty rate of 10% will apply.

Rather than delaying shipments until arrival after 1st January to gain benefit from the lower duty rates, we can assist by arranging to have your shipments held for a few extra days either in storage or “under bond”  (moved to a Customs approved warehouse/depot). The duty rate reduction will be applicable to any Customs declarations made on or after 1st January 2015, rather than on the date the shipment actually arrives in Australia.

Before making this commitment, we can assist in a costing exercise in weighing up the added storage, demurrage  & handling costs compared to the duty savings.

As this period will also impact over the traditional holiday close-downs for much of industry, storage is usually always at a premium across Australian ports. So if you intend to hold any of your shipments in storage for a short period to take advantage of the duty reductions, we suggest you let us know your plans as soon as possible, so we can make appropriate planning decisions in your best interests.

Please call 1300 351 888, email info@maglog.com.au, or contact one of our Customs Brokers or your Account Manager directly to further discuss the plans for this upcoming duty rate reduction.

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Free Trade Agreements Help Australian Exporters

free-trade-agreement-magellan-logistics

When it comes to global trade opportunities for Australian exporters, free trade agreements (FTAs) play an important role. For any locally based business wishing to expand their international reach, they are a way of linking otherwise unconnected economies and establishing new markets for reciprocal exchange of goods and services, as well as investments.

Those in the business of international shipping from here in Australia have previously enjoyed seven different FTAs with countries across the globe, including New Zealand, Singapore, Thailand, US, Chile, the Association of South East Asian Nations (ASEAN) (with New Zealand) and Malaysia.

In addition to allowing trades of goods and services, FTAs also typically encompass a range of other trading potential, such as the exchange of intellectual property rights, government procurement and also competition policy.

All exporters in any industry that freights goods internationally can benefit from FTAs.  The fashion, textiles & footwear freight industry for example, under these established FTAs, make up around 26% of Australia’s total trade – a substantial figure and one that is now set to grow further. The addition of FTAs for Japan and Korea will be of interest to Australian garment manufacturers and local fashion exporters.

Japan and Korea Add New Export Market Opportunities

In April 2014, those in the Australian export business were pleased that Australia signed an FTA with Korea.

In other positive news for the local retail industry, in July 2014, Australia also signed an Economic Partnership Agreement (EPA) with Japan. An EPA is an economic arrangement – often described as a premium variation of a general free trade agreement – that opens up free movement of goods, services and investment between countries. It’s good news for anyone in the business of fashion freight shipments, whether as an importer, or exporter of garments and other goods – but also a positive step for any local retailer or manufacturer keen to tap into a wider international audience.

Then, there are economic partnerships, which are sometimes described as high standard variants of free trade agreements.

Using the fashion industry again for a quick snapshot, at the moment, Korea accounts for around 5% of Australia’s total trade, with Japan accounting for around 11%. With the increasing number of FTAs currently in negotiation to help Australian exporters access new markets and expand trade in existing markets, this is expected to increase.

If you’re an existing Magellan Logistics client, currently enjoying the export and import opportunities for your business, we’d encourage you to actively review your current marketing plans and shipment strategies to analyse whether these latest  FTAs will be of benefit for your business.

To find out how your business can benefit from these new Free Trade Agreements, speak to our trusted freight specialist team here at Magellan Logistics, for more information on 1300 651 888.

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