In 2021, C&A Serbia was the victim of a major customs fraud involving 300 imports. As recently as the following September, Toyota was sentenced by the Supreme Court of Thailand to a very heavy fine for importing components not subject to a reduced tariff. These two events show that international trade and customs classification are of the utmost importance if you want to stay in good standing and work more serenely with foreign countries. Here's how to avoid this situation happening to you.
Sobering examples of customs classification fraud
In October 2021, C&A Serbia was the target of an organized customs fraud. In media reports, the company explained that it had been defrauded "by one of its business partners and other as yet unknown perpetrators". 300 fraudulent imports were accumulated, presumably abusing the C&A logo, as well as the " advantageous customs status and powers of C&A's customs representative in Serbia".
Toyota, for its part, saw a dispute end in its disfavor in 2022 when the Supreme Court approved the court's earlier ruling that the imported items should be treated as complete disassembled kits, with a customs duty rate of 80%, instead of being considered as car parts. In other words, they had originally benefited from a reduced rate of 30%, under a Japan-Thailand Economic Partnership Agreement (JTEPA).
These two recent events are examples of what can happen when customs classification and declarations of origin are not sufficiently rigorous. It also happens when monitoring leaves "holes in the racket" that can allow fraud committed by unscrupulous trading partners to slip through.
The financial and reputational risk of misrepresentation
The customs classification of products has a direct impact on the rate of customs charges to be applied to them. Ignoring these harmonized international rules, or making a mistake, can lead to numerous problems, not only in customs terms, with fines, but also through the courts in the country where the goods have arrived.
Thus, even in good faith, incorrect customs declarations can result in :
- High financial risks that can lead to such heavy losses that the business has to close down.
- A bad reputation with customers, investors and business partners. Indeed, misclassification can give rise to fears of evasion of the rules, which does not bode well for the company's other actions and relationships.
Whether a company is just starting out or has been in the business for several years, the consequences are more or less significant. But in any case, if customs discover obvious errors and the courts intervene, it's not good news for any company looking to expand internationally.
Optimal control of your classification and origin risks
Today, no commercial enterprise should do without a complete digital solution for classification and declaration of origin. To ensure that you don't have to deal with any of the examples given at the beginning, it's important to turn to a Global Trade Management (GTM) tool that covers all your classification and customs rules.
MyTower is a unique source on the market for verifying the accuracy of your trade data (classification and origin). Reduce and control your customs risks with this 360° GTM tool. An intuitive dashboard lets you check all your products, spot errors and verify customs declarations with a single click. Among a range of other tools, you can also know the exact number of items classified or awaiting classification, and track their chronology. You can also integrate your data with other sources, such as your ERP. In short, you have full control of the classification chain, from start to finish.
Protect yourself against risks and trade internationally with peace of mind!
