Issuance of supplier's declaration: What firms need to know
Supplier declarations are an essential part of the supply chain management process for any business trading internationally. This documentation is essential in ensuring businesses are able to take full advantage of free trade agreements (FTAs) by utilizing preferential tariff arrangements.
Securing reduced or eliminated duties on imports requires firms to demonstrate they are complying with all relevant rules of origin for a product and its components. However, for more complicated supply chains that source materials from many different countries around the world, this can quickly become a very complex and challenging process.
If businesses are issuing requests for supplier declarations and then passing them on to customs authorities manually, it can be easy for mistakes or omissions to fall through the cracks. This could leave businesses facing unexpected tax bills if items they were expecting to get relief on end up facing charges, and can cause delays and disruptions throughout the supply chain.
Therefore, having a full understanding of what the supplier declaration process involves and how the right technology can streamline this is essential in guaranteeing firms are taking full advantage of FTAs, as well as ensuring the smooth flow of trade.
The importance of accurate supplier's declarations
Supplier's declarations are a key component when claiming reduced or zero-rated tariffs based on advantageous rules of origin agreements. They tell customs authorities exactly where each part of a final product originated in order to determine whether or not items satisfy the criteria for customs relief. This proof of origin is typically needed whenever goods are exported to a different market.
Ensuring these are complete and accurate is essential, particularly when there are complex criteria for rules of origins requirements. For example, in many cases, a specified percentage of manufactured goods by value will need to come from preferential countries in order for the final product to be classified as tariff-free.
Therefore, complete details about materials and their value are vital. Failure to provide this could result in financial penalties in addition to importers being required to pay the full rate of duty.
What information should a declaration contain?
While it is the supplier that is wholly responsible for issuing the declaration, the onus is on the exporter to ensure the information is received in a timely manner and features all the necessary information. This includes:
- A description of the items supplied
- HS codes or other commercial designation
- Originating country
- Name and address of the consignee and purchaser, if different
- Date of declaration
As well as declarations for individual shipments, suppliers are able to make long-term declarations when they are engaged in regular shipments of the same items. This can cover multiple shipments of goods over a specified period of time and is valid for up to two years from the date of issue.
In addition to the above, these declarations should include the start and end dates of the period covered. The start date must not be more than 12 months before or six months after the issue date, and the end date may not be more than 24 months after the start date.
The benefits of automating supplier declaration requests and issuance
Managing these supplier declarations can quickly become a complex process. Documentation will need to be secured every time a firm does business with a new company or makes changes to the goods it receives.
As such, global trade management software that allows firms to automate the issuance of supplier's declarations is hugely useful. This can take many of the manual processes out of the hands of businesses, from initial requests for information to automated follow-up reminders and as well as final warning.
A key benefit of this is that it reduces the risk of costly delays to shipments that may be caused by late, incomplete or inaccurate information. This also eliminates the possibility of financial penalties for inadvertently submitting false details.
What's more, being able to rely on this technology frees up a great deal of time for professionals to focus on other areas that can provide greater value. They can do this secure in the knowledge that their everyday tasks are being performed as seamlessly as possible.