An overview of special customs procedures: What should firms be aware of?

Special customs procedures are typically designed to facilitate trade and make it easier for businesses to transport goods in and out of a certain country with reduced costs. The opportunity to avoid duties or taxes allows companies to be more flexible in how they plan their supply chains, storage and processing facilities and react quickly to changing environments.

As well as offering significant cost savings for businesses, they are also often used to boost economic activity. By offering incentives for firms to ship and process goods in certain locations, national authorities can encourage investment and business development in an area.

There are a range of initiatives and programs that fall under the category of special customs procedures, but some of the most common and useful are as follows.

Bonded warehousing, also known as customs warehousing, allows businesses to temporarily store and process goods in designated locations in a country without paying import duties. For example, in the EU, these facilities allow businesses to import non-EU items duty-free and then hold or modify them. Goods can then be re-exported without paying any duties, or customs fees can be delayed until goods are shipped out of the bonded warehouse and into the EU.

Inward processing allows goods to be imported into a territory for the purposes of processing. This may include manufacturing, repair, packaging or other alteration. Goods imported using inward processing rules are exempt from import duties, VAT and other customs charges. They may then be reexported without further charges. 

Goods processed under these rules may also be released into the customs territory, but if this occurs, businesses will be required to pay all relevant duties.

Outward processing can be considered the opposite of inward processing. Instead of importing goods for manufacturing, repair or other activities, businesses can temporarily export them to have these processes completed offshore. 

They may then re-import their transformed goods to the original country and take advantage of partial or total relief from import duties. Typically, customs duties will only need to be paid on any value added by the overseas processing rather than the entire product, which would be the case without this regime.

This allows businesses to import goods into a territory without the need to pay customs duties, provided the items in question are only used for certain prescribed purposes before being exported again. Typically, goods may only remain in the country for up to 24 months and may not be processed during this time.

Temporary admission is often used for:

• Items involved in trade events, demonstrations or exhibitions
• Commercial samples and promotional materials
• Professional equipment, such as tools, instruments and testing machinery
• Medical, surgical and laboratory equipment