A question that the BCR customs brokers are being frequently asked by freight and customs clients is, why there is a duty payable on their product although there is no Australian manufacturer for it?
Read on to find out what the reason for the duty is and what actions you or your customs broker may take in order to save that duty for your imported goods that are not produced locally in Australia.
Who is in charge of tariff classifications and duty in Australia?
The Australian Customs and Border Protection Service is the body in charge of classification and duty related matters. Products and goods imported to Australia require a classification under the Customs Tariff Act 1995 (for more information please visit: https://www.customs.gov.au/tariff/default.asp and https://www.customs.gov.au/tariff/tariff2012.asp or download the PDF)
The existing classifications are listed in the Australian Customs Tariff which is based on the International Harmonised Tariff coding.
Why do you have to pay duty though the product is not manufactured in Australia?
The Australian Customs Tariff is currently made of 9 schedules. Goods are classified in schedule 3, the most interesting schedule for importers, and in general this determines the duty rate. Each classification generally covers a broad range of products and the duty rate is set for the whole range. This is the reason that even though some of the products may not be made locally they fall into that range, and duty still has to be paid.
Can you do anything about it? Read in the next paragraph what actions can be taken.
How about products that are covered by the classification but are not manufactured in Australia? Is there a way to reduce the duty paid?
As the Australian tariff duty rates are mostly set to protect local manufacturers, it is recognised that duty should not be charged on imported products that do not have a locally made product that can be substituted. There is a mechanism known as the Tariff Concessions system that acts to remove the duty on these types of products. The tariff concession system requires an application to be completed for the specific product on which the duty reduction is being sort. See the article “How do I get a tariff concession?” for details on how this process works and how customs brokers can take care of it.
If you are not sure whether your products qualify for a tariff concession, please contact our Customs department. Our custom brokers are happy to assist with your questions or your customs clearance.