Process Steps: Duty and Tax Calculation on Trade Transaction/Declaration

Once you have completed the setup steps, you are ready to perform the customs duty and tax calculation process on a trade transaction/declaration. Following are the major steps:

Create trade transactions/declarations and corresponding trade transaction lines/declaration lines.
Execute Look Up Product Classification action or enter the product classification for the item on the trade transaction line/declaration line manually.
Execute VALUE SET assignment compliance rules in order to assign charges and other values to the trade transaction/declaration header or lines. These values are required to calculate customs duty and other taxes.
Assign values for ENTERED MANUALLY value qualifiers.
Allocate values from header to lines.
Execute VALUE QUALIFIER FORMULA compliance rules in order to assign and calculate formulas for those value qualifiers flagged as system calculated.
Execute Convert UOMs action.
Execute Estimate Duty and Taxes action.

Creating Trade Transactions/Declarations and Trade Transaction/Declaration Lines

A trade transaction line/declaration line holds important information such as Incoterms and country of destination that will be used when estimating duty and taxes. Following is an example of a trade transaction:

Navigate to Transactions > Trade Transactions.

Trade Transaction representing an import from China to Great Britain:
- Enter a Transaction ID = ELC-GB-CHN TRANSACTION-1.
- In the header section:
  - Enter a Border Transport Mode = AIR.
  - Enter an Incoterm ID = CIF.
- In the Dates section, select a Date Qualifier ID = EXPORT DATE with a Date = 2015-02-25.
- In the Involved Parties section:
  - Select an Involved Party Qualifier ID = SHIP_FROM with an Involved Party = LILY BEARINGS (a party previously created with an address in Shanghai, China).
  - Select an Involved Party Qualifier ID = SHIP_TO with an Involved Party = SI PUMPS LIMITED – LONDON (a party previously created with an address in London, UK).
- Click Transaction Line and click New Transaction Line.
  - Enter a Transaction Line ID = ELC-GB-CHN TRANSACTION-1-0001.
  - Enter an Item ID = NEEDLE ROLLER BEARINGS.
  - In the Quantity section, select a Quantity Qualifier ID = ORDERED with a Quantity = 10 and a UOM of EA.

Executing Look Up Product Classification

When you execute this action, the application looks at the classification on the item and copies the classification data from the item to the trade transaction line. In this example, this action copies the HTS GB = 8482400000 from the item to the trade transaction line.

Refer to the Product Classification topic for more detail on how to classify items.

Executing VALUE_SET Assignment Compliance Rules

Execute Compliance Rules for a compliance rule set group with rule category of VALUE SET. This action will assign a group of values to the trade transaction lines/declaration lines. In this example, execute compliance rules for the Transaction ID = ELC-GB-CHN TRANSACTION-1 with the compliance rule set group of ELC-CHARGES ASSIGMENT RULE-SET-GROUP-1. As a result of the screening, the following value qualifiers will be assigned to the trade transaction line: FOB VALUE, INSURANCE and INVOICE VALUE. The method of calculation (i.e. SYSTEM CALCULATED or ENTERED MANUALLY) will also be indicated for each one of the value qualifiers.

Assigning Values for ENTERED MANUALLY Value Qualifiers

Enter the values for those value qualifiers that have been assigned to the trade transaction lines/declaration lines and the method of calculation is indicated as ENTERED MANUALLY. In this example, enter 29000 USD as the value for INVOICE VALUE qualifier.

Allocating Values from Header to Lines

There are charges such as international freight that are added to the trade transaction/declaration header. These charges need to be prorated to the lines.

In this example, execute the Allocate Charges by Value action on the trade transaction/declaration. Enter the following information when performing the action:

Allocate a charge with Value Qualifier ID = INTL FREIGHT. This is the value qualifier at the header level. This amount will be allocated to the lines.
This allocation is prorated based on Value Qualifier ID = INVOICE VALUE. This is the value qualifier at the line level that will be the base for the allocation.

As a result, a Value Qualifier = INTL FREIGHT will be created automatically for all the lines with the corresponding prorated value.

You can also allocate charges by weight, allocate weight by value, sum quantity and value from the lines to header, or sum quantity and value on the header using the corresponding actions if necessary.

Executing VALUE_QUALIFIER_FORMULA Compliance Rules

Run the Execute Compliance Rules action for a compliance rule set group with rule category = VALUE_QUALIFIER_FORMULA. This action will calculate the formula or mathematical expression for value qualifiers assigned to the trade transaction lines/declaration lines that are flagged as SYSTEM CALCULATED. In this example, execute compliance rules for the Trade Transaction ID= ELC-GB-CHN IMPORT TRANSACTION-1 with the Compliance Rule Set Group= ELC-CHARGES FORMULA ASSIGNMENT RULE SET GROUP-1. As a result of the screening, the following value qualifiers are calculated: INSURANCE and FOB VALUE.

Converting UOMs

When you execute the Convert UOMs action, the application converts the quantity qualifier that will be used to estimate duty and taxes from the trade transaction/declaration unit of measure to the product classification code units of measure required for that purpose.

In this example, enter the following parameters for the action:

Product Classification Type = HTS GB.
Quantity Qualifier = ORDERED.
Select the Product Classification UOM to convert. If you are not sure what is the required unit of measure, select all of them.

The results will appear under the Reporting Quantity section on the trade transaction lines/declaration lines. In our specific example, there is no result as the customs duty and taxes for the classification code HTS GB 8482400000 is calculated based on the trade transaction/declaration value and not on trade transaction/declaration quantity.

Executing Estimate Duty and Taxes

The Estimate Duty and Taxes action will prepare a tax request to the external service that will estimate customs duty and taxes.

In this example, the application sends the following information in the request:

The FOB VALUE mapped to COST_OF_GOODS category.
The INSURANCE mapped to INSURANCE category.
The INTL FREIGHT mapped to FREIGHT_AMOUNT category.
The INTL FREIGHT mapped to DUTIABLE_FREIGHT_AMOUNT category.

The data provider sends the following values in the response:

The CUSTOMS VALUE category mapped to CUSTOMS VALUE value qualifier.
The DUTY category mapped to DUTY value qualifier.
The EXCISE category mapped to EXCISE value qualifier.
The VAT category mapped to VAT value qualifier.
The OTHER category mapped to OTHER value qualifier
The OTHER.HMF category mapped to HMF value qualifier.
The OTHER.MPF category mapped to MPF value qualifier.

These value qualifiers are flagged as CALCULATED EXTERNALLY to indicate that the calculations are done by a third-party system.