All businesses involved in moving goods across borders anywhere in the world must comply with customs and international trade rules and regulations. These rules and supporting guidelines are set, administered and enforced by the World Trade Organisation, trade bodies and sector associations, regional customs unions and national governments.

Customs authorities worldwide are responsible for assessing and collecting customs duties (the import taxes, charges and levies on imported and exported goods). It is estimated that business spends almost US$300 billion in customs duties annually.

Complying with customs and international trade requirements is therefore a fact of life for businesses involved in moving goods across borders. More onerous still, businesses are faced with continual changes to international trade rules and regulations. Even the way the same rules are applied can vary at international, regional and national levels.

Despite these differences, customs duties (the taxes paid on imported and exported goods) have several features in common:

• they are triggered when goods move across borders;
• the duties are based on tariffs (charges) for the type of goods being moved, not the trading profit of the business;
• they hit the bottom line as an absolute cost to the business as “sticking taxes”;
• they can be difficult to reclaim once paid and cannot be offset as tax credits.

In common with every other type of tax that your business has to deal with, management of customs duties and understanding the impact of trade policies on your business can result in tax cost reduction, enhanced process/reporting efficiencies, management of risk and compliance assurance.