Why is it important to monitor your commodity codes regularly?

When classifying imported goods, knowing the related processes is a critical factor. An annual review of your commodity codes is imperative to avoid unnecessary costs. With a lifecycle management approach, you can keep up with commodity number changes and gain a competitive advantage in your market.

"Working with classification and looking at commodity codes from a lifecycle perspective is important for all companies. Commodity codes govern restrictions, licenses and regulations. Therefore, you should see commodity codes as constantly evolving, making classification a competitive factor worth spending time on. Life cycle, in this case, means that it is not static, but should be revised regularly. If you get the foundation right, you will ensure that everything else follows correctly too," says Peter Ruotsalainen, Key Account Manager at Maersk.

Minimise the risk of fines and permit revocation

One invalid or incorrect commodity code is often an indication that other deviations may also exist. Correct codes ensure compliance with any simplified customs declarations. Incorrect codes can cause payments of excessive or insufficient VAT or customs duties which increases your costs.

If you pay too little, you may face legal fines and/or penalties. Customs may even delay or seize your goods. Keep an eye on the life cycle and you will have a flow in your customs master data. With your codes up-to-date and valid, can withstand an audit successfully.

Classification is cost-effective

Getting all your codes in line from the start requires significant investment, both in resources and time. The most important task is to sort all customs master data with the current codes to determine which codes need to be revised. After that, you only need to make annual updates to enhance cost-effectiveness.

By regularly reviewing your codes, you will discover where free trade agreements can be utilised to optimise your customs duties and cut costs. This also allows you to keep track of regulated markets where anti-dumping fees are regularly imposed.

The importance of classification

One wrong code can prove risky. For example, if your company is importing from a country outside the EU at a low cost, keep in mind that the destination country will impose anti-dumping duties, which can make importing the goods more expensive than anticipated.

Establishing processes, routines and systems not only ensures compliance but also helps overcome obstacles in your daily business.