Cost Analysis Application Form
attachment: cost analysis application form.doc
How can a company claim for preferential tariff treatment ?
claim for preferential tariff treatment by:
- Present the CoO to Customs Authority of the importing party;
- If there is reasonable doubt, Customs authority of the importing party may request issuing authority of the exporting party to conduct retroactive check;- If not satisfied, the Customs Authority may conduct verification visits to the manufacturer's premise in exporting country.
How does a product be determined of its origin ?
A product is deemed as originating from a particular country based on two criteria:
1. It contains no materials or processing from outside country, i.e., the products is wholly obtained, or
2. Sufficient working or processing or substantial transformation has taken place.
How to check the product HS Code?
Product classification is normally in accordance with the Harmonized Commodity Description and Ceiling System (HS). The related agency in determining HS Code is the Royal Malaysian Customs Department.
Under Malaysia's FTAs, goods are classified under specified digit level. The first two digits are known as the chapter, the first four digits as the heading and the first and sixth digits are subheading. The seventh and eighth digits consist of further detailed tariff nomenclature breakdown.
The chapters are organized according to materials or to degree of processing, for instance:
Live animals Chapter 01
Rubber and articles thereof Chapter 40
Wood and articles thereof Chapter 44
Paper pulp Chapter 47
Paper Chapter 48
Books Chapter 49
Wool yarn and woolen fabrics Chapter 51
Cotton yarn and cotton fabrics Chapter 52
Within each chapter, there are several headings. Within chapter 01, there are several headings, namely:
Live horses, asses, mules and hinnies
Live bovine animals
Live sheep and goats
Within each heading, goods are categorized into subheadings, as follows:
0101.10.00 for purebreeding animals
0101.90 for others
Within each subheading, there are several subheadings, such as:
4. How to check whether the product is covered under the tariff elimination/reduction schedule?
Exporters must check whether the goods are included under the tariff reduction schedule of our FTA partner. First determine the digit code number of your product. Scan through the tariff schedule of the FTA partner to see whether your product is listed for elimination or reduction.The tariff schedules for each of Malaysia FTA can be obtained from Ministry of International Trade and Industry (MITI) website on FTAs www.miti.gov.my.
What are Mutual Recognition Agreements?
A Mutual Recognition Agreement (MRA) is an agreement between the FTA partners to recognise, or accept each otherâ€™s conformity assessment results e.g. test reports, certificates and inspection results, thereby not requiring them to undergo similar tests and certification in the importing country. This will save time and eliminate the cost of duplicative procedures.
What are Originating Goods?
Originating Goods are goods that meet the conditions for preferential market access. All other goods are called non-originating goods
What are Preferential Tariffs?
Preferential tariffs are customs duties imposed on incoming goods from an FTA partner which is set at zero or at a lower tariff than that imposed on other countries. The elimination/reduction exercise does not cover internal taxes such as GST or excise duties.
What are Rules of Origin (RoO)?
Rules of Origin are the criteria used to determine the country in which the good has been produced or manufactured. It is the basis used for international trade purposes. RoO is needed to determine the origin of products eligible for the preferential tariff concession.
What are Sanitary and Phytosanitary (SPS) Measures?
Sanitary and Phytosanitary (SPS) refer to any of the laws, rules, standards, and procedures that governments employ to protect humans, other animals, and plants from diseases, pests, toxins, and other contaminants. Exporters are required to adhere to the rules and regulations on products they are exporting concerning SPS of the FTA partner country or their products will be rejected entry. SPS rules and regulations may vary from country to country.FTAs can ensure that each countryâ€™s food safety and animal and plant health laws and regulations are transparent, scientifically defensible, and fair.
What are Technical Barriers to Trade (TBT)?
Technical regulations and standards are important to ensure environmental protection, safety, national security to consumer information. Exporters are obligated to adhere to the respective rules and regulations of the importing FTA partner country. These may vary from country to country. Technical Regulations and Standards can become a barrier to trade.To help reduce costs to Malaysia exporters and remove barriers to the movement of goods to FTA partner country, Malaysia has negotiated mutual recognition agreements (MRA) on conformity assessment in all our FTAs.
What are the benefits of FTA to Malaysian based exporters?
Exporters in Malaysia will benefit from FTAs through preferential treatment and market access. Exporters will also enjoy cost savings from elimination or reduction of customs duties and from mutual recognition agreements, trade facilitating customs procedures and removal of onerous regulations. For service providers, FTAs provide improved market access for various commercial and professional services from Malaysia. FTAs also provide for easier entry for businessmen as well as more predictable terms for investment in the FTA partner country.
What are the measurements used in determining that a product have undergone substantial transformation (ST)?
Substantial Transformation (ST) can be measured through:
Value Added (VA)/ test of origin method defines the degree of transformation required in terms of:
- minimum percentage of value that must come from the originating country; or
- maximum amount of value that come from the use of imported parts and materials;
The general rule is for their product to satisfy that at least 40 per cent (either local content of individual countries or ASEAN cumulative content whichever applies)
Formula used in determining product satisfaction of the 40 per cent rule is:
(F.O.B. - V.N.M)
--------------- x 100
Q.V.C. is Qualifying Value Content
F.O.B. is Free on Board Value
V.N.M. is Value of Non-Originating Materials
Change in Tariff Classification (CTC)
- ST occurred if a good obtained is classified in a different tariff classification than that of its non-originating inputs used in the process.
- specified process of manufacture;
- defines certain manufacturing or processing operations that a product must undergo in the exporting country to confer origin (positive test); or
- Specifying manufacturing/processing procedures that do not confer origin (negative test).- combination of the above.
What are wholly obtained goods?
Wholly obtained goods are generally goods that meet the following criterion:
- live animals born and raised in that country;
- animals obtained by hunting, trapping, fishing, gathering or capturing in that country;
- products obtained from live animals;
- plants and plant products harvested, picked or gathered in that country;
- products of sea-fishing and other products taken from the sea outside a country
- goods obtained or produced on board factory ships;
- products taken from the sea-bed or subsoil beneath the sea-bed outside a country;
- minerals and other naturally occurring substances;
- scrap and waste derived from manufacturing or processing operations or from consumption in that country and fit only for disposal or for the recovery of raw materials; and- goods obtained or produced in that country solely from products referred to above.
What is Early Harvest Programme (EHP)?
The EHP is a mini fast track prelude to the FTA under negotiation. It exempts some products from tariffs before the FTA is completed. Either countries or parties can increase market access for each other on items of significant commercial interests.The EHP has provided duty free access to a substantial number of products within specific time. The list of products shall be agreed during bilateral negotiation. Apart from this, a large number of products will be exportable by both countries at Margin of Preference in relation to MFN duty rate. By doing this, either countries or parties can enjoy concessionary duty rate in comparison to exports of same products from other countries.
What is the basic component of an FTA?
FTAs have traditionally been confined to trade in goods. However, after the establishment of the WTO, trade in services and other areas such as investment, intellectual property protection, competition policy, and cooperation measures have been included.
What is the tariff elimination/reduction schedule?
The tariff elimination/reduction schedule indicates the rates at which duties on goods are being eliminated. Under Malaysiaâ€™s FTAs, the schedule should include the HS Code, description of the product, the base rate applied at the date the FTA comes into force, and the schedule of elimination/reduction by year.
Where can companies forward their Application for CoO to?
MITI is the sole issuance authority of the CoO. However, companies can obtain the forms from FMM and its branches.Prior to CoO approval, Pre-exportation verification to determine the origin of a product is required. Result of the verification is valid for two years.
Which Agreement has been commenced under Early Harvest Programme (EHP)?
Malaysian companies can enjoy the EHP through two agreements that is one under bilateral trade agreement and the other is under regional trade agreement. The implementation of the ASEAN6-China (trade in goods) commenced in January 2004.
Will my product enjoy preferential tariff under the FTA when imported into the FTA partner country?
Prior to applying for FTA concessions, companies are advised to check their product HS Code with the Customs Department. Companies should also check whether their product is included in the Inclusion List of Malaysia and the importing ASEAN country with Federation of Malaysian Manufacturers (FMM) or Ministry of International Trade and Industry (MITI). To qualify for preferential treatment, your product must also qualify as an originating good.
What is an FTA?
FTA is an agreement made between two or more countries under which countries involved are given preferential market access.
Last Updated 2015-06-26 11:00:41 by admin2