Preferential Duties

What are preferential duties?

A Preferential Duty Rate is lower than the normal duty rate applied to the imports from third countries - i.e. lower than the Most Favoured Nation (MFN) duty rate. This lower duty may be claimed for qualifying goods originating in countries with which the importing country has a Free Trade Agreement (FTA). In order for you to claim the preferential duty rate, you usually need to submit some kind of Proof of Origin.

How do you claim a preferential duty rate?

You typically claim the rate when the customs entry is filed, and you need to show that the goods meet the rules of origin in the trade agreement. Proof can take the form of a certificate or an origin statement on the invoice, depending on the agreement and the importing country.

What are common pitfalls?

Goods made in a partner country don't automatically qualify. They must meet the specific origin rules for their product, which often depend on where the materials came from and how much processing took place. Keep your supplier's origin records, since customs can audit claims later and recover duties if a claim fails.

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