EU Customs to use FloraHolland reference prices for the determination of customs value of Kenyan flower imports.

The EU Customs have agreed to use FloraHolland reference prices for the determination of customs value of Kenyan flower imports. This will make it easier for growers and freight forwarders to declare the value of shipments upon entry into the EU. Growers and freight forwards may use the FH reference price to do a definitive declaration at the moment of customs clearance. According to FloraHolland, Customs has indicated that the suggested method will be used as a Pilot measure, valid until 31 December 2014, after which an evaluation will take place.

This comes after the successful completion of the East African Community and European Union Economic Partnership Agreement (EAC – EU EPA) Negotiations. Both Parties initialed the text of the EPA paving way to the process reinstating Kenya on the duty-free status for all its exports to the EU market under the EU Market Access Regulation (MAR), a process that could take 3 to 6 Months pending final signature and ratification.

How it works

Every Friday, FloraHolland will produce a document stating the total average price per crop (Rose, Hypericum, etc) of each grower. From this total average price, a fixed percentage of estimated costs may be deducted, resulting in the reference price for customs value (The fixed percentages have been determined at: 18.6% for members and 19.8% for non-members). The fixed deduction represents the following costs: contribution fee, auction commissions, trolley and lot levy, bucket rental, handling/unpacking costs and waste.

The reference price calculated and issued by FH in a certain week (‘X’) may be used as customs value base for shipments in the following week (‘X+1’). The value of a shipment offered for clearance and declaration in following week ‘X+1’ is then calculated as follows:

Number of stems per crop x reference price of crop from week ‘X’ = base value of products.

From this value, the actual costs of clearance, handling and transportation to the auction may be deducted, as well as 39% of total Freight cost. This deduction will need to be done according to invoice of the freight forwarder/clearing agent.

After these costs are deducted, the resulting value is the Customs value, upon which the import duty is levied.

Example for member grower ‘Y’ shipping roses in week 41:

FH Average Price Rosa week 40 of grower    Y:                                            € 0.20

Reference price FH for to be used for week 41:                                           € 0.1628 (=20 cents– 18.6%)

Base value of Shipment of 10,000 stems Rosa wk 41                  € 1628 (10000 x 0.1628)

 

 

Additional deductions based on invoice (values in example are fictive)

Freight cost:                                                         € 400 x 39%= € 156

Customs clearance fee                       € 40

Freight forwarding costs                   € 20

Transport to auction                                           € 25 +

Total deductions invoiced                                 € 241

 

Base value:                                                           €1628

Deductions:                                                          € 241 –

Customs Value of shipment:                             € 1387

 

The clearing agent declares the value calculated above at the moment the shipment is cleared through customs. The import duty is levied on this value.

Advantages

The advantages of using the method above are twofold. Firstly, the challenge of allocating proceeds and costs of unpacker and auction to a particular shipment is tackled. The FH weekly price statement with fixed deduction is sufficient documentation for customs declaration. Secondly, declaration can be done definitively at once, instead of doing a preliminary declaration upon clearance and a definitive declaration later once the product has been sold. This reduces administrative load and costs of clearing agents.

What about the shipments already imported since 1 October?

Customs has agreed to allow the same method of value determination for shipments that have been imported since 1 October and are currently still awaiting definitive declaration. FH will send all growers their reference prices of all prior weeks since 1 October.

Note: every grower is of course at liberty to use his/her own documentation and alternative methods for calculation of customs value of both past and future shipments if they wish to do so.

How the information is supplied

In order to safeguard the confidentiality of information, FH intend to issue the reference prices of each individual grower via his/her email address only! A grower wishing to use this data for customs declaration purposes, will need to take care of supplying the document to his freight forwarder/clearing agent.

Growers should  expect to receive an email regarding their reference price within the coming days.

If you do NOT wish to receive your reference price by email, or want to have it sent to an alternative address, or if you did not receive any email regarding your reference prices by the end of this week, please contact your accountmanager at FH.

For more information on the requirements of your clearing agent regarding the manner and time of receipt of documentation, please consult with your freight forwarder/clearing agent.

NOTE: Customs have agreed to the method of value determination above as a pilot. Customs may perform audits at some point in the future to determine if the used deduction percentages were accurate or not, based on the actual costs of unpacking, sales and waste

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