Active improvement


Inward processing is a customs regime that allows merchandise to be received with suspension of import duties and taxes. This, to submit them to some transformation, elaboration or repair for re-exportation.

This process also includes the maintenance of goods susceptible to deterioration. In this sense, it contributes to preserving them, improving their appearance or quality. After the process of transformation, maintenance, repair, etc., these goods are called compensating products.

It is the opposite of outward processing.

Entry to this regime must be processed with local authorities in foreign trade matters. This, before carrying out any merchandise import process.

For example, the company Reparadora SA receives a request to fix a machine in poor condition. For this he makes use of this regimen. Since you do not want to import the merchandise to sell it, but to repair it, you can save yourself the payment of taxes that could be caused by importing from another country or re-exporting to another country.

Characteristics of the inward processing regime

The companies that apply this customs regime can assemble, produce, assemble, restore or adapt the merchandise. In addition, they can use machinery, equipment, spare parts and other producers that are not part of the compensating products.

However, the entry of these products into the country carries customs taxation. This process can be carried out inside or outside the customs territory, depending on the laws of each territory.

Other characteristics of this customs regime are:

  • The companies are obliged to carry out the improvement operations.
  • Customs authorities should be able to supervise the refinement process.
  • Imported goods must be identifiable in compensating products.
  • The refinement process must not be to the detriment of local economic interests.
  • The perfected goods must be exported, in case of entering the national territory, the corresponding rights must be canceled.

Benefits of inward processing

This customs regime provides benefits, mainly, to exporting companies. Therefore, it also allows the export of other productive factors such as work. Given the suspension and possible exemption in the payment of taxes, companies benefit from a reduction in tax costs.

Active improvement enables the elimination of commercial limitations in force within the national territory. For example, you can make the purchase of raw materials or supplies even when they exceed import quotas in your country of origin.

Types of inward processing

This regimen can be of two types:

  • Suspension: In this case, the payment of taxes is completely suspended. After the re-export of the perfected goods, it is exempted from taxation.
  • Refund: This consists of the payment of duties and taxes when importing the merchandise. Later, when the company carries out the re-export, the paid taxes are reimbursed.

Likewise, regardless of the type of regime, companies can avail themselves of the following modalities:

  • Total re-export: This modality applies to companies that carry out the re-export of total production.
  • Partial re-export: In this case, the companies allocate part of the production to re-export and another to local sale. Therefore, the part of the production that is sold in the domestic market is subject to customs taxation.

Tags:  passes Spain accounting 

Interesting Articles