Customs Economic Procedures

Customs Economic Procedures Image

There are three Customs Economic Procedures operated under EU Customs Legislations, namely the Customs Warehousing, the Processing under Customs Control and the Inward / Outward Processing procedures respectively. The last two procedures are the most commonly used.

The Customs Warehousing Procedure allows that the temporary storage of imported non-Community goods will not be subjected to import duties, VAT and excise duties as well as to commercial measures. Some goods such as raw meat, meat products and other goods subject to veterinary checks cannot be stored in a customs warehouse. Unlike other customs procedures, an application to use this procedure has to be filed directly with the Customs Department. More information is available on the Customs Website.

The Processing under Customs Control Procedure allows goods to be imported from outside the EU market for processing operations that change their nature or state without being subject to import duties or certain commercial policy measures. The import duty becomes payable when the finished product is put on the Community market. Obviously in most cases the product does not attract duty at all or the duty due is less than that payable on the components integrated in the product itself. This Customs Procedure also applies to excise duty but does not apply to VAT.

There are two systems that can be applied under the Inward Processing Procedure, namely the Drawback and the Suspension System as outlined below:

This system allows the repayment of import duties paid in respect of raw materials used in the manufacture of goods exported outside the EU territory. The system also allows the repayment of import duties due on goods re-exported outside the EU in an unaltered state.

This system allows that processing of non-Community goods can have the import duties, VAT and excise duties suspended at the point of release from Customs, provided that the finished product made up of these goods is exported outside the EU market.

Inward Processing allows EU goods to be temporarily exported from the EU customs territory in order to undergo processing operations. The final product from these operations may be released for free circulation in the customs territory of the Community with total or partial relief from import duty.

The issue of authorisation to use the Customs Economic Procedures is vested in the Department of Customs. Applications to make use of the Customs Warehousing Procedure have to be directly filed with the Department of Customs.

Companies and small enterprises selling more than 50% of their manufactured goods (based on the average export sales during the last two financial years as certified by a public auditor) outside Malta, shall qualify for any one of these procedures.

1.     Qualifying companies and small enterprises exporting 80% or more of their annual manufactured output shall qualify for a full suspension of import duties on their raw materials through a Customs Economic Procedure they opt to make use of.

2.     Qualifying companies and small enterprises whose exports are below the 80% threshold can still make use of the Customs Economic Procedures. However, the authorization would be issued on pro rata basis or to certain conditions as the Department of Customs may deem fit to impose. In the case of the Inward Processing Procedure, companies that export a small proportion of their manufactured goods to non EU countries can apply for a Drawback System.

Companies and small enterprises wishing to apply for any one of these procedures will be requested to fill in the appropriate application of the procedure they opt to apply for. Along with the application they have to submit a covering letter as well as the respective auditor’s sales certificate.

Each application is verified and, if everything is in order, it is recommended and forwarded to the Department of Customs - Customs Economic Procedures Unit. This unit will make further verifications before issuing the relative authorization. An authorization will be valid for a period of one year or less as decided by Customs and can be renewed.

last updated Jan 2023

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