Customs Procedure Codes (CPC) are not easily explained yet, how they work is fairly simple.
“Procedure” Codes replace the old “Purpose” Codes. The codes follow a common format and common set of rules which all parties can follow. They are designed to indicate the “Purpose” of an import or export Customs declaration. For example, if you intend importing goods for domestic consumption in a free market environment (i.e. free movement of goods), we term this as Duty Paid (Code DP) goods. In the new Customs Acts the corresponding CPC is Home Use (Code A11.00) goods. The tax status of such goods (in this example) is that duty and VAT will be paid upon clearance for importation. Here are some examples of the old Purpose Codes (for imports):
I have seeing countless private individuals on the short end of the stick when it comes to postal clearances. Just stand at the receiving counter of any post office where foreign parcels are received. You will hear the horror expressed by mostly elderly people who have to pay excessive duties and Vat for parcels sent as gifts from abroad.
The same often applies to companies (small companies especially) who do not anticipate the rates of duty and Vat payable for postal clearances.
The consignor is responsible for completing the small declaration which is affixed to the outside of the parcel upon dispatch. If the value of the goods are not declared on it or if no invoice accompanies the parcel, then Customs need to improvise. And yes, they often get this wrong. Declaring inflated values for insurance purposes may also sway Customs toward higher values, leaving you at the short end of the stick when it comes to valuation.
The Customs Officers at international postal centres are also responsible for tariffing the articles. They are responsible for determining the rates of duty and Vat applicable. If the product descriptions are insufficient, then Customs Officers will most likely use a tariff with higher rates of duty. Twenty percent is a good default rate.
In addition, most people do not understand how the rates of duty and especially Vat are calculated. They are not aware of the hidden 10% inflation on the Customs value when calculating Vat. Ignorance will leave one with surprise.
Anyone wishing to appeal the amounts payable must first pay for the parcel to be sent back to the Customs Assessment Centre where the decision was made. This too is a financially counterproductive exercise.
The best advice I have for sending postal articles is to ensure that the sender includes the commercial invoice with adequate descriptions on the parcel, and to mark the declaration accordingly. Better yet, don’t bother with parcel post if it can be avoided.