De minimis

Definition

The ICC Customs Guideline #11 defines “de minimis” as a valuation ceiling for goods, including documents and trade samples, below which no duty or tax is charged and clearance procedures, including data requirements, are minimal. This section seeks to provide practical advice on the key considerations for establishing a de minimis regime, including the latest research on the economic and fiscal impacts of such regimes.

Problem statement

The preparation, submission, processing and retaining/storing of cargo and goods declarations (paper and electronic) are very costly processes, both for industry and an administration. This cost is the same for processing dutiable high-value shipments as for non-dutiable or low-value shipments. Where the value of the goods and their respective amount of duties and taxes is lower than the cost to administer this shipment (small consignments), governments spend more money on this administrative process than they collect in duties and taxes. Often, however, governments take the existence of their public services for granted and do not perform regular cost benefit analyses to improve their efficiency and effectiveness.

Implementation guidance

When it was adopted in 1999, the Revised Kyoto Convention (RKC) acknowledged the e-commerce trend of increasing numbers of small consignments and included a provision on de minimis values. According to Transitional Standard 4.13 of the RKC, Customs administrations shall specify a minimum value or minimum amount of duties and taxes below which no duties and taxes will be collected. Consequently, documentary requirements are minimal for goods on which no duties and taxes will be collected. Administrations that have implemented a de minimis regime also applied the WCO Immediate Release Guidelines (IRG), which provide for immediate release on the basis of a consolidated declaration that can be a manifest, waybill, cargo declaration or inventory of such items.

Determination of the appropriate de minimis values should be based on research, taking into account national circumstances and international good practice. At its 2011 Summit, APEC Leaders endorsed a new Pathfinder to introduce a common de minimis value of 100 USD. This decision is based on a study conducted by the Conference of Asia-Pacific Express Carriers (CAPEC)which suggested that a de minimis threshold of 100 USD would generate a net economic benefit of about 19.8 bn USD among the 21 APEC economies. ICC released a Policy Statement on Global Baseline De Minimis Value Thresholds in February 2015 in which the world business community underlines that raising de minimis thresholds would provide significant benefits to businesses of all sizes. Setting a meaningful de minimis level will most notably have a positive impact on small- and medium-sized enterprises and offer opportunities for increased e-commerce. ICC recommends establishing a global baseline de minimis value of at least US$ 200 to generate economic benefits by refocusing public revenue collection on more efficient revenue sources – boosting the global economy and enhancing job creation. ICC states that ideally governments should strive to implement a commercially significant de minimis value of US$ 1,000.

According to the Immediate Release Guidelines, Customs shall ensure that information regarding the de minimis values is readily available. Where practicable, de minimis threshold values and/or amounts should be stipulated in national legislation. Customs administrations should carry out regular reviews of the value or duty and/or tax payable below which no duties and taxes will be levied, taking into consideration inflation and the need to simplify the processing of low value goods. In determining the value of these consignments, transport costs may be excluded.