Key Risks in Inward Processing: Authorisations, Export Commitments and Customs Audits

Executive Summary

The Processing Rejimi in the included is a customs regime for the processing activities of certain goods under the relevant legislation and evaluation of the treated products with the prescribed conditions.

The basic legal framework of the application in Turkey is evaluated within the scope of the Rejimi Decision and the relevant secondary regulations, including the Customs Law No. 4458, 2005/8391.

The main risk areas to pay attention to the companies are:

1. Processing Permit Certificate (DIIB) or transactions against the scope of the corresponding permission.
2. Amount and consumable differences between imported inputs and products produced.
3. No commitment to export.
4. Wrong management of document and permission times.
5. Not to meet the conditions in equivalent goods applications.
6. It is not reliable to stock and production records.
7. The wrong assessment of fire, waste, side products and secondary treated products.
8. Closing and missing clearance of related customs transactions.

It is important to establish a coordinated control system between customs, production, planning, accounting and export departments to manage these risks.

1. What is the Processing Rejimi in Included?

The Processing Rejimi, including, is a customs regime for the processing activities of goods with the conditions prescribed in the relevant legislation.

The application is used as an important tool in the production processes for export.

Processing activities within the scope of the rejim;

• processing or assembly of goods,
• merger with another item,
• regeneration or repairing,
• other processing activities defined in the relevant legislation

can occur in the form.

However, the scope of the regime is determined according to the concrete processing and relevant legislation of methods and conditions to be used.

The benefit of Processing Rejimi in the Included does not mean that the company is exempted from all customs obligations.

2. What is the Conditional Exemption System?

The conditional exemption system is the system that allows the goods to be subjected to the processing activities by applying conditional exemption in terms of import taxes in terms of conditions related to the Processing Rejimi.

The collateral and other obligations arising from the relevant legislation in this system may come to the agenda.

It is important to be completed in accordance with the transactions under the Rejim.

For example, the processing of imported inputs under the permission and the realization of the necessary export processes may be required.

However, the conditional exemption provided in the import phase does not mean that all obligations are terminated precisely.

Taxes and other legal results may occur if the transactions or obligations are not met.

3. What Is the Drawback System?

The legislation governing inward processing also provides for a drawback system.

In this system, it may be concerned that the import taxes that have been paid for the goods imported with the relevant conditions are given back.

The legislation specifies which goods and transactions qualify for drawback and the conditions that apply.

The suspension and drawback systems should therefore be assessed separately.

It is necessary that companies can benefit from the system and identify the relevant obligations on the basis of the transaction.

4. What is the Processing Permit Certificate (DIIB) in Included?

The Processing Permit Certificate in the Included is the document issued on the execution of processing activities in particular included within the scope of the relevant legislation.

In document and related system records;

• imported inputs,
• products exported to exported,
• quantity and value information,
• production and processing conditions,
• durations,
• Other obligations related

You can take place.

However, it should not be taken if the processing process is necessarily carried out with the same type of document.

There are different applications such as Processing Permit in the relevant legislation.

Therefore, it is important to determine the appropriate permission or document type for the processing of companies.

5. Most Important Risk in the Scope of the LANGUAGE: Dispute of Fiilî Transactions with Document

One of the important risks in the Processing Rejimi, is the differentiation of import, production and export activities performed by the processes prescribed under the document.

For example, if the company is allowed for a specific input, it may require a evaluation according to the relevant conditions.

Changes in similar production processes may require updating the consumption and product information within the document scope.

Therefore, it is important that companies perform compliance controls not only during the document editing phase, but throughout the production process.

6. Control of Import and Export Quantity

The relationship between imported inputs in Processing Rejimi is important.

Production prescriptions, prices and actual production records can be used in evaluation of this relationship.

For example, let’s assume that a company produces products by importing certain amount of raw materials.

In this case;

• amount of imported raw material,
• quantity used in production,
• composed of fire and waste,
• the amount of products obtained,
• exported product quantity

among which there is a clear relationship.

However, the formation of certain differences in the production processes does not mean a violation of the legislation alone.

It is the evaluation of the quality of the important differences and the results in regard to the relevant legislation.

7. Sarprice Rates and Production Recipes

Sarprice rates play an important role in determining inputs used for obtaining certain amount of processed products.

Companies need to manage their production prescriptions in a current and reliable way.

Specifically;

• change of product design,
• differentiation of raw material composition,
• regeneration of production technology,
• Heading of alternative inputs

In such cases, it may be necessary to re-evaluate the consumption information.

For example, for a product in the production recipe, 2 kilograms of raw material for a product can create a difference that should be explained regularly in actual production, using 2,4 kilograms.

However, the legal outcome of this differentity should be determined in the framework of the relevant conditions and regulations.

8. Management of Fire, Waste and Side Products

The formation of fire, waste and side products in production processes can be usual.

However, within the scope of Processing Rejimi, it is necessary to evaluate these elements in accordance with the relevant legislation.

Specifically;

• the nature of production fire,
• quantity of waste,
• economic value of side products,
• status of secondary treated products,
• Completion of related customs transactions

can carry importance.

The same legal outcome does not arise for each fire or waste.

Therefore, companies need to reliably keep actual production records and classify the related elements according to the legislation.

9. Critical Risks in Equivalent Use of Goods

Equivalent goods application is an important mechanism that can be used with certain conditions within the scope of Processing Rejimi Included.

However, the use of equivalent goods does not provide an unlimited freeness.

The equivalent and other conditions prescribed in the relevant legislation must be met.

In particular;

• technical properties of goods,
• quality and commercial qualities,
• related classification conditions,
• inventory and production records,
• permission scope

assessment is important.

The reliability of records in equivalent goods is critical.

Because in cases where the goods used in production with imported goods are not required to be the same physical unit one, it is necessary to show the compliance with reliable records.

10. The Place of Export Contracting

The fulfillment of export commitments related to the scope of Processing Rejimi is one of the important obligations.

It can lead to financial and legal results according to concrete conditions, not to be completed in the period of the contracting or related operations.

For example, delay in the company’s production plan may affect the completion of export commitment.

However, commercial or productional delays are not considered automatically mazeret in regard to the relevant legislation.

The delays of the companies must be identified at the early stage and evaluate the appropriate operations in time to the legislation that may apply.

11. Management of Document Periods

Time management is an important control area in terms of DIGITAL and related permissions.

Companies;

• document start and end dates,
• related trading times,
• export commitments,
• times for closing application,
• additional time conditions

it is necessary to follow.

However, it should not be given for all documents and transactions for a single general time.

Periods should be evaluated according to relevant legislation, document type and concrete processing properties.

Therefore, it can be useful to create a central time tracking system of companies.

12. Stock Records in Processing Rejiminde Included

The accuracy of stock records plays an important role in the reliable management of Processing Rejimi in the included.

In the stock system of the company;

• imported inputs,
• quantities shipped to production,
• inputs consumed in production,
• products,
• fire and wastes,
• exported products

should be traceable.

Manual recording systems can create important control difficulties especially in companies that produce high volumes.

However, the use of electronic system does not mean that the records alone are correct.

System data must be compatible with actual production and stock movements.

13. Mutabakir of Production and Customs Records

In addition, it may not be enough to compare only import and export declarations in Processing Rejimi.

Production records and stock movements should also be evaluated.

For example;

• quantity of imported inputs,
• quantity shipped to production,
• actual consumption,
• products obtained,
• exported products

include a consistent record structure.

These understandings can help identify possible differences in early stages.

However, the reasons for differences should not be concluded directly against the legislation without evaluation.

14.Included Processing Rejiminde Accounting Controls

The Processing Rejimi, including, is connected with accounting and financial processes as well as customs transactions.

Specifically;

• import taxes,
• warranties,
• stock values,
• production costs,
• export records,
• relevant financial obligations

between the appropriate control mechanisms should be installed.

With accounting records, regular consensus between customs and production data can support the determination of unexplained differences.

However, the obligations regarding the customs regime with accounting applications may not be based on the same legal rules.

Therefore, differences should be evaluated in the relevant legislation framework.

15. Risks Meeted in the DIP Closing Process

After the completion of the transactions under the Processing Permit Certificate, the closing processes prescribed in the relevant legislation are important.

At this stage;

• import records,
• export records,
• Consumption information,
• quantity and value balances,
• Other obligations under the document

can be assessed.

Companies should not only be interpreted in the form that export processes are completed, all closure obligations are terminated.

The nature of deficiencies detected in the closing process should be assessed through the relevant legislation and concrete process.

16. Processing Rejimi in Included in post-clearance audit

Transactions within the scope of Processing Rejimi, may be subject to control or other customs examinations after the relevant legislation.

In these reviews;

• document and permission conditions,
• import and export operations,
• production prescriptions,
• cash rates,
• stock records,
• equivalent goods applications,
• closing operations

can carry importance.

For example, the company may require a difference between import quantities and production records carried out in a certain period, description and evaluation.

However, it does not mean any difference automatically.

It is necessary to evaluate the relevant records and legislation conditions together.

C-INSPEC Perspective

In addition, Processing Rejiminde Asıl Risk is Breakthrough Between Processes

The Processing Rejimi, including, is evaluated in the responsibility of the foreign trade department, which often manages import and export operations by companies.

However, the actual functioning of the regime is directly connected with the production and inventory processes of the company.

For example, the foreign trade department can follow imported inputs within the document.

But what production orders of these inputs are used, how much fire is formed and which products are produced can be included in the records of production and planning departments.

Similarly, accounting department can follow the logistics department shipment processes while managing inventory values and financial records.

When there is no adequate coordination between this information, it may be able to strengthen the evaluation of the transactions performed under the document in the holistic format.

Therefore, in the C-INSPEC approach, Processing Rejimi should be discussed as a corporate control field that connects import, production, stock and export processes, not only as a customs convenience.

Sustainable harmony in the Processing Rejimi included is provided not only with the completion of the export commitment, but with the reliable monitoring of all the movements of imported inputs.

This approach is especially important for companies with high production volume and complex product prescriptions.

17. Seven Stages DIR Control Program for Companies

Step 1 — Document and Permission Inventory

Processing Permit Documents and related permissions are determined in the Company’s existing Included.

Step 2 — Import Control

Imports, products and quantities performed within the document are evaluated.

Phase 3 — Production and Consumption Analysis

Production prescriptions, actual consumption and consumption records are reviewed.

Stage 4 — Stock Mutabakir

Stock and production movements are compared with imported inputs.

Step 5 — Export Control

The situation of export operations and related commitments is assessed.

Step 6 — Time and Closing Tracking

Document times, related applications and closing processes are monitored.

Stage 7 — Internal Audit and Corrective Activity

The detected differences are evaluated and the necessary control improvements are planned.

This program is an example control approach that can be adapted according to the company’s operating features.

18. DIR Risk Indicators For Top Management

These indicators are recommended for internal risk management; there is no mandatory reporting format for all companies in the legislation.

19. In-In-In-In-In-In-In-Site Errors

Check deficiencies that companies should pay attention especially include:

1. No regular comparison of actual import operations with document coverage.
2. The production prescriptions are not kept up-to-date.
3. Not to investigate the consumption differences.
4. Not to evaluate fire, waste and side products in terms of legislation.
5. Not to check the necessary conditions in the use of equivalent goods.
6. Following only the period of export commitments.
7. Not to watch documents and closing times as centrally.
8. No consensus between stock records and customs clearance.
9. No sufficient information sharing between production and foreign trade departments.
10. Evaluation of Processing Rejimi as an application that only provides tax advantage.

The removal of these deficiencies can contribute to more effective management of financial and operational risks caused by companies’ regime.

Frequently Asked Questions

Conclusion

The Processing Rejimi, including, is a customs application that can provide important advantages for companies that manufacture for export.

However, it depends on the correct management of the relevant obligations, which can be used reliably from these advantages.

It is especially important to create a consistent control system between import, production, stock and export records.

Consumption rates, equivalent goods applications, export commitments and document times should be evaluated regularly.

It can be useful to perform risk-based controls for transactions within the regimen, not only in the document closure phase.

The sustainable success of Processing Rejimi in the context depends on the reliable management of the obligations based on this advantage.

Legislation and Official Sources

1. 4458 No Customs Law — provisions on Processing Rejimi, including.
2. Processing Rejimi Decision No. 2005/8391.
3. Communiqué on Processing Rejimi Included (Export: 2006/12) and related changes.
4. Customs Regulation.
5. Ministry of Commerce — Included in the Rejimi and the resmî explanations on the application of the DIP.
6. Related customs regime, collateral and capping regulations.