International trade requires complying with various rules, most of which SAP Global Trade Service can assist with. When importing goods into another country, buyers typically pay duties. Duties are in place to raise money and protect domestic manufacturers from foreign competition. However, two countries may agree to terms wherein they will accept each other’s goods duty free (i.e. “preferred” goods).

Preference Processing in SAP GTS supports exporters two fold: in meeting legal requirements for customs preferences and in identifying their goods as eligible preferred goods. If eligible for preferential treatment, the exporter’s customers can import these goods duty free or at a reduced rate of import duty, giving the exporter a competitive advantage.

Features of Preference Processing

There are many benefits to leveraging SAP GTS when preference processing including:

• Manage vendor-based long-term vendor declarations (LTVDs) and LTVDs for customer’s purposes
• Preference calculation based on preference agreements and preference models for standardized products, with static/configurable products
• Make a statement on the preference eligibility of a product based on preference determination
• Print preference statements as PDF forms

Preference statements that you can print with GTS include:

• Requests and reminders for LTVD
• NAFTA blanket certificate of origin
• Long-term vendor declarations
• Revocation for LTVD
• Cover letters for the various documents

If you integrate Preference Processing with Customs Management, you can also print preference statements such as:

• NAFTA Certificate of Origin
• NAFTA Certificate of Origin for the U.S.
• NAFTA Certificate of Origin for Mexico
• NAFTA Certificate of Origin for Canada
• Certificate of origin for the EU
• TR movement certificate
• 1 movement certificate
• INF4 information sheet

Business Process

Preference determination is one of the most complex areas of customs law. SAP GTS eliminates the complexity and risk, while providing immediate cost savings to you and your customers. Let’s take a look at the steps involved:

Steps in Trade Preference Processing

1. The feeder system transfers information on vendor-product relationships to SAP GTS for Preference Processing. The GTS system creates a worklist from this data for further processing.
2. If you have to include goods receipts from vendors who do not originate in your preference zone in the aggregation of vendor declarations, you can flag them as “not relevant for requests, but relevant for aggregation”.
3. The system selects the products and the corresponding vendor master data from the worklist for cases where vendor declarations are not available.
4. Preference determination involves calculating the threshold value to determine the preferential origin and is based on preference rules (which can be maintained directly or obtained from external data providers). The system creates requests for vendor declarations for the selected products, based on the corresponding vendor data. It uses various media to do so, such as Smart Forms. You can now send the requests for vendor declarations to the vendors.
5. When you receive vendor declarations from your vendors, you have to enter them in the GTS system.
6. The system determines whether a valid vendor declaration is available for a product. It aggregates valid, invalid, or missing vendor declarations.
7. The system uses the threshold value from preference determination. In this process, it combines the statements for each material, based on the rules and procedures of the preference agreement, regardless of whether valid or invalid vendor declarations are available. The system archives the results of preference determination to enable further monitoring and audits.
8. When you create or change an order or billing document in the feeder system, the system compares the threshold value with the ex works price from the order or billing document.
9. If the product is eligible for preferential treatment, the system sets the preference indicator.
10. You can issue the vendor declaration for customer’s purpose.

With SAP GTS to support you in your preference processing, you can benefit from cost savings opportunities and avoid the associated compliance risk of deploying a manual or home-grown solution. You can download the following Krypt white papers to deep dive into the related topic  –

1. Krypt Cloud for SAP Global Trade Services
2. How SAP Global Trade Services (GTS) addresses the new USMCA Trade Agreement
3. Leveraging SAP Global Trade Services 11.0 to Manage Foreign Trade Zones
4. Leverage SAP S/4HANA – International Trade for Trade Compliance
5. Identity Based Preference Processing (IBPP)

If your organization has been using SAP as an enterprise platform, you can reap the benefit from implementing SAP GTS. The integration is done through an SAP standard plugin, which ensures co-existence of the systems with minimal setup and maintenance effort.

SAP GTS is a one-stop solution that will enable your company to single-handedly & centrally address all global trade-related issues and efficiency of all processes.

KRYPT is a preferred SAP Partner that has assisted in the success of global businesses through the implementation of SAP GTS, TM, IBP & EWM.

If you wish to know more about our products/services, please request for a DEMO or do Contact Us.

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