Author: Canan Doksat
Introduction
Incoterms are a set of rules introduced by the International Chamber of Commerce (ICC) to explain the commercial terms that are widely used in international trade. The purpose of Incoterms rules is to facilitate and expedite international trade in a safe and secure manner.
Recently, Turkish Customs Authorities have imposed special irregularity penalties on taxpayers based on the claim that their customs declarations violated the Incoterms rules. This Newsletter aims to discuss the legal ground of the referred special irregularity penalties.
The Approach of Turkish Customs Authorities
In order to clarify the current approach of Turkish Customs Authorities, a brief introduction regarding the nature of Incoterms rules should be made.
Incoterms rules regulate certain aspects of contracts of sale and, in particular, the parties’ rights and obligations in terms of delivery of the goods, transfer of risk and allocation of costs, as well as insurance and documentation requirements. However, Incoterms rules are not a substitute for sales contracts.
However, in several recent inspections, the Turkish Customs Authority has claimed that parties have not correctly declared and recorded the correct shipment terms in their customs declarations.
These inspection reports have noted that parties are using shipment terms that should only be used for delivery by sea, such as FOB, CIF, FAS, and CFR, for goods that have been shipped by land or by air.
These inspections led to the imposition of special irregularity penalties being applied on these customs declarations, as they had not been completed in accordance with the "Customs Declaration Usage Instruction" in the annex of the Customs Regulation.
