What is an ATA Carnet?

What is an ATA Carnet?
What is an ATA Carnet?

A Carnet is an international customs document designed to simplify and streamline customs entry procedures for merchandise, whether accompanied or not, into participating countries for up to one year. Participating countries include most European, North American, and Pacific Rim countries. The initials “ATA” are an acronym of the French and English words “Admission Temporaire/Temporary Admissions”.

Customs authorities in participating countries accept Carnets as a guarantee that all Customs duties and excise taxes will be paid if any of the items covered by the Carnet are not re-exported within the period allowed.

What Does an ATA Carnet Do?
A Carnet eliminates extensive Customs procedures for temporary imports. Such procedures might include the payment of tariffs and excise taxes subject to a refund on departure, of purchase of a temporary import bond for the amount of the tariffs and excise xxx taxes which could become payable of the goods were sold or if the terms of temporary importation were breached. Without a Carnet, time, effort and expense would be wasted.

Who is the Carnet Holder?
The company or individual that the Carnet will be issued to is the Carnet Holder. The holder must a beneficial interest in the merchandise being exported; a Customs Broker or Freight Forwarder cannot be listed as a Holder of a Carnet when they are acting in their professional capacity on behalf of someone else. Holders must be U.S. entities with a Federal Tax Identification number or Social Security number. It is the Holder’s responsibility to ensure that all the items on the Carnet exported out of the U.S. are re-imported back into the United States before the Carnet’s expiration date. The Holder must also make sure that the Carnet has been returned to the issuing office after final use.

What is a Carnet Claim?
A claim is a notice from the issuing association of a country you have entered that a violation of the Carnet System has occurred. For example, if all items are imported into a member country and not all items are re-exported, a claim will arise. Upon return, the Carnet will be reviewed by the U. S. Council, and if there is a possibility of a claim a “Carnet Redemption Report” will be sent to the Holder. The issuing association has up to one year after the expiration of the Carnet to file a claim. The Bond will only be released when all claims are cleared and the the Carnet is cancelled. For this reason it is of the utmost importance that all counterfoils/vouchers are filled out correctly.

Diversion
A situation may arise wherein some items on the Carnet may need to remain in the country of importation either permanently or beyond the expiration date. In this instance, it is possible to file a permanent or temporary importation into that country. This usually requires paying the duty and applicable taxes, and may include a penalty. Please note that this type of diversion must be filed before the expiration date and is only available in some member countries. In addition, documentation of the diversion must be attached to the Carnet upon return to the issuing office. Full assistance is provided in all of these scenarios.

Carnet Duty Insurance
Carnet duty insurance covers theft or fire destruction of merchandise while in another country (goods are not covered while in the U.S.). It is important to note that in this instance the Carnet holder is still liable for the applied duties and taxes.

This insurance covers up to 25% (with a maximum of $1,000,000.00) of the value of each piece as listed on your general list (i.e., London’s duty/VAT is 33% of the value of each piece so the client would be responsible for the remaining 8%) The premium for the insurance is $0.75 per $100.00 (the premium for a piece worth $2000.00 would be $15.00).

Counterfoil/Voucher Sheets
The top section of one of these sheets is known as the counterfoil and the bottom section as the voucher. Sheets are issued in sets. A “yellow” set for leaving and re-entering the U.S., a “white” set for entering and exiting a foreign country and a “blue” transit set for passing through or stopping over in one country in order to enter another. A set of counterfoil/vouchers must be issued for every country you intend to visit, for each entry and re-entry into the U.S., and for each transit.

Security Requirements
All Carnet applicants must furnish the U. S. Council with a security deposit. This security deposit may be used to reimburse the U. S. Council for any penalties they must pay on the applicant’s behalf. The amount of the deposit is based on the total value of all items shown on the General List forms, and may be in the form of:

* Certified Check
* Surety Guarantee/Bond
The security that is most often used is a Surety Guarantee/Bond provided by the issuing office.

A guarantee from any Surety may be submitted, however it must be included in the list of Sureties approved by the U. S. Department of the Treasury. All Guarantees must contain the same text as the Lloyd’s of London Guarantee. A copy of the Lloyd’s of London Guarantee and the list of approved Sureties will be provided upon request.

Carnet Guarantee/Bond
Every Guarantee must be in the amount of 40% of the total value of the merchandise as listed on the General List. Carnets going to Isreal and Korea must be in the amount of 100% of the value of the merchandise, due to high duty and taxes.

Requirements necessary to obtain Carnet Guarantee/Bond vary according to the total value of the merchandise listed on the Carnet. The Surety will usually request the Carnet Holder to provide them with one of the following:

* Current financial statement which shows that the Holder has a net worth of at least twice as much as the value of the goods and has been in business for at least three years.

* Letter of Credit usually in the amount of 40% of the total value. Must have prior approval from the U. S. Council for International Business Headquarters office in New York City, New York.

* General Indemnity Agreement – a personal guarantee from an individual whose net worth is at least two times the amount of the total value.

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