North Star

North Star

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Institution:

North Star

Due to the multinational presence of North Star, it is apparent that the organization faces significant implications concerning the exportation of its products. Accordingly, North Start specializes in manufacturing, dispensing and retailing casual and outdoor clothing. Established in 2009, the company seeks to export its clothing products to other international countries in order to maintain a considerable and dominant presence within the global market. However, it is imperative to understand the costs incurred on the exported products. This is possible through determining whether the clothing products possess a tariff or a value added tax. In addition to this, understanding the presence of the value added tax or the tariff also involves determining the respective target market for the respective exported commodities. In addition to this, it is also imperative to determine the Harmonized Schedule (HS) code for the product in order to know the classification of the company’s exported product.

The main product exported by North Star comprises clothing. Accordingly, the multinational enterprise focuses on distributing casual and outdoor clothing to other international markets. Much of the reason behind this extraneous exportation of its products is in accordance to global expansion. Currently, North Star maintains a dominant presence in seven countries. However, the organization is also attempting to market its products in other nations. Nonetheless, it is important for the firm to know the harmonized code for its product in order to ensure compliance with the cost of exportation to the respective target market. In general, a harmonized product code, also described as a Schedule B Number, is a categorization code for U.S. exports to other markets. In this respect, the Schedule Number for North Star’s clothing product is 6211.12.0000 (United States Census Bureau, 2013). However, determining the HS code for the product requires using six digits of the number. Hence, the harmonized code is 6211.12.

Since the organization knows of its Schedule B figure as well the resultant harmonized code, it is possible to determine the commodity’s applicable tax rates and tariffs for the specific target market. In this respect, the specific target market is the United Kingdom. The organization attempts to avail its products to Britain based on the passions the civilians exude for outdoors and casual clothing. Accordingly, the British people are outgoing and exhibit a considerable quantity of fascination for fashion in general. In addition, the British market is also favorable for North Star’s products. This is because it offers an idyllic destination for the inauguration of the enterprise’s clothing line. In addition, entering the British market also poses less entry barriers for North Star and its products. This is because the government institutes policies that endorse foreign investments in order to augment the nation’s economy.

Undeniably, the organization is already aware of its Schedule B Number and its respective HS code. Therefore, in order to determine the tariff number, it is imperative to determine the full code for the product undergoing exportation. Therefore, in this respect, the tariff number for the clothing product shipped to Britain is 6211120000. By possessing the tariff number, it is also possible to calculate the tariff. Therefore, due to the tariff number, the tariff for the clothing product is 12 percent (Customs Info, 2013). In addition to this, the Value Added Tax (VAT) is also 20 percent. Moreover, calculating the tax involves multiplying the Cost of Products, Freight and Insurance (CIF) with the VAT, which is at 20 percent. Thus, the calculation will be 20% * (CIF & DUTY) (Customs Info, 2013).

In conclusion, it is possible for North Star to determine the cost of exportation that it will experience as it attempts to enter the United Kingdom. By determining the Schedule B integer and the Harmonized Schedule code for its respective clothing product, the organization will be able to determine the costs that it will incur as it exports its goods. Based on this, the HS code will allow North Star to determine the tariff rate and the Value Added Tax (VAT) altogether.

References

Customs Info. (2013). [Data illustration of the duties and taxes for clothing Nov 1, 2013]. Global tariffs. Retrieved from http://export.customsinfo.com/GlobalTariffs/Default.aspx#.

United States Census Bureau. (2013). Foreign trade. Retrieved from http://www.census.gov/foreign-trade/schedules/b/.