Case Overview
The Kaohsiung Customs Office recently uncovered a major violation: a company imported electronic components from Mainland China, performed only minor processing, and attempted to export them to the United States labeled as "Made in Taiwan (MIT)." Upon inspection, the authorities determined the goods did not meet the standards for substantial transformation. Consequently, the International Trade Administration (TITA) of the Ministry of Economic Affairs imposed a heavy fine of NT$600,000.
If exported goods do not meet the "Substantial Transformation" criteria (e.g., they involve only simple packaging or relabeling) but are labeled as MIT, TITA will issue severe penalties in accordance with the Trade Act.
Beyond the Fine: Potential Chain Risks
A violation does more than just hurt your bottom line; it can lead to:
►Customs Nightmares: Your company may be flagged as "High Risk." Future imports and exports will face high-frequency sampling or even 100% physical inspection. Clearance times could stretch from hours to several days, severely disrupting your delivery schedules.
►U.S. Customs (CBP) Retrospection: If goods exported to the U.S. involve fraudulent origins, you face more than just Taiwanese penalties. You may also face criminal investigations and massive back-tax assessments from U.S. authorities.
What is "Substantial Transformation"? Two Key Indicators for MIT Origin
Self-Check: Does your processing qualify?
Customs regulations clearly state that simple operations—such as sorting, packaging, or relabeling—cannot be used to claim Taiwan as the country of origin.
To legally qualify as "Made in Taiwan," the processing must meet at least one of the following criteria:
►Change in Tariff Heading: After processing, the first six digits of the CCC code (Harmonized System code) must differ from those of the raw materials.
►Increased Value-Added: The value-added rate of the processing performed in Taiwan must exceed 35%.
►Be Prepared: The "Document Package" for Rapid Clearance
How to speed up customs clearance?
When Customs questions the origin of a shipment, they typically require proof of the manufacturing process within a very tight window. Waiting until then to request data from the factory is often too late.
We have compiled the [U.S. Export Origin Substantial Transformation – Process & Document Checklist]. We recommend ensuring your factory has these documents ready before shipment to minimize delays during inspections.
Core Document Checklist
►BOM (Bill of Materials) & Raw Material Origins
►Detailed Manufacturing Process & Key Process Proofs
►Cost Structure & Value-Added Calculations (if applicable)
Batch Traceability (Raw Material → Work Order → Finished Product)
Common Supplementary Data (Case-by-Case)
►Product catalogs, specifications, and photos of the finished product.
►Raw material purchase invoices, import declarations, or supplier information.
►Shipping documents (Commercial Invoices, Packing Lists, etc.).
P;ease contact us, if you have further problem
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