If your business imports goods from developing countries, you may be entitled to significantly lower — or even zero — tariffs under the UK’s Developing Countries Trading Scheme (DCTS). Since July 2025, important updates to the Rules of Origin have made the scheme even more accessible for certain sectors, particularly garment manufacturing.

This guide explains how DCTS works, which countries are eligible, what changed in July 2025, and the practical steps you need to take to benefit from preferential duty rates.

The official government publication on the updated Rules of Origin is available at: Rules of Origin under the Developing Countries Trading Scheme (DCTS) are improving – GOV.UK.

What Is the Developing Countries Trading Scheme?

The DCTS is the UK’s unilateral preferential trade scheme that provides eligible developing countries with reduced or zero customs tariffs when exporting goods to the UK. It replaced the EU’s Generalised System of Preferences (GSP) after Brexit and is tailored specifically to UK trade policy objectives.

The scheme has three tiers, reflecting different levels of development:

• DCTS Least Developed Countries (LDC): The most generous tier, providing zero tariffs on almost all goods. Applies to the world’s poorest nations as designated by the United Nations.
• DCTS Enhanced Preferences: For lower-middle income countries, offering substantial tariff reductions across a wide range of goods.
• DCTS Standard Preferences: For middle-income developing countries, providing more limited preferential rates.

For UK importers, this means that goods originating in eligible DCTS countries can attract lower import duties than they would under the UK Global Tariff (UKGT), which applies to countries without a preferential trade agreement.

Key Update: Rules of Origin Improved in July 2025

In July 2025, the UK Government implemented significant improvements to the Rules of Origin (RoO) under DCTS. Rules of Origin determine whether goods qualify as “originating” in a DCTS-eligible country — and thus entitled to preferential tariff treatment.

The Challenge: Rules of Origin Can Block Preferential Access

Preferential tariffs are only available if the goods meet origin requirements. For manufactured goods like clothing, these rules typically require a certain level of processing within the eligible country. If a garment is made from imported fabric, the rules may previously have required the fabric itself to originate in the eligible country — a difficult requirement for many developing nations that import their raw materials.

July 2025 Changes: Easier Rules for Garment Manufacturers

The July 2025 update specifically eases the Rules of Origin for garment manufacturers in 16 low-income and lower-middle income countries. The key change is that these manufacturers no longer need to source their fabric locally to qualify for preferential rates. They can use imported fabric — from any source — and as long as the cutting, sewing, and finishing is done in the eligible country, the finished garment qualifies for DCTS preferential treatment when exported to the UK.

This is a significant practical improvement that aligns with how garment manufacturing supply chains actually operate in developing countries, where fabric is routinely sourced globally.

Cumulation

The DCTS also allows for cumulation — meaning materials from certain other eligible countries can be treated as originating materials when calculating whether a product meets the Rules of Origin. This allows regional manufacturing networks across developing countries to combine their processes and still qualify for preferential rates when the final product is exported to the UK.

Which Countries Are Eligible?

The DCTS covers a substantial number of countries across Africa, Asia, the Americas, and the Pacific. Eligibility is determined by the UK Government based on development status criteria. Key groupings include:

• LDC tier: Countries including Bangladesh, Ethiopia, Cambodia, Myanmar, Nepal, Tanzania, Uganda, and many others in Sub-Saharan Africa
• Enhanced Preferences tier: Countries including India (for certain products), Pakistan, Indonesia, Philippines, Ghana, Kenya, and others
• Standard Preferences tier: Broader set of developing countries not in the higher tiers

The full list of eligible countries and their tier status is maintained by HMRC and updated periodically. Always verify current eligibility before planning import operations.

How to Claim DCTS Preferential Rates

To benefit from DCTS preferential tariffs, you must:

1. Verify country eligibility: Confirm the exporting country is on the current DCTS eligible country list and at what tier.
2. Verify product eligibility: Check that your specific goods (by HS commodity code) qualify for preferential treatment under the relevant tier.
3. Obtain proof of origin: Your supplier must provide proof that the goods meet the Rules of Origin requirements. This is typically either:
   • Form A (Generalised System of Preferences Certificate of Origin) — a standardised certificate completed by the exporter and usually certified by an official body in the exporting country.
   • REX (Registered Exporter) statement on origin — a statement on the commercial document made by a registered exporter.
4. Declare at import: Reference the proof of origin on your UK import declaration (using the correct preference code) to claim the preferential rate.
5. Retain documentation: Keep proof of origin documents for at least 4 years in case of HMRC audit.

For expert assistance with developing countries import operations and DCTS claims, specialist customs agents can verify eligibility and manage the full declaration process. Explore developing countries import support services.

Practical Example: Garment Importer

A UK clothing retailer imports cotton shirts from Bangladesh (an LDC-tier country). Under DCTS LDC tier, the tariff on cotton shirts (HS heading 6205) is 0%, compared to the standard UK Global Tariff rate of 12%.

On a shipment valued at £100,000, this represents a saving of £12,000 in duty. The retailer needs Form A from the Bangladeshi supplier, certified by the Bangladesh Export Promotion Bureau, to claim this rate.

Following the July 2025 RoO update, if the supplier uses imported Chinese fabric (previously a potential barrier), the shirts still qualify for LDC preferential rates as long as the cutting and making is done in Bangladesh.

DCTS vs. UK Free Trade Agreements: Which to Use?

Some countries eligible for DCTS also have UK Free Trade Agreements (FTAs). In such cases, the FTA rate and the DCTS rate may differ. You should always compare both rates and use whichever is more beneficial — but you cannot combine them. For assistance in optimising your preferential duty rates, specialist support for preferential duty rates can identify the best route for your specific goods and suppliers.

FAQ — Developing Countries Trading Scheme

Conclusion

The Developing Countries Trading Scheme offers UK importers substantial duty savings on goods from eligible developing countries, and the July 2025 Rules of Origin improvements have made it more accessible — particularly for the garment and textile sectors. If you source from developing countries and are not yet claiming DCTS preferential rates, you should review your supply chains urgently: the savings can be significant and the compliance requirements, while important, are manageable with good supplier relationships and documentation practices.