Incoterms and Customs Clearance
Customs clearance responsibilities are an important aspect of Incoterms rules, as they determine which party is responsible for handling customs formalities and paying associated duties and taxes.
Customs Clearance by Incoterm
DDP (Delivered Duty Paid)
Under DDP, the seller is responsible for:
- All customs formalities
- Import duties and taxes
- Customs clearance in the destination country
- All associated costs and risks
DAP (Delivered at Place)
Under DAP, the responsibilities are:
- Seller handles export customs clearance
- Buyer handles import customs clearance
- Seller pays export duties and taxes
- Buyer pays import duties and taxes
Key Considerations
- Customs documentation requirements
- Valuation of goods for customs purposes
- Classification of goods under HS codes
- Special trade agreements or preferences
- Prohibited or restricted items
Best Practices
- Ensure accurate documentation
- Verify HS code classification
- Check for special requirements
- Maintain customs records
- Work with experienced customs brokers
Common Challenges
- Incorrect documentation
- Misclassification of goods
- Unexpected duties and taxes
- Delays in customs clearance
- Non-compliance with regulations