Customs clearance is a key step in cross-border trade before you can formally import or export your goods. There are duties and taxes to be paid and a great deal of paperwork to be dealt with for your goods to exchange hands internationally. Compliance with local and international regulations can be a slow process heavy on documentation and red tape. Read on to learn more about customs clearance, and how we can help you overcome this bureaucracy.
What Is Customs Clearance?
Custom clearance is the process of declaring goods executed to export and import goods that help governments monitor trade, collect taxes and prevent dangerous or illegal activities. The documentation process is an essential part that involves preparing and submitting various forms and documents to the customs authority to ensure compliance with the implied regulations. Customs officers will release the shipment once it has been cleared after careful inspection.
What Is a Customs Broker?
Customs brokers are individuals or companies who specialize in customs regulations, tariffs, and filing customs declarations on behalf of importers and exporters. It is your customs broker’s job to classify goods by HS codes, make customs entries, pay duties and communicate with customs authorities in order to clear your goods across customs. Customs agents also provide professional advice to shippers and consignees on duty optimization and regulatory compliance. Some freight forwarders, including CargoPoint, act as customs brokers.
Customs Clearance Costs
Apart from duties and taxes, customs clearance costs normally include your broker’s fees based on the number of customs entries, HS codes, and the value of your goods. Other costs may include filing of import or export permits, certificates of origin or hygiene, etc. If you are looking for advice on reducing your logistics overhead, feel free to check out our article on reducing shipping costs.
Documents Required For Customs Clearance
Generally, the following documents are required to clear your goods through customs:
Commercial Invoice: includes a detailed list of products you are shipping and the value for each item
Packing List: contains the number of packages you are shipping, their contents, net and gross weight per package
Certificate of Origin: provided by authorities in the country of export, this document serves as proof of origin indicating the country of production of goods. Having this document may help reduce duties and taxes in the country of import.
Customs Declaration Form: this is an official document that lists the details of goods being imported or exported. This form is filled out by your customs broker and filed with local customs authorities in the country of import or export.
Besides, you will need to provide additional documents related to transportation such as a bill of lading, CMR, rail waybill, air waybill, or documents for multimodal or combined transport, as well as insurance documents or phytosanitary certificates, to count a few.
Customs clearance process in 4 steps
The customs clearance process can be executed in 3 essential steps listed below.
1. Paperwork review
Customs officers review all documentation and check for any discrepancies. Missing or inaccurate documents may result in clearance delays and extra costs. If the discrepancies are deemed substantial, the customs officer may cancel the shipment or even impose penalties. Once all paperwork is in order, you may proceed to the next step.
2. Payment of tax and duties
Taxes and duties are collected by customs authorities on goods traded across borders. Duty rates diverge across countries and amounts payable depend on the origin of the goods, incoterms, commercial value, and freight costs which makes the calculation process complicated. Once your customs broker determines the amount payable to the customs office, you settle the dues owed to customs authorities.
3. Release of shipment
After the taxes and duties have been paid, the shipment is released and can continue to its final destination. The point of release could be a port of arrival or a bonded warehouse where your goods are held in bond until duties and taxes are paid.
The customs clearance process can be daunting, especially in the beginning. Nowadays, thanks to globalization and increasing international shipping, customs clearance is an unavoidable task for any export-oriented business looking for long-term success. To ship internationally without issues and delays involves a good understanding of the customs clearance process, costs, and consequences of non-compliance with regulations.
At CargoPoint, we are dedicated to providing expedited service and seamless experience for businesses shipping internationally. Our in-house customs brokers will help you through the customs clearing process, optimizing your costs and ensuring regulatory compliance across your supply chain. Learn more about our services here or contact our team today to consult free of charge.