Last week a clients asked me to carry out an audit on historic import declarations to ensure their compliance. I uncovered several glaring issues with their invoicing and declaration practices which were worrying but now at least, could be addressed and rectified. These findings serve as a critical reminder of how incomplete or incorrect documentation can expose importers to non-compliance risks, financial penalties, and supply chain disruptions.
Each of the following missing elements is a weak link in declarations that can lead to delays at time or arrival or indeed even if the goods are Green Routed at that time, issues and penalties can show up down the road:
- Incoterms: Define responsibilities and costs between buyers and sellers. They were frequently omitted or incorrectly applied resulting in misrepresentation and non-compliance. I uncovered many transactions that were actually Ex Works (EXW) but were declared as Delivered at Place (DAP). This discrepancy had significant implications on the true customs value whereby transport costs should have been included but were not. Duty and VAT calculations ae affected and lead to under-declared values. By failing to include transport costs in EXW, the importer violates customs valuation rules, potentially subjecting them to fines or audits.
Also, it is crucial that Incoterms are formally agreed between the buyer and seller to establish who is responsible for what and when as the goods travel. This not only circumvents any disputes over liabilities and costs should the goods be damaged, but also ensures that both parties understand who is responsible for any transport costs involved.
- Commodity Codes: Every product on the planet has one. They determine applicable duties and ensure compliance with trade regulations. If they are missing from an invoice or other formal documents a competent person in the area must supply.
- Country of Origin: Establishes where the goods were wholly made, often confused with where the goods travelled from. Knowledge of the true origin can minimise or negate duties if there is preferential treatment agreement in place.
- Statements of Origin: Formally required in order to claim the above preferential duty rates which are established under trade agreements.
- Weights and Dimensions: Critical for accurate customs valuation and transportation logistics.
A Call to Action
For importers, the takeaway is here is abundantly clear. By addressing issues proactively, businesses can streamline operations, avoid penalties, and foster smoother global trade relationships.
Ensure your invoices include all the required details and that declarations align with the agreed Incoterms, the correct commodity codes, the true origin, the statement of origin, and the exact weights.
Regular compliance checks can help identify issues before they become costly problems. Partnering with experienced customs professionals can make all the difference in maintaining compliance and safeguarding your business.
