Customs clearance: All you need to know before shipping abroad

Team Kolleqtive

Since there are always two countries involved, the goods will be subject to the customs policies of both countries (the sending and receiving). These policies differ from country to country, and while an item may be accepted in one, it may be highly regulated in another.

The customs department of your country handles the clearance process as the goods leave your borders. The customs department in the receiving country clears the goods when they arrive at their borders. There are also taxes, duties, and other tariffs you must pay to clear your goods. These fees vary.

There are several steps and documents involved in the customs clearance process. Failure to adhere strictly to them may cause delays, so customers may not receive their deliveries on time.

It’s, therefore important to have a good understanding of the customs clearance process, so you’ll always do what’s required and avoid penalties and delays.

So, let’s dive in.

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What is customs clearance?

Customs clearance is the process of acquiring permission to either export or import goods. The document granting you this permission may also be referred to as customs clearance. The document will indicate that you’ve paid all the fees associated with shipping the package.

Documents required for customs clearance

For your goods to be cleared by the customs authorities, you must provide the following documents:

  • Import and Export license
  • Pro Forma invoice, which is the one you sent to your buyers. Customs authorities use the information therein to calculate taxes and duties.
  • Customs packing list, which is a list of all the items being shipped.
  • Country of origin
  • A shipping bill is a document that the customs offices use to determine the value of your export items.
  • A Bill of lading, also known as the airway bill, is a receipt listing the goods you’re exporting. It’s the shipping carrier that will issue this bill to you.
  • A Bill of entry is a document filled in by your customs broker before the shipment reaches the port. This is required before the customs department can start the clearance process.

Customs brokers are agents authorized by the US Customs and Border Protection to assist international traders with all customs issues. The activity is known as customs brokerage. A customs brokerage firm will ensure you comply with all customs regulations and help you prepare the documents you need. They are licensed to handle your customs issues for you so you can focus on your trade.

  • A commercial invoice (some countries use the Pro Forma invoice in place of this)

The commercial invoice, just like the Pro Forma Invoice, shows proof of transaction between you and your buyers and will contain the following information:

  • Your name and address
  • The buyer’s name and address
  • The destination address of the item
  • Quantity of goods
  • The unit price of the goods
  • Goods dimension/volume
  • Date the invoice was made
  • Customer reference number
  • Sales and payment terms
  • Currency of payment
  • Package marks
  • Unit of measure
  • The total value of the invoice
  • The total price of the goods
  • Mode of shipment
  • Freight Insurance details
  • Tax identification numbers of you and your buyers
  • Incoterm
  • Certifications
  • Miscellaneous charges

Steps involved with customs clearance

Below are the steps involved in customs clearance:

1. Inspection of Documents

In this step, a customs officer will review all the relevant documents to verify their accuracy. If the documents are in order, the customs clearance process will begin.

2. Calculation of Taxes and Duties

To determine the taxes and import duties to be paid, a customs broker’s assistance is recommended. These calculations are based on factors such as the type of goods, their declared value, the customs laws of the destination country, and the chosen incoterm.

3. Payment of Taxes and Duties and Incoterm Selection

You can choose between Delivered Duty Unpaid (DDU) and Delivered Duty Paid (DDP) incoterms. Customs officials will check which applies to your shipment. If you have paid, your shipment will be marked as DDP, and all taxes and duties will be paid in advance by your customs broker. If not, your shipment will be marked DDU, and an independent customs broker will be assigned to collect the payments.

4. Release of Shipment

Once all taxes and duties are paid, the customs department releases the shipment for its final destination. Extra fees such as inspection, storage, handling, insurance, and disbursement will apply if the shipment is marked as DDU.

Final thoughts

All things considered, there are still some things you could do to make your customs clearance much easier. The first is to deal with a reliable brokerage firm that can handle the entire documentation burden on your behalf.

Aside from that, you need an experienced carrier or freight forwarder to deliver your goods to the port and then to the destination. Also, know that international trade laws are ever-changing, so try to stay current on these laws, so you are never caught unawares.

Lastly, make sure your documents are well arranged and easy to reach to make things easier for the customs agents. If you have all things covered, the customs clearance process will likely proceed much faster.

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