How to Clear Customs for International Shipping
When dealing with international commerce, there will be many times when a business will have to ship packages across and beyond the borders of countries. To do this, a set of guidelines are set in place by the Customs Departments of countries around the world, to provide a set of rules and regulations to determine which packages are safe to be transferred through customs. Though policies may change between various countries, the basics of imports and exports stay relatively similar.
What are Customs and Where do they Apply?
Essentially, clearing customs refers to the process of obtaining governmental permission to move goods into and out of a country. Once the goods enter the country, they are warehoused according to customs authority until the process is completed and the customs documents are adequately vetted. In addition to the process and steps needed to clear customs, customs clearance also refers to the specific document that customs authorities grant to the shipper, enabling them to transfer their cargo across borders.
The Information Needed in Clearing Customs
The primary — and most involved — part of clearing customs is ensuring the information in the customs clearance document is correct. To obtain this document, the business must first declare the goods they are shipping, along with the following list of information to fill out the customs clearance document:
An Import and Export License
These licenses allow a business to move cargo across borders, the necessity of either license depends on the direction of shipment and the goods being shipped. An Import License allows a business to bring goods into the country (as well as goods that are otherwise restricted), while an Export License allows the business to send goods out of the country. For either of these licenses, the business will have to apply to the licensing authority to receive them.
A Pro Forma Invoice
The invoice is sent to the buyers of the goods after order confirmation. It serves as a transaction agreement between the business and the purchasing party, and some countries may use it in lieu of a commercial invoice. The Pro Forma Invoice is also necessary for the customs authority to calculate taxes and duties for the shipment.
A Customs Packing List
A record of all the items included in the business’ shipment. The packing list allows transportation companies to keep a record of the various goods being shipped.
A Country of Origin Document
Issued by the business, this document declares the country from which the goods are being shipped, manufactured, or processed.
A Commercial Invoice
Similar to the Pro Forma Invoice, this document is another piece of proof between the business and the purchasing party. It also contains its own set of information, such as:
- The business’ Name and Address
- The Receiver’s Name and Address
- Detailed Information on the Size of the Goods
- Prices of the Goods Being Shipped
- The Mode and Certifications of Shipment
- The Incoterms Chosen for Transport
- Details on Freight Insurance
Once the required information is vetted and confirmed by the customs officers, the shipment is forwarded to the destination country. The business is then supplied with several extra documents that are needed for the next steps in the customs process:
A Shipping Bill
The assessment of the value of goods being exported.
A Bill of Lading or Airway Bill
This receipt lists the goods being exported and is supplied by the shipment carrier.
A Bill of Entry
This document is filed before the shipment arrives at its destination, and is used by customs brokers and agents to assist in the customs clearance process.
A Customs Invoice
The same as a commercial invoice, this document has a specific layout that is defined by customs officials.
An Insurance Certificate
This certificate defines the business’ coverage for potential losses or damages of cargo during shipment.
Resolving Customs Clearance
Once the business’ documents have been reviewed and cleared, the customs departments will calculate the business’ requisite taxes and duties that need to be paid. These taxes and duties are defined by the destination country’s customs laws, the value of the shipment, the incoterms chosen, and the mode of shipping. Costs can be reduced here in various ways, by deciding on the right incoterms, modes of shipment, and size of the shipment. Once all of this information is confirmed and the taxes and duties are paid, the customs department is able to release the shipment, and allow it to continue to its destination.
“With the right information and a good customs broker, clearing customs should be a simple affair for any business”
Though there are many documents and pieces of information to maintain, all of these steps ensure that a business is able to clearly track and maintain the goods being shipped. If anything should happen during transit, the customs clearance documents grant businesses a trail of information to find the best way to resolve their issue, whether it is tax calculation, damaged cargo, or restricted goods. With the right information and a good customs broker, clearing customs should be a simple affair for any business.
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