Customs is a place feared by every importer, but once we get to know the terrain a little better we will see that it is a rather unjustified fear. As we explained in a previous post, two of the main duties of customs are to collect taxes and inspect goods. Let's now look at the typical events during this transit and how to avoid problems as much as possible:
1. Payment of tariffs. This tax depends on each product and country, so we must check what tariff applies to what we are importing.
-The supplier gives us an "HS code" indicating what type of product it is. Then we use a tool to determine the tariff -> Tariff calculator for the European Union.
-Then we apply that tariff to the cost of the product + transport.
To avoid problems in this part of the operation, we must be honest. We have to declare exactly what we are shipping (not falsify it to try to be charged a cheaper tariff).
You also cannot enter a cost lower than the actual one to make the tariffs lower. In that case we risk an inspection (point 4) and things will get ugly. In addition, if we try to bring in products well below their cost, we may end up being accused of dumping.
2. VAT collection (in other countries ITBMS, IV, ITBIS, IGV, etc). If we are going to import from China to resell later, this step is irrelevant because the VAT will be deductible.
VAT is applied to the cost of the product + transport + tariff. We should not calculate VAT only on the value of the product or we will be making a significant mistake.
3. Customs clearance costs. These are a series of expenses caused by the handling of the cargo at the port, paperwork, insurance (in Spain it is usually 0.45% of the invoice value) and other small charges. In total they should be around US$250-350.
These costs depend on the port and country of destination, so they vary depending on where you are importing to.
It must be noted that if our cargo is stopped at customs we will have to face unforeseen costs, which is unavoidable.
4. Inspection of the goods. It is carried out randomly, or when the cargo or documentation is suspicious.
In the first case, there is nothing we can do. From time to time, goods are stopped as a routine matter or because there is an order to inspect a certain type of product for a period of time.
However, we can save ourselves problems if we do our homework. The goods must be described in as much detail as possible so as not to arouse suspicion.
Example: We are importing electronic components. If the packing list reads:
-5 boxes of electronic components -> Bad
-3 boxes of C232 electrolytic capacitors, 2 boxes of 100ohm resistors -> Better
Providing the detailed information is the supplier's responsibility, but if you hire an intermediary company they will take care of reviewing everything beforehand to avoid unpleasant surprises.
Lying about the price of goods also increases the chances of ending up under inspection. Always being honest will save us half the problems. The other half depend on luck and hiring the right people.
In short, we could have 5 cases regarding inspection:
a. No problem. Container cleared.
b. Document review. If we have been honest and everything is in order, nothing will happen.
c. Taking a sample from the container (positioned). This will inevitably cost us around US$75.
d. Container scan. Around US$90.
e. Complete unloading of the container. We have to cover the cost of the operation, which is around US$600. If this happens to us, bad luck. There is no way to avoid paying it.
I hope it has helped you better understand how customs works when importing. Feel free to leave comments if you have any doubts or want to share new perspectives on the matter.