Customs duties and taxes are often the most painful elements of running an international business. They account for a significant proportion of the cost of imported goods. The total value you pay to the authorities for the clearance of your consignment depends on different factors. These include product type, customs valuation, HS tariff code, tariff treatment, weight and volume of goods, duty rate, and packaging type. Whatever the cost adds up to, it may burn a hole in your revenues and profits. But you can do your bit to lower the custom clearance costs for your business. Here are some actionable tips to help.
Ensuring correct tariff classification can take you a long way with savings. Using the apt codes also saves you from customs audits and penalties, which is another way to economize clearances. Finding the correct HS Code for your product sounds easy. But it requires expertise and attention to follow the product and classification regulations. You may use the wrong code for your products without knowing that it can elevate your tariffs. It is best to let a customs broker agent help you with HS classification because they understand the nitty-gritty of the classifications better than anyone else.
Duty rates may change annually, or there may also be country-specific updates. The last thing you want to face is paying more when the rates have dropped. Many countries have lowered the rates for essentials during pandemic times to help businesses sustain through the crisis. The best way to leverage the benefits of lower rates is by staying ahead of the updates. You can rely on your brokerage company to proactively update you with the most recent information about rates and regulations.
Business owners must declare the value of the product to customs for calculations of duty and taxes. But the valuation on the invoice is often not the same as the customs duty calculation. Some companies even try to lower the value to reduce their total taxes. You must declare the correct valuation of your products because the authorities may see through the tactic and reject the declared value. If it happens, you will have to pay a higher duty. Even worse, the officers may impose hefty fines and penalties on your shipment.
This one is a no-brainer because collaborating with an expert helps in more than one way, even if you have to pay them. Your customs brokerage rep ensures that the entire process is streamlined and there are no errors and omissions. They help you minimize the tariffs by using the apt codes and guide you about the correct packaging. They even prevent fines and penalties by ensuring that your shipment follows all the necessary regulations. The brokerage you pay to these professionals is a small price for a smooth process with extensive money savings.
Good time management is another measure to cut down the costs of customs. It is crucial for businesses dealing in perishable products like fresh produce, food and beverages, pharmaceuticals, and more. Some borders stay closed at specific hours, so you have to time your cargo to get through during the open hours. Arriving during closed hours can be detrimental to perishable cargo. Your business may have to bear a significant financial loss and reputational damage. Moreover, the additional freight cost and after-hour charges can be even more painful. Your customs broker can guide you about border closure times so that you can schedule shipments accordingly.
Documentation plays a significant role in customs clearances. Surprisingly, it is also a cost-savings opportunity. Ensuring good documentation can decrease the cost or avoid additional expenses from paperwork. Some countries have extra requirements in paperwork, while others are omitting certain documents to facilitate global trade in pandemic times. The charges may go up as you generate more documents. Likewise, you may have to pay additional fees for not preparing the required documents. Stay ahead of the updates and be ready with all paperwork to save on these costs.
Trimming customs clearance costs is easier than you imagine, provided you know the essentials and follow them stringently. Most importantly, you must have a reliable broker showing the way to be on the right side of documentation, regulations, and processes. With an expert guiding you, there is no chance of having to pay more than you should, and you can prevent fines and delays as well.