Custom Clearance: A Short Run-Through


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For a short definition, custom clearance is the transfer of goods (import or export) through customs to safely enter another country. In the same context, this is called trade, a global way of sending and receiving goods.

Custom clearance Australia is the process that permits the transport of goods internationally. It is a complex topic because every country has different rules and regulations with regard to trade where goods cross borders.

Custom clearance 

Custom clearance is always required because it also concerns the duty we pay to the government of a country for the transfer (import/export) of goods through its land.

The term custom clearance comes whenever we deal with international trading. It is the duty we pay to the government of a country for the transfer (import/export) of goods through its land.

The main documents that you will need to help customs authorities clear the products quickly are discussed below.

Export/import license

To be able to export goods, you must have an export license. The first international export of a shipper cannot be carried out without an export license. This is required only for the first time.

You need to apply first to the licensing authority, and afterward, the permission is granted. The chief controller of imports and exports is the one who provides you the permit.

Import licenseis the permission of a government grant to allow the import of goods that are restricted. For getting an import license, you have to apply to the licensing authority office.

Import duties / value-added tax

In custom clearance, if you want to import cars or anything from the US to Europe, you need to follow the EU customs clearance tariffs. These import duties include 22% for trucks, 10% for cars and 6 to 8% for motorcycles.

Depending on the country or region, you also have to pay value-added tax of 19-22% on the import. There are tools for these but if cannot find any, you can simply check the documentation fee for the different required legal documents.

Clearance fee

Add the duties and taxes applied to the different products to the fee, and you can calculate the total customs clearance fee. It does not more than one day to process the clearance. Sometimes, your goods might be suspected of something and this can cause delays in the process.

Both buyer and seller are subjected to customs clearance. If the buyer doesn’t know much about the goods or cannot take the responsibility to all the process of custom clearance, if you are the buyer, you can hire a customs broker.

Customs broker 

A custom broker is a private individual (or a firm) that assists the buyer to pay taxes, helps in custom forwarding of goods from the customs office and safely transfers them to the destination port.

He is responsible for organizing custom entries, paying duties, and taking care of the shipment. He is the one who will inform you on any changes you need to change in your documentation as well as keeping you updated on the shipment.

There are other advantages your customs broker provides you.

Customs broker advantages

A customs broker helps you in the safety of the shipping of your goods. You can get professional advice from them to help you avoid difficulties in declaring your products at the customs.

When you are importing products from another country, a customs broker who does business on both sides can help ensure you get your goods quick.He keeps you updated on costs and gets you to know the strategies to save money. 

Also he proof reads all the documentation and take out the errors. Many customs brokers   will provide you with additional tools to use internal systems to improve your efficiency, control your costs, and keep you products away from risks of non-compliance.

There are extra steps that need to be followed for custom clearance.

Examination and verification

A customs officer verifies your documents and other paperwork. Commercial invoices are required for international shipments with list of the most important information like the control information of all parties involved.

The commercial invoice has the export date together with the Air bill number mentioned. A customs officer will analyze the goods, the laws related to them in the country of import and export, plus their value.

The customs officer checks on the fee applied to any shipment and make sure all the taxes and duties have been paid.

Assessment/duties payment

The various types of goods also have various ranges of import fees. In assessing the duties and taxes for customs clearance, you need to know about the de minimisvalue. Import fees are not the same for all goods. 

As the name indicates, it is the minimum value that is subjected to taxes.

For example, if you are trading goods with a de minimis value of $200, you will not be subjected to the duties, unless the goods value exceeds $200. (Certain goods are subjected to taxes regardless of the de minimis value.)

Another major factor in the assessment of duties and taxes is the incoterm mode of shipping. There are different taxes for shipping through DDU (Delivery Duty Unpaid) and DDP (Delivery Duty Paid).

Incoterm in shipping

One of the most important decisions you can make regarding international trading in incoterm.

In the best scenario, you can choose either DDU or DDP.

DDU (delivery duty unpaid) means that the import duties and taxes have not yet been paid. In DDU, the customs broker collects the required documents from the customs officer independently.

DDP (delivery duty paid) means the taxes and duties are already paid. The paid amount covers all the import fees. If you have a customs broker, he will also charge a fee for his services. He will help you in the customs clearance process.

Shipping process

The shipments are held at the customs office until after the complete satisfaction of the customs department. These shipments are only released when all the obligations (paperwork, taxes, and duties) get fulfilled.

Shipping starts once all duties get paid, and all the goods are according to the customs laws. Choosing the transport service for your goods is your responsibility. The shipment that has paid all the duties very rarely gets stuck in the customs department.

Shipping and trading across borders are not the same as locally exchanging goods. The process of international shipping involves the process of customs clearance. 

You need to know all the necessary details about it if you want to get into the process.