E-commerce Customs Affairs
每個國家海關的主要使命是管理關稅及稅收流程，並監控國家非法產品的進口。對於電子商貿而言，報關準備及提交準確的文件至關重要，但這並不局限於對合規性而言。管理清關出錯或會對貨運時間構成影響，從而引致海關延誤、罰款及客戶滿意度下降。常見的錯誤包括：商業發票錯誤、價值不符、協調製度 (Harmonized System)代碼、漏報原產地及限制物品的進口許可證。
- 發票可能會列出協調製度(Harmonized System)代碼，以便海關準確確定關稅和稅收。在個別情況下，出口國和進口國之間的協調製度代碼的格式或有差異。例如，協調製度代碼的長度；香港的代碼為8位數字，而美國則為10位數字。
E-commerce connects merchants and customers from everywhere around the world. It brings boundless opportunities for businesses to grow and expand. However, it also brings challenges due to the difference in demography, culture, environment, technology, economy and customs channels. With over 220 countries in the world and the ever-changing customs regulations, customs affairs can be a daunting topic even for the most experienced shipper.
The primary purpose of customs in each country is to govern duty & tax processes and manage importation of products that are illicit in the country. Customs preparation and accurate documents are vital for e-commerce businesses, but not only for compliance. Managing customs clearance incorrectly can affect transit time, which results to customs delay, penalty, and negative customer satisfaction. Common mistakes include: commercial invoice error, value discrepancies, Harmonized System (HS) code, missing country of origin and import permit for restricted items.
To improve on customs compliance, below is a general guideline on how to prepare a customs invoices:
- Customs documents like invoice and packing list must be submitted to customs physically or electronically. Different carries and shipping models may offer different solutions.
- A good product description needs to be clear and specific, including info such as: generic product description, composition of materials, purpose of the product, brand, used or new item, and manufacturer.
- Invoice may list the H.S. code of the product for customs to accurately determine duty and tax. In some cases, the format of H.S. code may vary between export and import countries. For example, length of H.S. code in Hong Kong is 8 digits, while H.S. code in the US is 10 digits.
- Sensitive products such as firearms, airsoft, alcoholic beverages, living animals, biological products, and dangerous goods can be restricted by local governments or carriers. It is important to clarify and obtain the required permits/ licenses to avoid possible return or loss.
Further than documentation, import duty & tax is also a key factor for merchants to consider. Although Hong Kong is a free port that duty & tax do not apply for most products, the majority of countries have their own tax and duty system. It is not just about how much the merchant or consumer needs to pay. It can also affect an ecommerce business’s strategy such as their online shipping policy, warehouse location, and shipment consolidation model. There are a few key factors for shipper to know:
- De-minimis value is available for many countries, which means a valuation ceiling that duty or tax is not charged during the clearance procedure. This value can vary between countries. Examples are: USD 800 for the United States, 135 pounds for the United Kingdom, 150 EURO for Europe, and 10,000 Yen for Japan (data on Jun, 2022).
- Duty and tax can be paid by shipper (merchant) or receiver (consumer). In either case, a clear communication between online shoppers is recommended in order to avoid unexpected fees and dissatisfaction. If merchants ship under the DDP model and collect duties/taxes up front, an accurate and up-to-date duty/tax calculator in the shopping cart would be crucial.
- To better control duty & tax payments, setting up a foreign entity for billing purposes can also be an option. Especially in Europe after the restructuring of VAT regulations, having a foreign entity can simplify tax & duty payments and potentially reduce costs.
Although e-commerce has brought new challenges to businesses and local customs, customs officials around the world are continuing to adjust and improve. In addition, having a trusted shipping company who can provide advisory service and technology solutions can be a big time saver. By choosing your approach wisely, mastering this aspect can actually be less daunting than ever. At the end of the day, if customs affairs can be tackled properly, we are one-step closer for a stable business growth and positive customer experience.