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Detailed Process Guide for Import Customs Clearance

In import and export operations, specifically customs clearance, you will hear a lot of advice and guidance that may contradict each other and find yourself confused, especially if it is your first import.

In this article, we will focus on one of the most difficult stages of import, or at least a stage of complexity, which makes it one of the biggest stumbling blocks for international traders, which is the customs clearance stage.

This made customs clearance a difficult figure in importing, due to the large number of necessary documents and the different laws from one country to another.

Here are the most important tips and guidelines that will simplify customs clearance:

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1. Selection of a professional and honest customs broker

Why sail alone if you can hire an experienced captain! Some may think that hiring a customs broker is a waste of money and time, especially since you are not obliged to use one. But let me list the advantages of hiring a customs broker, and the decision is then up to you.

Advantages of dealing with a customs broker

1. His experience will spare you from failed experiments

Hiring a good customs broker saves you the time and resources needed to understand customs legislation and deal with customs officials, allowing you to focus on your core business, as they stay abreast of changing policies and procedures.

2. Savings in duties and taxes

You may be eligible for duty-free, reduced or refundable, but ignorance of the laws in the destination country, or of the agreements with the importing country from may miss the opportunity.

The customs broker determines the products eligible for these exemptions by reviewing purchase orders, commercial invoices and other documents prior to shipment, to determine if there are any strategies to save duties in place, as well as completing and submitting the required paperwork to customs.

3. An ounce of prevention is worth a pound of fines

The customs broker ensures that accurate and complete information is provided to ensure that your shipments comply with all applicable rules and regulations. Incorrect declarations can lead to checks on your goods, sanctions, or even confiscation of your goods at the border.

4. Other Services

In addition to customs clearance services, a customs broker may assist you with other services such as shipping, warehousing, local trucks, etc.

2. Calculation of all customs costs and duties

Certainly, you realize that any project needs a feasibility study before you decide to enter and follow it, and as a first step in calculating the feasibility of the import process you intend to start, you have to calculate all costs and customs duties.

What are customs duties?

Customs duty is an import tax imposed by the customs authorities of a country on imported goods and merchandise.

Types of customs duties

There are many different types of tariffs applied around the world, here are the most common of these duties:

  • Basic (financial) customs duties: They are duties imposed on imported goods based on value or as a specific rate.
  • Additional customs duties (revenues): Fees imposed with the aim of increasing government revenues.
  • Protection fees: are levied to protect the local industry from foreign competition.
  • Compensatory duties: Also known as anti-subsidy fees, they are levies imposed on imported goods to compensate for the subsidies granted by the supplier country to suppliers to support their exports and give a fair chance to domestic goods.
  • Anti-dumping duties: Anti-dumping duties: Anti-dumping duties for a country’s foreign trade policy whereby goods are exported to another country at a price lower than or lower than their price in the country of origin.

Other classifications of tariffs vary from country to country depending on economic policy, specifically policies related to the regulation of foreign trade.

How to determine customs duties

To understand how tariffs are calculated, you must first understand how tariff rates are determined. There are types of customs duties according to the method of their calculation:

Value Duties: calculated as a percentage of the value of imported goods. For example. 4.5% of the total value of imported lamps.

Specific duties: calculated based on the weight or quantity of imported goods. For example. $0.20 per 10 kg of tea.

Composite fees: a combination of the previous two types

Import rate related fees: The lower the import, the lower the duties and vice versa.

When you get a container shipping price from your shipping agent, always check to see if customs duties are included in the quotation provided.

How to calculate customs duties for imported goods

There are six methods commonly used by customs authorities around the world to calculate the value of customs duties for imported goods, of the six methods, the most common method is called the transaction value method. Here’s how you can calculate it

The customs value of the goods is based on the amount of money that the buyer pays the seller to obtain the goods. This includes any costs associated with bringing the goods to the point of import.

In general, to calculate the customs value of a commodity, you need to summarize the following:

  • The value of the goods as stated in the commercial invoice
  • Brokerage fees
  • License Fees
  • Processing or assembly costs
  • The cost of processing goods such as packaging, boxes, etc.
  • Cost of road transportation cost
  • Cost of sea transportation
  • Insurance cost

Note: Most importers mistake presenting the retail value price as the value of the goods, and end up paying higher customs duties because of the higher value.

The transaction value method may not be suitable for some, although it applies to most imports. To read more about other methods, you can visit the WTO website on customs valuation. Instead, check with your customs broker.

Use the customs duty calculator

You can calculate customs duties yourself by searching for the harmonized code for the goods you import to get the applicable duty rate, and using the automatic duty calculator such as the customs duties and taxes calculator in Saudi Arabia

All you have to do is choose the type of goods, add the value of the goods and press the calculate button

3. Prepare all the necessary documents for customs clearance

The customs clearance process usually involves the preparation of documents that can be submitted electronically or physically with the shipment. This helps the concerned authorities calculate the taxes and duties that will be levied on the goods.

The type of documents required for customs clearance usually depends on the type of goods shipped. It may also vary depending on the country of origin and the destination of the shipment. However, there are a set of general documents that you will need when importing goods:

  • Proforma Invoice
  • Customs Packing List
  • Certificate of Origin
  • Commercial Invoice
  • Bill of lading
  • Bill of Lading or Air Waybill
  • Import License
  • Health Certificates

4. Check for specific packaging requirements

In many countries, there are laws governing the process of packing imported goods in a certain way for a successful import. The first objective of these laws is to protect imported goods and to assess the damage and resist the factors that the goods meet during import and transportation across countries.

There is another goal related to knowing the country of origin of the goods, such as the law requires that the name of the country of origin be printed on the packaging in a way that cannot be removed, so when planning to import, you must keep a record of the requirements and packaging policies in the importing country, to avoid that the goods are refused entry into the importing country due to an offense related to packaging.

5. Study the restrictions on the import of certain goods depending on your country

When importing goods from a different country, it is necessary to ask about goods prohibited in either country. For example, Christmas trees may be imported to most Arab countries, but not to Saudi Arabia.

In some cases, your company can obtain a license or permit to allow the import of a prohibited item into a country. While some countries allow the import of goods, they may impose restrictions on these goods. Restrictions can be based on factors such as quantity, packaging, and licensing.

It is therefore important to conduct research on the import and export laws of the countries with which it engages in trade.

6. Always up to date with trade agreements between your country and the concerned countries

Trade agreements establish trade arrangements, preferential taxes and customs duties that vary by country of supply, and relevant preferential agreements between countries to help them trade among themselves, for the import and export of goods.

There are several types of trade agreements between different countries, so you should seek to understand the trade agreements between your country and the supplier country, which can help you make your goods compatible with the terms of the agreement, take advantage of reduced exemptions and fees and be careful not to choose prohibited goods.

Trade agreements cover several key points such as those contained in the Free Trade Agreement (FTA), unilateral or bilateral trade, anti-dumping duties, countervailing duties (CVD), and the like. It can benefit from conducting pre-import research and complying with these trade agreements in reducing cost, increasing profits, and moving away from sanctions and prohibited products.

7. Learn about the delay policies

Sometimes, people leave their containers at the airport for longer than the time allowed. If you exceed this time, ports or railway stations may charge for your containers left on site.

These demurrage fees are levied so that ports can operate efficiently, to compensate shipping lines for overtime and to also encourage importers to remove their goods within a reasonable time.

You may be charged a delay fee depending on the additional amount of time, per day, or depending on the size of the container. In any case, the late fees can reach very high amounts that increase the cost of your goods, lower your profit or even cause a loss of trade.

Fortunately, it’s not hard to know the late fees, with a simple search on search engines, Google, for example, you can quickly access most of the information you should know. Began searching for these fees available on government websites.

So get to know these fees and make sure to receive your containers as soon as possible, by providing the required documents in advance and explaining all the required information accurately to avoid any delay for inspection and audit.

8. Fill out documents accurately and with correct information

In international import operations, you will be required to have many paperwork, documents and documents necessary for customs clearance. You have to fill out these papers thoroughly to avoid any delays or problems.

All information on these forms must be accurate. Your business name and contact information must be accurate. Pay attention to information that relates to the shipment from weight to number, country of origin, most importantly customs coordination code and country of origin.

Finally, and the most important advice in customs clearance, yes, one gains experience from his failures and failed experiences that he goes through, but there are easier and more economical ways that only need you a few hours, which is to learn from the experiences of others to reach safe and successful import at the lowest possible cost, so do not skimp on yourself to invest in it and seek expert advice.

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