Advice required on overseas customs duty

Advice required on overseas customs duty

Didn't find your answer?

I have a software company starting to make overseas sales outside of the EU. They have encountered problems where the customers are refusing to pay the import duties imposed on them by their local tax/customs departments (India has been the biggest problem). So I have a number of questions.... The software is sold to businesses not individuals.

1. Surely the customers would realise that an import duty is due in their home country, or are the exports being handled incorrectly?

2. I understand that duty is imposed on goods but not on services, could the sale of the goods be valued at a nominal amount and the supporting services be charged as a greater proporation of the sale?

3. If the customers were able to download the software from the web would this eliminate the requirement to pay any duty?

4. One customer is refusing to take delivery and the sale has fallen through, the export company has advised the seller they will now be liable to pay the import duty (over 2k) Surely this can be correct?

Can anyone fill in some of the blanks or point me in the right direct of where I could improve my export knowledge?

Many Thanks

Replies (3)

Please login or register to join the discussion.

avatar
By ACDWebb
13th Nov 2012 17:20

Import duties

are hardly the clients responsibility.

Perhaps they need to have a big notice on the sales page of the website that duties & local taxes are the responsibility of the purchaser.

Re 2, I would think that would depend on the rules of the country concerned, but certainly do not be browbeaten into a false Customs declaration of value - as I have seen suggested on other forums as an option to "beat" UK Import duty & VAT

Re 3, possibly but is that what is being sold.

Re 4, I should have thought not. Depends on the contract with them and whether it allows them to charge back. Why are the export company trying to charge a duty that is presumably not due as the import has not occurred and the software is being returned? Perhaps they have paid the duty on account for the purchaser to pay before releasing the goods (as tends to happens with VAT on imports to the UK where Parcelforce pay & then send the recipient a letter with a bill for duties & handling to be paid before release). If so, and the goods are to be returned then surely the carrier should be reclaiming/reversing any duty paid on account

Your blanks seem to be on the import rules of other countries rather than UK based, and other than searching out the English versions of the foreign Revenue departments websites and seeing what you can find there, there is probably not a lot you can do.

Finally re "India has been the biggest problem" ... why does that not surprise me :(

Thanks (1)
avatar
By Richard Willis
14th Nov 2012 13:44

Incoterms, incoterms, incoterms!!!

See http://en.wikipedia.org/wiki/Incoterm 

Who is responsible for what is defined by the incoterm under which the goods are sold.  This should be established and defined at the CONTRACT stage; you shouldn't be arguing about it when the goods are in clearance!  If the goods were contracted-for without this being established then whoever is responsible is at fault.

Thanks (1)
By Steve Kesby
14th Nov 2012 14:32

I think...

... that there wouldn't be any customs duty to pay, if the export declaration was completed correctly, and the items valued correctly.

Whilst rates of duty and the like will be country specific, the classification system and valuation methodologies are international, being set/negotiated by the World Trade Organisation.

I think you have a valid basis to value according to the principles set out in this minute from a meeting of the WTO's Customs Valuation Committee, picked up from this search.

This publication might be helpful to you.

This item and this item from the website of the Indian Directorate General of Valuation, picked up from this search, suggests that India will be applying this decision.

Probably as well to take some paid advice on it though, given that it's quite important to your business.

Thanks (1)