All importers and exporters require the support and advice of a good customs agent that can be counted on to reduce customs duties within the maximum legal limits using the benefits of commercial agreements, (Free Trade Agreements, EUR1, etc.), that exist between countries, (please read through this completely for more information on this topic).
Import taxes will repeatedly mark the differentiating factor for the product to be commercialized profitably or at loss, requiring a dependable customs broker, who will provide the customer with advice and guide him through this vital stage of the international transport operation.
Our Customs Brokerage department in each of our offices at Panamá, Perú and Venezuela are continuously updating their knowledge of customs matters, thus ensuring that our clients enjoy the benefits of Free Trade Agreements obtaining reduction of import taxes and the maximization of benefits.
To expand you knowledge about the costs that influence transport, we suggest you read our freight calculation article in order to complement the customs process to have a complete picture https://www.pic-cargo.com/en/noticias/ freight-calculator-and-freight-types /
SUGGESTIONS AND TOPICS TO CONSIDER WHEN RETAING THE SERVICES OF A CUSTOMS BROKER OR CUSTOMS AGENT
Simply, all customs brokers ensure that impoters and exporters register in customs the arrival or departure of goods or products at the lowest cost possible.
When the cost of the goods being imported exceeds USD 2.000 although each country/Common Market has it’s own regulations,
The simple answer is to reduce as much as possible the investment in import duties and processes, although, there are various aspects which we will expand on.
1 Avoid extra costs
When a merchandise arrives to a customs zone, called port, customs warehouse etc,. Costs start to be incurred such as storage, container demurrage/detention which if the customs agent is not quick and diligent in obtaining the release of the goods from this area will result in rapidly increasing additional costs for importer or exporter.
2 Import Duties
Every merchant wants his product to have the lowest costs possible so that the final customers can purchase it. Import tariffs (taxes placed by the each country/common market) directly affects the final price of the product, these can vary from 0% to 30% and in some cases if the country/common market to which the goods are being imported is protecting its local Industry these tariffs can reach 100% of the cost of the product, all customs agents must classify correctly within the customs tariff and look for the classification that best benefits the customer which may determine the feasibility of the business and that it is profitable
Duties are taxes imposed by the each country/common market for the entry of a product into its territory. In most countries/common markets customs duties are paid only for IMPORTS, while exports generally pay only a slight export rate for customs processing.
1 Protection of local industry.
We will explain this with an example:
Say X country/common market produces a great amount of oranges, thus if any importer wants to introduce oranges from a another country/common market the import tariffs for this product will be relatively very high, because the local government will prioritize their local producers.
2 Trade agreements or agreements between countries, the so-called FTAs (Free Trade Agreements)
Let’s say country/common market A has an excess orange production, however it lacks bananas, in contrast, country/common market B ha excess bananas but a shortage of oranges…… These countries/common markets reach an consensus and set up a mutual cooperation agreement in order to import these products at low cost because they require them and do not produce them locally.
In general these agreements take years because not only one product is reviewed, but a list of goods are considered and of course each party seeks to benefit as much as possible.
PIC calls it the customs broker’s bible, it looks like telephone books used to be, (thick), where all the possible products that exist in the world are catalogued under classifications which indicate the import duties to be paid for the product.
The first few digits in a customs tariff are the same worldwide ensuring that all countries speak the same customs language.
We’ll answer this question starting with what the customer shouldn’t focus on: NEVER focus on reducing the customs brokers fees.
The customer should focus on obtaining the best advise from the customs broker to reduce duties to a mínimum by seeking the best import tariff and avoiding unnecessary costs and expenditures in a customs zone.
The keyword here is BEFORE, it is very important to check to see if all the required documents and permits are at hand in order to import a product into the destination country/ common market, otherwise the extra costs will leave you without any profit.
Below are a list of products that generally require special permits, if you don’t see yours please consult your customs broker:
Generally the required documentation is:
Transport document, for ocean transport it is called Bill of Lading or B/L and for air transport air way Bill or AWB.
Additional documents may be required later in the customs clearance process depending on the country/common market and/or product:
Some countries require a notarized power of attorney appointing the customs agent as the importer’s/exporter’s representative.
Additional permits that must be obtained if any of the following products are to be customs cleared, (if the product is not listed consult your customs broker)
It is important to note that in certain cases permits may take up to six (6) months to obtain which is why we strongly suggest to inquire about possible permit requirements before starting the import process
In Panama some of the import government permits are:
Aupsa, for all related foodstuffs and beverages products
Farmacia y Drogas, for medicines and biopolymers; medicinal drugs,
Alcohol and tobacco.
Cuarentenafor Wood, compressed cardboard
Vicomex, the agency where exports must be registered
In Peru some of the import government permits are:
Digesafor all related foodstuffs and beverage products for humen consumption
Digemid – Minsafor all pharmaceutical, health products and/or medical devices
Senasafor all agricultural and vegetable products
Sucamecfor all explosives and firearms
Ministerio de Transporte y Comunicaciones for telecommunications equipment
The venezuelan government has granted the exoneration of import tariffs to many products which are detailed in the federal register (Gaceta Oficial) https://www.finanzasdigital.com/2019/01/gaceta-no-6-423-se-prorroga-hasta-el-31122019-la-exoneracion-del-pago-del-impuesto-de-importacion-y-tasa-por-determinacion-del-regimen-aduanero-a-las-importaciones-productos-de-diversos-sectores/
Keep in mind that these agreements help to reduce import duties and to always request advice to from your customs broker, as the agreements depend on the product’s origin country/ common market with which there is an agreement as long as the certificate of origen is presented. It is important to note that not in every case the application of an agreement is beneficial as in some instances it may increase the tariff, (remember it is always best to request advice from your customs broker)
Panama has the following agreements in place
Peru has the following agreements in place:
Peru currently has fifteen (15) comercial agreements, either regional or bilateral with the following countries:
Some misunderstandings are prevalent and some customers think that duties are paid to the customs broker or agent, while the duties actually go straight to the government agency that controls customs tariffs/duties
Panama - Tesoro Nacional (National Treasury)
Venezuela - SENIAT (operates under the Finance Ministry)
Peru - Sunat
In customs there is what is the so called CIF value, which means:
C = Cost(of the Product(s))
I = Insurance(covering the merchandise and freight costs. If no insurance was taken the government will all the same calculate and apply to the value declared customs value 1% on the cost and freight.)
F = Freight, (transportation cost)
In most cases the customs clearance costs consist of
Import duties, which as previously indicated es the percentage reflected in the customs tariff.
Taxes, VAT, IGV or IVA or ITBMS (they all have the same meaning but change their name or abbrevation depending on each country but it is the local sales tax. Currently in Panama it is 7% , in Peru 18% (16% of IGV and 2% of IPM) and in Panama the 7% taxi s known as ITBMS
As oreviously indicated remember it is always best to request advice from your customs broker to avoid delays and extra costs.
Origin country costs: Will depend on the negotiation made with the supplier who is selling the producto, (commercial term or INCOTERM)