Having to navigate the complex world of ocean freight is complicated enough with the amount of paperwork required for a simple shipment. Throw in having to understand HS codes and pay the right import taxes and duties and things get even more complicated.
What if you’re only importing goods for a short period of time, say, for a tradeshow or fair? Or perhaps you are simply shipping commercial samples* to a potential client?
Under such circumstances, having to pay the taxes and duties in accordance with your cargo type just doesn’t seem fair. After all, the cargo isn’t being imported for consumption or end-use in the importing country and will be exported within a relatively short period of time.
Here’s where temporary import shipments come into play.
*Note that the US CBP does not recognize the word ‘samples’. For an item to be shipped as a sample, it has to be a non-usable product. Eg. a shoe sample must have a hole in the sole so that it cannot be sold as a functioning shoe.
Temporary import shipments are tax- and duty-free importation of goods that are meant to stay within a certain country for a limited period of time.
These apply to goods that
As a general rule of thumb, the imported goods cannot be hired, loaned, or disposed of in any way while they are in the importing country.
There are different ways to manage your temporary import shipments, such as Carnets, securities, and duty drawbacks. Here’s a general overview of all of them.
Note that rules and regulations may vary from country to country. When in doubt, speak to your freight forwarder or customs broker.
The US allows for commodities to be imported for up to three years without paying duties. However, in the 11th month, the importer or broker will need to alert customs to inform them if the goods will be staying for another year. This can be done twice, totalling up to three years.
After the three years are up, the goods must be either be re-exported or the importer will have to file a consumption entry, used for goods that are imported for use/consumption within the country.
“Upon import, customs will usually advise on whether the goods will need to be checked when exported. In my experience, customs will want to verify that the goods that came in are leaving intact. Any discrepancy in piece count must be explained to customs.”
Administered by both the World Customs Organization and the International Chamber of Commerce, the ATA Carnet is by far one of the most popular temporary import permits and is also commonly known as the Merchandise Passport or Passport for Goods.
In fact, according to the ICC, over 185,000 ATA Carnets for $26 billion worth of temporary imports and exports were issued in 2017.
The ATA Carnet is issued in the country from which the goods are being exported. It allows the exemption of duties and import taxes payment on cargo that is re-exported within a fixed period of time. This includes commercial samples, equipment, and imports meant for exhibition at tradeshows.
Upon issuance, the ATA Carnet is valid for up to one year from its issue date and can be used multiple times across multiple countries. This means that it can be used as long as it remains valid.
The Carnet de Passages en Douane, or CPD Carnet, is a temporary import permit for private and commercial motor vehicles.
It can only be issued by the Alliance Internationale de Tourisme (AIT) and Fédération Internationale de l’Automobile (FIA), which have associations in more than 120 countries.
With this permit, you are declaring your intention to re-export the vehicle within the validity period of the permit and allow for the corresponding taxes and duties to be taxed in the event the imported vehicle(s) is/are not re-exported.
Should a vehicle enter a country without a CPD Carnet, a guarantee deposit will need to be paid to the customs office of the importing country.
Both the ATA and CPD Carnets are usually issued for up to twelve months, but there may be exceptions that reduce their validity period. This is usually dependent on:
Does not need to be presented at the time of export from the origin country
Goods can also be temporarily imported into certain countries without an ATA or CPD Carnet. To do so, the importer will be required to put down a financial security deposit with the customs office of the importing country, usually in the form of a cash deposit of the local currency, a financial bond, or a written agreement (conditions apply).
This amount is usually equivalent to the taxes and duties due should the merchandise not be exported within the stated period. This acts a guarantee that these imported goods will be re-exported.
Customs securities can be applied for at the time of import. But note that additional import documents will likely be required. It may also be necessary to undergo a customs inspection, which will delay the importing process.
Under a duty drawback scheme, exporters can get a refund on the duties that have been paid on the cargo during import.
Goods that qualify for this include those that are:
The importer must register the goods upon entry and make a deposit of the corresponding duties and taxes with the customs. In Europe, these tend to range between 20% and 30%. More often than not, this payment is carried out in cash and in the local currency (where the goods are being temporarily imported into).
When the goods are being re-exported, the correct paperwork and merchandise must be presented to the customs office. A refund of the duties and taxes paid upon entry will be made if all paperwork is in order. In the US, it’s a refund of 99% of the duties and taxes paid.
Note that in certain countries, credit cards may not be accepted and there may be a minimum claim required. Refunds may also take months to be made.
As in the case of the US and its temporary import under bond (TIB), other countries may have their own temporary import bonds and schemes. In general, these must be acquired from customs brokers and are used for customs clearance.
They must be obtained before cargo arrival and presented upon arrival or risk being held until the required documents are acquired.
The deposit required and payment for these documents are usually done in cash and the local currency of the importing country. Fees vary from country to country and are cargo-dependent. Typically, one is usually required for each country the merchandise passes through.
Just like a duty drawback, deposits from such bonds can take up to months to be refunded.
"An Incoterms is one of the most important aspects in business negotiations as it lays out the responsibilities of the buyer and seller"
Klaus Lydsal, vice president of operations at iContainers