Customs, Taxes, Chaos

How can businesses and consumers avoid getting tangled in the thicket of international customs regulations?

  • For nearly half of businesses worldwide, customs duties are one of the main challenges in cross-border e-commerce.
  • Meanwhile, for 42 percent of entrepreneurs globally managing supply chains in international e-commerce, the most common challenge is helping customers navigate the maze of customs regulations.
  • What aspects should entrepreneurs who would like to start exporting goods abroad pay attention to?

In 2020 – due to disruptions related to the coronavirus – the value of global trade is expected to fall by as much as 32 percent.

– In difficult times, opening up to many markets can result in desirable and much-needed budget revenues. I believe it is worth it for entrepreneurs who have not yet done so to consider starting to scale their business and shipping their products abroad – advises Edwin Osiecki, Vice President of Marketing and Sales at DHL Express. – Different countries are at different stages of coronavirus restrictions. This means that as individual sectors of neighboring economies slowly unfreeze, businesses in Poland – even those operating in still-closed areas of the market – can take the opportunity to sell their products.

Growing Appetite for Cross-Border E-Commerce

In cross-border sales, efficient delivery will play a key role. In the second half of March, demand for express shipments worldwide increased by 183 percent. However, every parcel crossing a border must go through specific customs and tax procedures.

Three Rules of Foreign Expansion

In such circumstances, companies importing goods into Poland or shipping their products globally should pay particular attention to maintaining the efficiency of such procedures. For many entrepreneurs, this can be troublesome, given that for nearly half of businesses worldwide, customs duties pose a challenge in cross-border e-commerce. What are the obligations of businesses aspiring to international expansion? They can be reduced to three rules.

First: Check the Regulations on Shipping Goods

Three Rules of Foreign Expansion: Customs, Taxes, and Documentation

All goods crossing a border are subject to various legal and tax obligations. Within the EU market, the regulations are fairly simple, but outside the European Community it can be more difficult. As many markets, as many rules and obligations related to transported goods.

Second: Prepare the Appropriate Customs Documentation

What should be declared? How should it be declared? In which systems should it be entered? Commercial invoices, proforma invoices, registration codes or Harmonized System codes – entrepreneurs exporting worldwide should be familiar with all the tools used to control the cross-border flow of goods.

Third: Pay Customs Duties and Taxes

After determining the classification of the goods and calculating the amounts due, the next issue remains paying customs duties and potential taxes. This is usually the responsibility of the recipient of the product, but when the recipient is a retail customer, such an arrangement creates an additional obligation for them. Meanwhile, buying from businesses should be as easy as possible.

– Businesses must not only remember many formalities, but are sometimes also forced to shift obligations onto their customers – points out Edwin Osiecki. – A solution could be, for example, using the services of a courier company that will not only ensure efficient delivery but also handle the procedures, relieving entrepreneurs of this burden. For example, DHL Express has its own customs agencies at its disposal, which – possessing extensive knowledge and experience in customs clearance worldwide – enable efficient and smooth processing of shipments.

Summary

International expansion requires companies to be efficient in three areas: knowledge of regulations, preparation of customs documentation, and payment of customs duties and taxes. As Edwin Osiecki of DHL Express points out, in 2020 global trade may fall by as much as 32 percent, prompting entrepreneurs to seek revenues in new markets. The key is to relieve customers of formalities, e.g., through courier companies with their own customs agencies. It is worth remembering that demand for express shipments increased globally by 183 percent.