Importing goods into another country can be a complicated process. This process can be even more confusing if you have never gone through it before. A-1 Auto Transport has an import calculator that can help you understand the possible taxes you may be required to pay when shipping a vehicle to another country. Keep in mind that some countries have no duties, and others have high duties to be paid before you can bring your goods into the country. Failing to claim these items could result in criminal penalties or your goods being seized by customs.
What are the different parts of a vehicle import calculator?
An import calculator has multiple working parts. To get an accurate estimate, all of the fields have to be filled out accurately. Even missing one part of the calculator could affect the amount the import calculator provides you with for import duties.
On the import calculator, you will find a spot to fill in the import information. You will select the country you are importing from along with the currency for that country. Next, you will select the country you are importing to and their currency.
Different countries have different import duties. Depending on the country, the import taxes could be high, or they could be non-existent. This field is essential because it allows for an accurate tax rate.
Product Description or HS Code
To provide an accurate estimate, the items being imported will need to be listed. The value of the item is how it is taxed for import. So having an accurate description can help with the actual value of the items being imported.
Harmonized Commodity Description and Coding System (HS Codes) are coded standards to classify goods. Customs use these codes in all parts of the world. The coding helps customs allocate the correct rate of duty and tax for each product.
The HS Codes contain a total number of ten-digits. The first six-digits are the Universal code for standard goods classifications. The country of import determines the last set of numbers in the sequence.
Value and Quantity of the Product
In the currency of import origin, the value of the product must be listed. The value can be done by inputting the price you paid for it or by looking up current value, especially if it is a car. You will want the current blue book value for a vehicle if you are shipping it.
Due to the various exchange rates, the calculator requires the product listed in the currency of the country of import. The calculator will convert it further as it is needed.
The quantity of the item you are claiming is important for accurate calculation. If you bring in two of the same items but only claim one, the taxes due should be twice the amount you paid. Penalties can be assessed if you do not pay the right duties. Customs may even seize the extra items and leave you with only what you correctly claimed.
CIF: Cost, Insurance, Freight
Some countries use the CIF option when calculating freight. The acronym stands for cost, insurance, and freight. The person who imports the items is responsible for them from import and until the item reaches its destination. With a CIF shipment, all of the insurance and freight charges are included in the total cost.
FOB: Free on Board or Freight on Board
During a shipment that is classified as FOB, the costs of the insurance and other freight costs are not included. FOB shipment classification can be called free on board or freight on board. Some countries prefer using FOB calculations for the importation of items into the country.
The FOB implies that the shipper is responsible for all of the carrier’s costs and risks until the items are on the transport vessel. After they are loaded, the cost risk is transferred to the buyer if one exists. When transporting a vehicle, all risk would be on the shipper.
Shipping and Insurance Cost
Most import calculators have a place to input the freight shipping costs and insurance costs. These need to be filled out in the currency of origin.
What is an import duty?
Import duty is a tax. The tax is collected on imports and some exports. A country’s customs authority collects these taxes. The value of the imported goods will often dictate the duty owed for bringing it into a country.
You may also hear these referred to as a customs duty, tariff, customs tariff, import tax, or import tariff.
What happens when my HS codes are incorrect?
When using HS codes, sometimes the wrong ones get used. Using the wrong HS codes can cause problems for the broker and yourself. A-1 Auto Transport will check and verify all HS codes before shipment to help reduce the chances of error.
If you find that the wrong code has been used you may be facing the following:
- The duty may remain the same. Consider yourself lucky in this case. The duty staying the same means that you will not be facing penalties from customs for the misclassification. It is crucial to make a note of the error you made and change it the next time you need to import. You may not get lucky twice.
- The duty was overpaid. When calculating your duties, making sure you calculate them correctly is key. If you overpay for your import, you will lose the overage. You are not issued a refund.
- You underpaid the duty. In situations like this, you will need to pay the difference. After that, it is a waiting game to see if customs charges you any interest, fines, or penalties.
Why is classification important?
When you import items into another country, you have a legal obligation to declare them. These items are typically listed on a manifest declaration. The declaration identifies the items and their codes for entry into a foreign country. Classification can be a difficult task. Up to 30% of all items imported are classified wrong to customs. Classifying items wrong often occurs due to the large amounts of HS codes available.
Incorrectly classifying imported items, an lead to customs holding these items. Customs may even reject the entry of the items or make you pay additional costs, including fines and penalties.
Who provides HS codes?
The default responsibility for HS codes in most countries falls upon the importer. The importer should be the one providing codes to the carrier for the manifest. The information is needed for the manifest for customs declarations.
It is becoming more popular that the exporter supplies the codes to their shipping carrier. When you are your importer and export client, using a shipping company that can help you with all the paperwork is definitely worth its weight in gold.
A-1 Auto Transport has been working with international borders for a long time. Our specialists understand what it takes to ship your vehicle and undergo customs scrutiny. Luckily for you, we will do all the heavy lifting and paperwork for customs. All we need is information from you to prepare it.
Holds and Exams by Customs
Customs can decide at any time they want to inspect your import. Sometimes it is because they need additional information or they want to inspect the shipment. Customs is not required to disclose their reason for the hold to the importer.
First-time importers have a higher likelihood of being held for customs. Those who have an established shipping record are more likely to avoid a customs hold. The destination country can often influence the hold for customs.
Common customs holds or exams:
- Manifest holds pop up when there is an issue with the data on the carrier’s manifest or the Importer Security Filing.
- Partner Government Agencies (PGA) holds placed on imports to ensure the cargo complies with regulations.
- Commercial Enforcement holds occur when issues arise under regulation or any other agency responsible for regulating goods issue the hold.
- Statistical Validation holds are implemented when there is a discrepancy in the declared data and the established data. Examples include discrepancies in value or weight.
- Contraband Enforcement Team (CET) can place a hold on items imported through customs, and the Anti-Terrorism Contraband Enforcement Team (A-TCET) believes the commodity is a threat with illicit drugs, currency, guns, or other contraband items.
- Non-Intrusive Inspection (NII) is X-Ray exams performed on cargo coming through customs. Vehicle and Cargo Inspection System (VACIS) also fall under this category. If the cargo passes the exam, it is released quickly. If cargo does not pass, it is required to go under additional inspection measures.
- Tailgate exams are inspections that are conducted after a failed Non-intrusive inspection. Customs officers at the port will physically inspect the goods. If no issues arise, the cargo is released. If there is a problem during the inspection, it will escalate to an intensive exam.
- Intensive exams require cargo to be transported to a third-party site. This site is called a Customs Exam Site (CES). In this exam, all cargo is removed and examed from the shipping container. This includes opening boxes and parcels that may be included. These officers are authorized to take samples and visually check every aspect of the shipment.
Necessary Customs Paperwork
Before any shipment can leave a port of origin, a manifest declaration has to be filled out. Shipping carriers have access to do this electronically. Customs receive your manifest declaration through the Automated Manifest System (AMS). If the import is being shipped through means of the ocean, an additional filing must be done. An Importer Security Filing (ISF) must be accepted at least 24 hours before the departure of the shipment.
Before arrival, but no later than 15 days after arrival, an entry declaration must be prepared. The declaration must be filed by the Importer of Record and their customs broker. When goods are declared, they must be accompanied by a bill of lading and a commercial invoice and packing list.
Bill of Lading, Commercial Invoice, and Packing List
A Bill of Lading acts as a contract for the movement of a shipment. It serves as a receipt for cargo and also acts as proof of ownership of the transported items. The Bill of Lading provides a detailed method and path of transport for the shipment.
The Commercial Invoice accompanies a shipment and lays out the value and quantity of the shipped items. The document is often used for customs declaration. All of the information for a customs invoice must be filled out in detail and must include:
- Country of origin or manufacture. The place where the items were made, if it applies.
- Full name and address of the supplier or manufacturer
- The full name and address of the business or person that is acquiring the items. This is only necessary if the person accepting the items is different than the importer.
- The full name and address of the person who the items are being shipped to. The importer will need to put their information in if they are receiving the item.
- The quantity of each item being shipped is required.
- The unit value for each of the items being shipped in the United States currency and the destination currency
- A complete description of each item is required
- By complete description, as much detail should be provided to indicate what item is being referred to clearly.
The packing list is a document that is used for customs declaration. This document identifies the weight, quantity, dimensions, and number of cargo crates being shipped. The information listed on the packing list should match the Commercial Invoice.
If you need to ship a vehicle or another item overseas, getting a quote on your own may be appealing. You may feel like you can save some time and money by using an auto transport calculator and paying your duties ahead of time. Unless you are skilled at shipping items overseas, you may want to get a hold of a professional shipping company, like A-1 Auto Transport.
At A-1 Auto Transport, we provide online resources for you to find out your import costs, but we cannot guarantee them due to the constant changes in tariffs and duties. When you need a quote and a company to get your vehicle or large item transported overseas, call A-1 Auto Transport for a job done right the first time.
Written By:Joe Webster
Joe Webster began his journey in the auto transport field by attending the University of Southern California (USC), where he graduated with a Bachelor of Business Marketing.
After college, he started his career in the auto transport industry from the bottom up and has done virtually every job there is to do at A-1 Auto Transport, including but not limited to: Truck Driver, Dispatch, Sales, PR, Bookkeeping, Transport Planner, Transport Manager, International Transport Manager, Brokering, Customer Service, and Marketing. Working with his mentor Tony Taylor, Joe Webster has learned the ins and outs of this industry which is largely misunderstood.
With over 30 years experience in the industry, we've been helping people ship their vehicles, motorcycles, RV's, heavy equipment, household goods and more across the country or overseas without a hitch. Ask us anything.