In international trade, trade terms such as FOB (Free on Board), CIF (Cost, Insurance, and Freight) and DDP (Delivered Duty Paid) are used to clarify the responsibilities, risks and expenses of the buyer and seller in the process of transportation of goods. Today we mainly discuss the DDP trade terms, especially the question of whether customs clearance can pay import taxes on behalf of the seller.

Overview of DDP Trade Terms

DDP (Delivered Duty Paid) means that the seller bears all costs and risks from the place of shipment to the destination, including shipping fees, insurance fees, customs duties and value added tax in the country of destination, etc. This trade condition is the highest requirement for the seller because it requires the seller to be responsible for all procedures and costs until the goods are delivered to the place specified by the buyer.

Practical Operations under the DDP Trade Terms

Under the DDP trade terms, the seller is responsible for paying all expenses in the country of destination, including customs duties and value added tax. However, in practical operations, it is also common for buyers or other third parties to temporarily bear some of the logistics clearing processes and expenses. This flexibility is mainly reflected in the following aspects:

The flexibility of the contract:Although the DDP terms are explicitly stipulated in the contract, the parties can negotiate adjustments according to the actual circumstances. For example, if the seller is not familiar with the clearing process in the country of destination, the buyer can act on behalf of the buyer, after which the cost is borne by the seller.
Flexibility in payment:In actual business, the seller and buyer can decide by consultation by whom to pay the import tax, even if the contract explicitly stipulates that the seller is to pay. If the buyer paid the import tax on behalf of the buyer, the two sides can adjust in the subsequent settlement of the goods.
Role of Customs:Under the DDP terms, the domestic customs reporting agency can pay import tax on behalf of the seller. This is usually achieved by concluding an agency agreement with the customs reporting agency. After payment of the tax, the customs reporting agency transfers the relevant fee invoice to the seller, and the seller pays according to the agreement.

Internal customs reporting process for payment of import taxes

Signing of Agreement:The seller concludes an agent agreement with the domestic customs reporting bank, clarifies the customs reporting agency for the payment of import taxes, and agrees on the payment process and settlement method.
Freight to port:When the goods arrive at the Finnish port, the customs office begins processing the clearance procedure.
Payment of taxes:The customs reporting bank calculates the customs duties and value added tax to be paid in place of the related costs.
4 Settlement of costs:The customs reporting agency shall submit the details of the payment of tax fees and the invoice to the seller, and the seller shall pay to the customs reporting agency the amount of the payment of tax fees in accordance with the agency agreement.
Delivery of goods:After the clearance is completed, the goods are delivered to the buyer at the place agreed by the contract.

Common Problems and Solutions in Practical Business

Temporary adjustment payers:If the buyer is temporarily required to pay part of the fee, the parties shall confirm by e-mail or other written form to avoid subsequent disputes.
Choice of Customs:Choose experienced and reputable customs reporting companies to ensure that the clearance process is smoothly carried out and the relevant costs are paid in a timely manner.
Forecast of taxes:At the time of signing the contract, the seller should be informed in advance of the tax policy of the country of destination and include all possible costs in the offer to avoid subsequent problems arising from insufficient costs.
Control of Risk:The seller shall specify in the contract the methods and times of payment of the charges and shall keep records of all transactions and payments so that they can be verified in the event of a dispute.

Under the DDP Trade Terms, while the seller bears all costs and risks from place of shipment to destination, in practical operations the payer can be flexibly adjusted according to the specific circumstances. Domestic customs banks can pay import tax fees, which must be achieved by signing an agency agreement. Both sides should maintain good communication, ensure that the trade process goes smoothly, and specify the methods of payment and time nodes for the costs in the contract to reduce potential risks and disputes.

Through reasonable arrangements and adequate communication, it is possible to ensure that import operations under the DDP trade terms are smoothly carried out, and to satisfactory results for both sides.