Incoterms DDP - often proposed by Chinese sellers

Update date:
01 Dec 2023
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Date of publication:
13 Jun 2023
Reading time: 3 minutes

Incoterms formula DDP ( Delivered Duty Paid ) In practice, this means that the seller is responsible for delivering the cargo to the destination or to a point that we mutually agree upon. The seller will also be responsible for export and import clearance, including payment of any customs duties and taxes. And this is where the problem arises, many sellers in China send their cargo on the DDP formula however the consignment does not undergo any import clearance and goes directly to the consignee. In this case it is treated as smuggling due to the fact that the goods have not cleared customs and therefore cannot be marketed. 

The rule can be applied regardless of the preferred means of transport whether it will maritime transport, rail or aviation

If we have doubts as to whether the seller will carry out import clearance and pay all duties, it is worth considering here the choice of the DAP or DPU formula. In this case, customs clearance will remain in our hands. The goods will still remain delivered to the designated point. With this choice, you will have to look for customs agencywhich will carry out the customs clearance declaration for us. The cost of clearance is approx. USD 50-60

Goods insurance for DDP 

Under the DDP formula, the seller is not obliged to enter into a contract cargo insurance. It is worth paying attention to this. For this reason, in the event of any damage to the load, we will unfortunately have no one to turn to in order to receive any possible compensation. However, the seller may offer insurance and then you should provide him with all the necessary information, it is also worth asking for it yourself. However, we must remember that obtaining insurance from a Chinese company may not be the easiest thing to do. If you use a Polish company, the insurance will be taken out with a Polish insurer. This will make obtaining compensation in the event of any damage much easier. 

Grey Customs 

When ordering goods via DDP, it is important to be aware of a potential problem known as grey customs. This occurs when products are dispatched from a warehouse located in the European Union, but you only receive a Chinese VAT invoice without any documentation proving the intra-Community supply of goods. Without such documentation, we will not be able to sell or distribute the products within the EU. To avoid this problem, we have to pay customs duty, VAT and go through customs clearance. If necessary, we should contact a customs agency or go to Customs and Taxation with all the required documentation to clear the goods ourselves. Failure to do so may result in the cargo being detained and incurring additional costs associated with the procedure of declaring the products and delivering them to the customs clearance location.

In summary, a DDP shipment can have many complications, especially when carried out by an unreliable company. If you are working with a supplier for the first time, it is worth considering using the DAP formula. We will then reduce the risk of unpaid customs duties. The price tip we will leave for last concerns correctness in the eyes of customs. If the goods are presented for clearance late or other irregularities are found by customs during the inspection, the risk of a customs control always increases. We recommend from the outset that you take care to comply with all formalities and procedures so as not to expose yourself to customs searcheswhich cost a lot and can also last for weeks. 

That's it for today ! 

See also other INCOTERMS formulas:

INCOTERMS CIF

FOB INCOTERMS

INCOTERMS EXW

FCA INCOTERMS

INCOTERMS DAP

INCOTERMS CIP

If you have any questions, please contact us! We will be happy to dispel any doubts. 

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