Eagerly attempting to participate in international trade is one thing, meeting the regulations and requirements is another! As an exporter or importer, you would want your goods to be cleared efficiently and in time. However, at times your shipment can get delayed or stuck at Customs clearance, often due to a lack of all the necessary documents. An experienced Customs broker can help you avoid unnecessary taxes and penalties. In this article, we will get to know who they are and what duties they perform.
What is a Customs Broker?
A Customs broker is a licensed individual who helps importers and exporters comply with the law and regulations of a country. Every country has different laws concerning imports and exports, and prohibit or restrict some goods from entering (or leaving). In Singapore for example, the law heavily restricts the importation of firearms. Furthermore, a Customs broker helps importers with proper documentation and ensure the importer meets all the other legal requirements associated with bringing the product across a border.
A Customs broker acts as a link between the Customs department and the importer in a country of import.
A customs broker can be an individual, a partnership, or a corporation that is licensed, regulated, and given the power to help importers and exporters comply with the government requirements on imports and exports. If the Customs broker is not an individual, it can be referred to as a brokerage firm. A Customs broker has to know the entry procedures and concepts of valuation, taxes, and computation of other fees on imported goods. It is a huge and important role that Customs brokers play. Let’s look at their specific duties and understand more about what do they do.
What does a Customs Broker Do?
If you would like to import goods and products then you might have thought of getting the services of a Customs broker. But what are the duties and tasks to be performed? The following are examples of what a Customs broker does;
Keeping records: A Customs broker must keep electronic documents and in many countries hard copy records of the financial transactions made while helping an importer or exporter clear goods. These records are kept for a specific period after importation or exportation, known as the record retention period or statute of liability period.
Guides and performs advisory service for clients: A Customs broker advises a client on matters relating to the business of bringing goods across a border. This may include informing the client to prepare any document required by the law which could hinder the process of clearance.
Helps importers and exporters with Customs clearance procedures:
- Evaluates the goods to be cleared to ascertain they comply with the law. If otherwise, the importer must be informed. A reputable Customs broker would not help an importer smuggle illegal goods into the country or evade payment of Customs duty.
- Helps register entry of the goods with the Customs authority. This must be done accurately so that goods do no get delayed at the Customs department.
- A Customs broker ensures that the client’s goods are classified properly with the right HS code for them to pay the lowest taxes and duties. The individual or corporation will then ensure the goods are cleared quickly after its verification.
A Custom broker also follows up on the clearance of goods: This helps maintain the client as the services offered are valuable and in case of any issues, the client gets informed.
Submits information and makes payment to the Customs authority on behalf of the client: There is usually an additional brokerage fee charged for this. It is calculated as the percentage of the value of the imported shipment.
Other important activities that a Customs brokers may involve itself in are:
- Helping an importer with tariff classification
- Customs valuation
- Processing refunds and drawbacks.
- In some cases, a Customs broker may offer freight-management services. This involves buying the freight rates in bulk and reselling them to clients.
- Also, Customs broker may be able to offer warehousing services to the clients.
All in all, Customs brokers play an important role in being the intermediary between the importer who is shipping goods and the government agencies.
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Who can be a Customs broker?
The following are some of the regulations that may need to be met to be a Customs broker in various countries
- May need to be a citizen of the country.
- Must not be a government employee.
- Must be of good moral character.
- Must be in good financial standing
- Must not have extensive criminal records
Moreover, in most cases you will need to submit an application and take a test administered by the Customs authority before you can perform the services of being a Customs broker. Passing Customs brokers’ license exams usually need adequate preparation.
Requirements of a customs broker
According to World Customs Organization Customs Brokers Guidelines, the following are some of the things a Custom broker must know;
- Principal legislation, regulations, and policies governing import and export of goods.
- Navigating the Harmonized Tariff Classification System
- Tariff Treatments and Free Trade Agreements
- Valuation principles and methods
- Prohibited goods identification
- Ethical business practices
- Customs procedures of neighboring countries
- Data and documents needed for retention and record keeping
- Reporting, releasing, and formal entry of goods procedures
- Computation and payment of duties & taxes
A final word
As an importer, you will almost definitely need the services of a Customs broker to ensure efficient and fast Customs clearance of your goods. Furthermore, a good Customs broker will be able to advise you whenever and wherever necessary on the type of goods you can import (and the documents required).