Cross-border terminology

A type of tax collected by a country’s customs authorities on goods that arrive from other countries (i.e. imports). The duty amount is calculated or applied based on the value of the goods and will vary depending on the country’s regulations and duty de minimis values.

Click here to learn more about import duty.

A tax collected by the country, state, or province in relation to the goods getting imported. The tax rates will vary depending on the country’s regulations and tax de minimis values.

Click here to learn more about import taxes.

The total price or import costs associated with a cross-border purchase. The total landed cost is the sum of duties, taxes, and carrier or country-specific import fees. For small parcels or low-value shipments, the duties and taxes will rarely be taken into account in the total landed cost.

Click here to read our guide on total landed cost.

The term for the entity responsible for complying with the required customs processes for the export of goods. This includes collecting necessary documentation and ensuring clear and accurate descriptions and values of goods. The EOR is also responsible for any breach of compliance procedures or regulations and any goods lost through the shipment process.

If there is a forwarding agent involved in a shipment, the EOR must send detailed information regarding the shipment.

The EOR is typically the legal exporting entity for goods leaving a country.

A term for the owner or purchaser of products being imported to a country. The IOR is responsible for ensuring the imported goods comply with local laws and regulations, filing a completed duty entry and associated documents required by the CBP (Customs Border Protection), and paying the import duties and taxes.

The IOR is typically the person or entity who has ownership of the imported goods at the time of import.

Short for International Commercial Terms, incoterms are trade terms for the delivery of goods, which provides certainty and clarity to businesses and traders in the industry. Incoterms and rules are standardized and published by the International Chamber of Commerce (ICC).

There are currently 11 incoterms for 2020. Seven of these incoterms are for any mode(s) of transportation, and four incoterms are for sea and inland waterway transport.

Some incoterm examples include DDP (Delivered Duty Paid) and DPU (Delivery-At-Place Unloaded).

See the next section for more details about specific Incoterms and click here for more information from the ICC about incoterms.

A term for the entity that is authorized and held liable by a financial institution to process a consumer’s credit and debit card transactions. The MoR is responsible for maintaining a merchant account, processing all payments, and managing all credit card processing fees. They also ensure compliance with the PCI-DSS, stay up-to-date on any laws where the transactions are taking place, and handle any chargebacks. The MoR is typically the name that appears on the consumer’s credit card statement.

An Incoterm that indicates that it is the seller’s responsibility to cover all costs to ship the product to a destination port; then, the responsibility shifts to the buyer at this point.

An Incoterm that indicates it is the seller’s responsibility to arrange and pay transport costs for shipping goods to the named destination port; the responsibility of the costs shifts to the buyer once the ship has reached the port.

An Incoterm that indicates it is the seller’s responsibility to pay freight and insurance to deliver goods to a seller-appointed party at a destination agreed upon by the seller and buyer. When the goods are delivered to the carrier or appointed person, The risk of damaged or lost goods transfers from the seller to the buyer

An Incoterm that indicates the seller assumes the risk while delivering the goods to a carrier or another seller-appointer person. All risk shifts to the buyer once the goods are in the care of the appointed party.

In DAP, the seller assumes the responsibility of costs and risk of damage or loss of moving goods sold to a specific location until the delivery has arrived at the agreed-upon location. Once the shipment has arrived at the agreed-upon location and is ready for unloading, the responsibility shifts to the buyer, including the payment of import duties and taxes (if applicable).

An Incoterm for the seller or exporter taking a risk of costs on the shipment. With small parcels or low-value shipments, DDP is a loosely used term indicating the business (seller) is responsible for all the duties, taxes, and clearance fees without taking on the same risk as a true DDP. DDP is used interchangeably with the following terms:

• DTP (Duties and Taxes Paid): a DHL-specific term for their billing service that allows for duties, taxes, and import fees to be billed to the shipper or other third-party.
• Free domicile: a term that is synonymous with DDP and DTP that indicates the duties, taxes, and fees to be billed to the shipper or other third-party. UPS typically uses this term whereas FedEx and DHL do not use it as often.

A term that indicates the goods are the seller’s responsibility to deliver until they are unloaded at the agreed-upon destination. The risk shifts to the buyer after the goods are unloaded at the destination. The seller must be confident in arranging the unloading of the goods.

An Incoterm that indicates it is the seller’s responsibility to make the goods available and package them for collection. The responsibility of transport, costs, and everything after is the buyer’s responsibility.

An Incoterm that indicates it is the seller’s responsibility to deliver the goods alongside the ship or vessel in a port to await loading and transport. The responsibility shifts to the buyer once the seller delivers the good alongside the vessel.

An Incoterm that indicates the seller delivers the goods to the buyer in one of two ways:

• When the named place is the seller’s premises, the seller assumes the risk until the goods are loaded onto the buyer’s arranged means of transport. At this point, the risk transfers to the buyer.
• When the named place is somewhere other than the seller’s premises, the seller assumes risk until the goods are ready to be unloaded from their means of transport and at the disposal of the carrier or another buyer-appointed person. At this point, the risk transfers to the buyer.

An Incoterm that indicates the product is the seller’s responsibility only until it is loaded on board a shipping vessel; the responsibility shifts to the buyer at this point.

A term that means charges will be billed to the sender.

A term that means charges will be billed to the recipient.

A term that means charges will be billed to someone other than the sender or recipient. In order to choose this option, you must provide your account number for the carrier you’re using.

A certificate of origin certifies the county of origin of the goods in the shipment. It is rarely used with low-value ecommerce shipments; however, if the value of goods is higher than $2,500 or you want trade agreements, preferential treatment or other reasons could require a certificate of origin.

A form smaller than a commercial invoice and requiring less information for customs clearance. This is typically sent through as a postal clearance vs. a commercial clearance.

A commercial clearance requires a commercial invoice and is typically performed by an authorized customs broker and not by customs. It is common to see additional fees charged by the broker or clearing agent such as COD fees, disbursement fees, brokerage fees, and more.

A country agency that collects import duties and taxes. In some cases such as postal clearance, customs may also act as the clearing agent of an import shipment; however, the majority of import shipments will be cleared by an authorized customs broker.

This statement is listed on a commercial invoice and is generally optional. It can be used for low-value shipments with trade preferences like USMCA, or with a requirement from the country of import such as the New Zealand low-value goods law.

The EEI only applies to US exports and is electronically filed with the US Bureau’s Foreign Trade Division. This is required for all goods exported from the US over $2,500 in value. You may file for an EEI through your logistics provider or freight forwarder.

The MFN clause requires a country to provide any concessions, privileges, or immunities granted to one nation in a trade agreement to all other participating member countries. For example, if one country reduces duties by 10% for a particular participating member country, the MFN clause states that all participating member countries will receive the same 10% reduction.

The electronic customs clearance process does not need to have a physical commercial invoice printed. A digital commercial invoice with a digital signature is sent to the clearing agent. This is not available to all countries. Other terms for this include the following: Paperless Invoice (UPS), Paperless Trade (DHL), or Electronic Trade Documents (FedEx).

This clearance type is generally performed by the customs agency of the import country and uses the CN22 to determine any applicable import duties and taxes.