Southeast Asia (SEA) has been heralded as the next land of opportunity for e-commerce. With fast-growing markets like Indonesia looking ripe for cross-border sales of your e-commerce goods, it would ideal for your shipment to sail through customs, reaching your customers safely and on time.
Dealing with customs in Southeast Asia could be challenging seeing that each country has its own set of customs regulations, import duties, paperwork and taxes that need to be complied with.
This is a living page covering how best to navigate the different customs regulations to get your products through customs without a hitch. This guide will be updated with the latest changes that each SEA country brings about.
PART 1: BASICS OF CLEARING CUSTOMS
1. Shipping Regulations
Regulations vary depending on which country you are shipping to and from. Ensure that you are aware of the licenses required, special provisions and restricted and prohibited goods for the respective countries. Most countries also require importers to register with the relevant trade authorities and obtain customs identification numbers.
In most cases, importing items into countries would require registration for required permits and licenses. For e-commerce merchants who do not have these permits and licenses, you have the option of using shipping partners as importers of record.
If you are planning on importing goods into Southeast Asian countries using your own company, find out each country’s import regulations below:
Ensure that you have the right set of documents as well as confirm that all necessary information has been included in these documents in advance.
This is important as the customs officers will process and classify your shipment based on the given documents. Inaccurate or missing documents may lead to delays at the customs clearance.
Usually, the documentation you would need to pass to your shipping partner is the following:
Gives total shipment value. Helps to determine the import duties and taxes, and eligibility of shipment.
Gives product details, shipment volume in kilograms (KG) or cubic metres (CBM), and serves as a checklist to ensure shipment has been packed correctly or not.
Volumetric dimensions of your package are often required on shipping-related documents, which can be calculated using this formula:
|Volumetric weight in KG = (length x width x height of the package in cm) / 5000|
3. Restricted & prohibited goods
Each country has its own list of goods that require additional regulations to comply with or cannot enter the country at all. These items are usually prohibited or restricted in most countries in SEA:
- Anti-government, seditious material, or politically sensitive materials
- Pornographic material
- Narcotics or recreational drugs
- Firearms, explosives, ammunition
- Tobacco products
- Alcoholic beverages
For restricted items, you may need additional permits, licenses which your shipping partner can help you with. Certain restricted items are also subject to higher tariffs or duties.
Find out each country’s list of restricted and prohibited goods below:
4. Duties & taxes
Your goods will be charged different import duties and taxes vary depending on where you are shipping to, shipment value and type of goods you are shipping.
To ensure that you are aware of how much you or the end customer will have to pay, it’s vital to understand how these factors affect the taxes that need to be paid.
Where We Are Shipping To
Each country has a different set of taxes and duties. The most common types of taxes are:
- Income Tax
This is based on whether your importer is registered with the country or not. In some countries like Indonesia, this tax charges unregistered importers more than registered importers.
- Import Duties
A tax collected on imports by a country’s customs authority – usually a percentage of the imported good’s value. The import duty tariff also depends on your product’s Harmonised System Code (HS Code).
HS Code is an internationally agreed special code assigned to each type of commodity to help Customs identify the product category you are shipping.
- Value-Added Tax (VAT)
Also known as GST or Sales Tax. This is a tax on the consumption of goods or services by the people, collected by the merchant on behalf of the government.
What Is The Shipment Value
The value of shipment that is declared for customs by the shipper to serve as the basis for computation of duties and taxes.
What Are We Shipping
Goods are taxed differently depending on their commodity type. For instance, some countries won’t have a tax on electronics like computers but would place higher taxes on luxuries like jewellery or perfumes.
Find out the HS code and/or tariff percentage for your type of commodity at the official customs pages below:
5. Calculating import tax
In some countries, there is a threshold below which fewer or no taxes are charged on shipments, known as the de minimis value.
De Minimis Rule
To encourage their consumers to buy more, some countries have a threshold for imports below which taxes and duties are not charged.
For instance, Indonesia’s de minimis value is USD 3. If you are importing a bag valued at USD 60 to Indonesia, this bag will be charged taxes and duties.
Find out each country’s de minimis values and taxes below:
Taxes for different countries in SEA
Each country has its own different sets of duties and taxes, ranging from varying tariffs on different types of goods to different levels of government or VAT taxes.
To find out these different calculations of taxes and duties for each country, check out their respective pages below.
Part 2: Best Practices for Customs Clearance
The ideal customs clearance situation has your goods processed through customs quickly and without delay. A smooth customs clearance process can complement your online shopping experience, providing transparency and peace of mind to your consumers.
Here are some customs clearance tips and tricks that can help you deliver that experience.
1. Delivery Duties Paid (DDP)
Delivery Duties Paid comes highly recommended to improve the customer experience. This means that the import duties and taxes are paid before the shipment arrives at your customer’s doorstep. If the taxes aren’t paid up front, the customer could have an unpleasant surprise when they find out they need to pay additional costs.
Some logistics carriers offer this service so that your end customers do not have to pay for the duties and taxes to be imposed. If needed, there are partners who will offer to pay these duties on your behalf and charge it back to you later.
2. Local Expertise
Engage a shipping partner who has experience in cross-border shipping to the country that you are heading towards. Take advantage of the local knowledge that they have to offer to avoid unnecessary shipment delays.
You can look out for shipping partners who have established a pre-clearance process with customs authorities in Southeast Asia.
These partners have a pre-clearance process in place that allow shipments to clear customs faster as all the relevant information is sent to the customs before the shipment batch even arrives in the country.
By doing this, customs can then allow the entire batch to pass through customs as soon as it arrives or earmark particular shipments that need further review.
4. Real-time Delivery Tracking
It is possible for parcels to get lost in the complex web of supply chains when it comes to cross-border shipping. To ensure that your shipment has arrived safely at its destination, engage a carrier that provides real-time track and trace.
Not only will you be able to estimate the final delivery time, but you will also know where the parcel is at every step of the way and can update your customers should they ask for an update on its location.
5. Digital Commercial Invoice
It is important to prepare a commercial invoice that is complete with the necessary information to ensure a smooth shipping experience.
Having a digitalized process to generate these invoices will help to reduce administrative time and costs, speeding up the shipping process for you.
6. Duties and Tax Advancement
Some shipping partners go the extra mile by offering to cover the duties and taxes for you first so that your shipment can breeze through customs clearance. This is good to have as the authorities would not have to hold on to your shipment as they wait for the payment to be settled.