DDP Shipping Risk When Shipping from China
DDP shipping: Delivered Duty Paid! For so many Amazon sellers who import products from China, it sounds like a dream come true! Isn’t it good that you can pay a slightly higher price for the product and deliver it to you with all the Taxes and Tariffs paid? It’s perfect! Still is…… Is it?
I’m afraid when it comes to such offers. We always go back to the old truth that if it looks too good to be true? Suppose you want to use Alibaba to import goods from China for sale on Amazon, eBay, or elsewhere. You should read this article very carefully because you are likely to be breaking the law and may face serious problems due to Tax evasion.
Does that sound scary? I agree. Let’s look for all about DDP Incoterms and how you use it and can’t use it in your import business.
As I’ve already said, the DDP shipping representative “paid taxes,” which simply means that the seller bears all the goods related to transportation cost from their home to your home, including:
- The cost of the product
- Export duties/fees
- Import duties/fees/VAT/VAT
- Shipping to the specified address
That sounds good, doesn’t it? Yes, it is! This is a convenient way to import goods from abroad without worrying about any problems usually associated with imports from China.
Another huge advantage is that you can eliminate all guesses about the CIF cost of your purchase. The price you pay the supplier is the final price, including the cost of shipping goods in China. This makes profit and loss calculations very easy, especially for Amazon FBA sellers who must consider seller fees and FBA fees to calculate their profit correctly.
At the moment, everything is fine, and there is no sign of an illegal! Yes, DDP shipping is used a lot in global B2B transactions. The problem is that many Chinese suppliers have different understandings of what DDP shipping means, so they use it illegally.
DDP shipping risk when shipping from China
Your suppliers will tell you that they can send you goods through DDP shipping, but in fact, they won’t clear your goods through customs!” What happens is that your goods are smuggled into your country without paying all taxes (import duties, duties, and VAT).
They achieve this in a variety of ways:
1) If it is a small package, they can try to pass it through customs by placing a low value on the customs declaration form. If you are arrested by customs and asked for a tax, but you must pay the tax.
2) Use the wrong HTS code
I hope this information will open your eyes to U.S. companies that accept DDP shipping when you import from China because in most cases, you will still receive the goods, but you will not have any documentation or evidence that the correct taxes have been paid. This means that you can’t even record this inventory correctly on your books! And if someone checks your books, you’re bound to be in trouble.
Some Chinese suppliers use legitimate DDP shipments. Perhaps they have a contract with the courier/freight company to achieve this goal. Probably, but in that case, they won’t have any problems showing you proof/documents (ii) that the correct taxes have been paid on the goods you imported. You will need these for accounting processing).
However, true DDP terms are rarely found on Alibaba.com. An easy way to tell if a vendor isn’t providing true DDP shipping is to look at the price. For example:
If the price of a “normal” mode of transport is $2000, but they give you a DDP shipping $2200 ( then 100% indicates that this is a risk!)
So, what can you do? What is the solution to this problem? Under what circumstances can we still use DPP shipping? Let’s find out…
I suggest buying from Alibaba’s website, completely avoiding DPP delivery.
When you know that more than 99% of suppliers will deceive you in this way, it’s not worth the risk. I’m sure Chinese suppliers won’t even put it in a scam. They think they’re helping you! Just as they keep underestimating small items, the package can pass through customs for free.
Only suppliers and legitimate companies that have a contract with the courier company may use the DDP shipment. These people will be happy to provide you with all documents relating to the taxes paid on your goods.
If you intend to import goods from China, Alibaba or any other website, please follow the simple shipping customs to control the way products are processed through customs:
1) When shipping in small quantities, it is usually a courier company.
2) If the purchase volume is large, you will need to use the air freight or Ocean freight handled by your freight forwarder.
As long as you ask the supplier to write down the correct value on the customs declaration form and get the valid invoice from them showing the value of all goods, the number of customs duties paid, etc., you can definitely can choose DDP shipping and successfully clear the goods through customs.