Every day, millions dollars’ worth of commodities travel throughout the world and arrives at airports, and seaports. During this journey, all goods need to go through a customs process when entering different countries. While many goods are standard, not needing special import preparation, there’re exceptions like IT or medical goods requiring a more complicated clearance process. Let’s compare and contrast an Importer of Record and a Customs broker to see the distinctions between the two.
What is a customs broker?
A Customs Broker is a professional who assists importers and exporters with customs clearance procedures. They are knowledgeable of the international trade laws, regulations, and paperwork requirements necessary for goods to cross borders. They also provide guidance on tariffs, duties, import/export documentation, and other trade compliance matters.
What is an importer of record?
Importer of Record (IOR) the legal entity responsible for ensuring shipments meet applicable laws, and regulations in the destination country. The importer is also responsible for any liability or fines associated with non-compliance or misdeclaration of these items. This responsibility falls to the importer or foreign importer of record if they don’t have an establishment in destination country.
The differences are:
A customs broker doesn’t have to be the legal importer of goods, pay taxes, duties, or ensure goods reach final destination.
They usually clear simple items like clothes, commodities, and things not restricted by Customs law.
Third-party IOR is necessary when seller or buyer doesn’t want to be the legal responsible of being the IOR\EOR.
This is the case when movement of goods is restricted or there’re lots of regulations, like with IT or medical items. The process of importing these things is long and complicated, in addition to various legal requirements that must be met.
In conclusion:
Knowledge of the import procedures and forms is necessary to submit these documents. As well, taxes, duties, and last-mile delivery are all the responsibility of the Importer of Record.
Can a customs broker act as the importer of record?
Yes, they can act as the IOR, but that would come with responsibilities, like taking care of any pre-shipment paperwork. They would also have to list their company name as the importer of record on all documentation. If using a customs broker, this person would be responsible for delivering the goods to the end user. Usually though, customs brokers don’t often have these kinds of resources available.
The Importer of Record is usually a general customs broker, but occasionally it’s the other way around. The process to import goods is much more difficult and requires specialized knowledge and skills. Also, the imported goods become a taxable asset for the importer of record, which creates additional complication in country.
