Understanding electronic customs filing
Electronic customs filing is a compulsory requirement for importers and exporters in many jurisdictions around the world. These activities play a critical role in global trade compliance, ensuring that businesses are paying the correct rates of customs duty and remaining on the right side of regulations such as quotas, rules of origin and export controls.
Getting to grips with these systems can be a complex process, especially for firms with operations across many different countries. Every nation and trade bloc will have its own system for making electronic customs filings, each with their own sets of categorizations and codes that businesses will need to familiarize themselves with.
This wide variety of customs administration procedures can quickly become overwhelming. But it's vital firms are able to understand what is required of them as the consequences of non-compliance are high.
Potential penalties for incorrect filings can range from fines to the seizure of goods or withdrawal of licenses. In some cases, there may even be the possibility for criminal charges against firms or individuals. Therefore, it pays to have effective solutions in place to make this easier.
What is electronic customs filing?
Electronic customs filing - sometimes referred to as e-customs - covers all the information firms need to file digitally when making import or export declarations.
In many countries, these systems have now fully replaced traditional paper-based processes, allowing for faster reporting, better security, and easier international trade.
The EU, for example, as the world's largest customs union, is aiming to have a fully electronic system for import and export declarations as part of its Single Window project. This became law in December 2022 and will be phased in gradually over the next decade. The first phase is scheduled to come into effect by 2025 and will focus on enhancing intergovernmental exchanges at EU borders, enabling customs authorities to verify that all shipments are compliant with EU rules.
However, while some electronic customs declaration service solutions are harmonized by the European Commission, others are still managed by individual member states. Other major economies also have their own systems, and even where these are similar there are likely to be enough differences to make it easy to get confused.
This highlights some of the difficulties involved in electronic customs filing across multiple jurisdictions, where each system may have slight deviations in what exactly is required or how electronic documentation should be submitted.
Electronic import and export declarations
Making an electronic import declaration when bringing goods into a country, or a corresponding electronic export declaration when shipping items overseas, must be done carefully to ensure all the information is accurate and up-to-date.
This can be especially important when making claims for zero-tariff rated items to ensure you're paying the correct level of import duty. This can be particularly complex when dealing with manufactured goods that contain parts from multiple points of origin.
For exporters, accurate declarations are vital in ensuring you're complying with export control regulations, denied parties lists and other sanctions. These lists change regularly, so if you're still relying on outdated information, you could be inadvertently breaking the law.
Therefore, understanding exactly what information you'll need to provide is critical in making sure you remain in compliance with all local requirements both in your home territory and abroad.
Electronic customers procedures in the US
Key regimes to be aware of include the US' Electronic Export Information, or EEI Filing, which is required for any shipments leaving the United States when the value of the commodity classified under each individual Schedule B number is over $2,500, or if a validated export license is required to export the commodity.
This must be submitted to the Automated Export System (AESDirect) hosted on the Automated Commercial Environment (ACE) platform. For imports, the primary method of filing electronically is the Import Security Filing (ISF) system, which requires importers of sea freight to submit various essential information digitally before the goods arrive at their port of entry.
What do electronic import and export declarations involve?
While the specifics for what details must be included and how documentation should be filed can vary by jurisdiction, with each customs office having its own rules, in general there will be a few common elements that must go into an electronic customs filing.
For example, the EU lists the following information as essential parts of a commercial invoice for every shipment, which is a key part of filing an import clearance declaration:
- Details about the exporter and the importer (including name and address)
- Description of the goods (name, quality, etc.)
- Unit of measure
- Quantity of goods
- Unit value
- Total item value
- Total invoice value and currency of payment
- Terms of payment (method and date of payment, discounts, etc.)
- Terms of delivery according to the appropriate Incoterm
- Means of transport
- Other documentation, such as a Country of Origin (COO) certificate from the exporter, will also be required depending on the type of items being shipped, so it's vital all this is in good order at the point of export and import.
Making electronic customs filing as easy as possible
With so much digital paperwork involved, electronic customs filing may be easier than traditional physical methods, but this does not mean it's easy. Therefore, firms looking to self-file should ensure they have suitable technology solutions in place that allow them to manage clearances and declarations across all countries where they do business from a single platform.
Solutions such as MIC's Customs Software (MIC-CUST®) offer easy answers to the sending and receiving of electronic data, both when filing with customs authorities and exchanging information with third parties like a customs broker or freight forwarder.
As well as enabling traders to make their filings more efficiently, it can automatically check to ensure that all required regulations are being followed and allow for direct connectivity with suppliers for the submission of vital e-documentation.
Advantages of customs clearance software solutions
Having all the functionality for every country in a single location makes the process of filing customs declarations much easier and faster. Having one platform with an intuitive, uniform interface for all jurisdictions provides for better accuracy and reassures importers and exporters they are fully compliant at all times.
Some of the other key benefits of these tools include:
- Easy recalculation of duties
- Automatic calculation of valuations and duty relief
- Easy check of applicable licenses and restrictions
- Management for special customs regimes such as free trade and temporary import zones
- Full data trail for internal and external auditing of every customs form