DDP shipments: The hidden bomb of the invoice amount

DDP (Delivered Duty Paid) is a common trade term, which means that the seller shall bear all costs of the goods arriving at the port of destination, including freight, customs clearance fees, and taxes. But here comes the question:foreign tradeHow should the invoice amount be filled in?The customer contract amount is 1 million

• but the actual product price only accounts for a small part, and the rest are freight and taxes.If an invoice is made for 1 million
• will the taxes at the port of destination be higher?If the invoice amount is underreported
• will it be checked by the customs?These problems have troubled many foreign trade people. Today, lets talk about the issues regarding the invoice amount in DDP shipments.

Truthful declaration: Safe but costly

The dilemma of the invoice amount

1. Declaring truthfully according to the customer contract amount is the safest approach. The advantages of doing so are:

Compliance and legality

• : Avoid the risk of underreporting and will not be fined or have goods detained by the customs.: Customer trust
• : When the customer sees that you operate with integrity, long - term cooperation will be more stable.: But the disadvantages are:

The taxes may be higher. Because the taxes at the port of destination are usually calculated based on the CIF price (Cost + Insurance + Freight), the larger the invoice amount, the more taxes there will be.Underreporting the amount: Risks and benefits coexist

2. Some foreign trade people choose to underreport the invoice amount in order to save on taxes. For example, the contract amount is 1 million, but the invoice only shows 500,000. The advantages of doing so are:

Save on taxes

• : The taxes are calculated based on the underreported amount, reducing costs.: But the risks are also great:

: If the customs finds that the value of the goods does not match the invoice amount, it may impose fines, detain the goods, or even blacklist the enterprise.

• customs inspection: Customer disputes
• : If the customer finds that you have underreported the amount, it may affect the cooperative relationship.: The taxes at the port of destination are usually calculated based on the CIF price, not the total contract amount. Therefore,

DDP shipments: Skills for filling in the invoice amount

1. Declare at CIF price

The invoice amount can be filled in according to the CIF priceinstead of the total amount including all DDP costs.Total contract amount: 1 million (including product price, freight, taxes)

For example:

• CIF price: 600,000 (product price + freight)
• Invoice amount: 600,000
• Doing so can ensure compliant declaration and avoid excessive taxes.

Communicate with the customer

2. Communication with Customers

If the customer requests to under - declare the amount, it is necessary to clearly define the liability. It can be stated in the contract:If there is a customs fine due to under - declaring the amount, the customer shall bear it.,.

However, it should be noted that even if the customer agrees to under - declare, the risk still exists. Once discovered by the customs,the seller may bear the primary responsibility..

3. Choose a reliable freight forwarder.

An experienced freight forwarder can help you reasonably plan the invoice amount, reduce tax costs, and at the same time avoid customs risks.

The three major risks of underreporting the amount

1. Customs fine

If the customs finds that the value of the goods does not match the invoice amount, it may impose a fine of 10% - 30% of the difference in the value of the goods.

2. Goods detention

The customs may detain the goods until the problem is resolved. This not only delays time but may also incur additional costs.

3. Credit Impairment

Once listed on the blacklist by the customs, future exports may face more stringent inspections or even be prohibited from exporting.

Conclusion: Declare in compliance for long - term development

When shipping under DDP, filling in the invoice amount seems like a trivial matter, but in fact it is related to the enterprises compliance and long - term development. Under - reporting the amount can save short - term costs, but the risks are huge and not worth it.