As a first-time importer, the load of responsibilities you are expected to handle can be overwhelming. This is especially true when you are designated as the official importer of record, yet have no experience in international trade.
Even given the opportunity to delegate some responsibilities, it can be unclear what to delegate. Also, you are unsure whether to engage a customs broker, a freight forwarder, a third-party IOR, or a transportation company.
Worse still, you may be afraid of thinning your profit margins while settling expenses of the chain of providers you engage in the importation process.
But who is supposed to be the importer of record? And what are the roles of the IOR? Can anyone else play the role of IOR apart from the importer?
This article discusses the roles and responsibilities of the importer of record, providing answers to the above concerns. You will also learn the benefits of a third-party IOR like Blackthorne over direct importing.
Let’s dive in!
Who is the Importer of Record?
An importer of record is the legally recognised entity responsible for ensuring compliance with import requirements and regulations for a successful shipment.
The entity can be a business, an individual, or a third-party IOR representing the importer. Once designated as the IOR, they bear legal responsibility for meeting all customs regulations, licensing requirements, and quality standards for imported goods.
Why is the IOR crucial in Legal Accountability?
Many countries impose strict legal regulations on imported goods, requiring adherence to local laws, safety, and quality standards before market entry.
Failure to meet the import requirements can delay the clearance of goods at the customs office. The importer can also be fined, or the goods can be detained or confiscated.
Hence, the IOR is critical in ensuring a timely and compliant import transaction.
Does the Importer of Record Have to Be the Consignee?
Usually, the buyer (consignee) or seller (consignor) can serve as the importer of record, depending on their shipping terms. However, certain circumstances may limit the buyer or seller from serving as the IOR, requiring the help of a third-party IOR.
A third-party IOR like Blackthorne is especially helpful when importing controlled goods, which require legal expertise and experience fulfilling local regulations. Such goods include dual-use goods, medical equipment, and IT equipment.
Who Does the Importer of Record Work With?
The global supply chain processes can be complex, with the IOR handling them all.
Once registered as the importer of record, you must coordinate various procedures, including HS classification, payment of duties and taxes, transportation of the goods, and customs clearance.
Here are the key partners you may consider working with to reduce import risks, speed up customs clearance, and avoid non-compliance:
Customs Broker
A customs broker is a licensed professional responsible for fulfilling import documentation and handling customs clearance.
The professional helps IORs to navigate customs clearance technicalities, including fulfilling local import regulations, filling import declarations, and settling applicable duties and taxes.
Freight Forwarder
A freight forwarder facilitates the physical transportation of goods from the source to the destination agreed upon between the buyer and seller.
They handle route optimisation, select the most appropriate means of transport, arrange for cargo space, and track the cargo in transit for a safe and timely delivery.
Freight forwarders also coordinate with the IOR to develop transport documentation, share cargo status updates, and organise for last-mile delivery of the goods.
Government Agencies and Legal Authorities
Each country has specific bodies that develop import regulations and oversee compliance for controlled goods.
For instance, in some countries, the Department of Information, Communication, and Technology (ICT) is responsible for approving the importation of technology equipment.
The IOR engages relevant authorities to obtain approvals and certifications, ensuring compliance with applicable regulations.
Third-Party IOR
In some cases, the importer may choose a third-party importer of record over direct transport. This involves entrusting a legally authorised IOR in your industry with the importation procedures, from customs declaration to delivery at the final destination.
While a customs broker can handle documentation and customs clearance procedures, a third-party IOR can handle the entire global supply chain process on behalf of the importer. You can learn more about the difference between a customs broker and an IOR.
7 Core Responsibilities of an Importer of Record
An IOR can engage customs brokers and freight forwarders to help fulfill their role in the importation process. But what exactly is the IOR expected to achieve?
Here are the seven core responsibilities of an importer of record:
1. Ensuring Compliance with Import Regulations
Regulatory authorities in different countries enforce local and international laws determining the technical, customs, and documentation requirements for imported goods.
The IOR must ensure imported goods adhere to all the import requirements, including:
- Accurately classifying the imported products to determine the applicable technical, customs, and compliance requirements.
- Performing relevant compliance tests, such as conformity assessments, and obtaining test reports to facilitate product marking and certification processing.
- Obtaining required approvals and import licences from relevant authorities in the country of origin before shipping.
- Determining product packaging and labelling requirements to ensure they align with the destination country’s requirements.
- Identifying any sanctions that may affect the importation of the products to the intended destination.
2. Handling Import Documentation
There are three types of paperwork that the importer of record must fulfill. These include:
- Compliance documents: Demonstrate that imported goods adhere to the country of origin and the destination country’s import regulations.
The documents must be obtained before initiating the shipment, as they are required at the customs office to showcase compliance with trade laws, safety, and quality regulations.
They include import licences and permits, a certificate of conformity,end-use and end-user statements, a certificate of origin, and product testing reports.
- Transport and logistics documents: Provide details of the importer, shipper, and carrier of the goods from source to destination.
Customs authorities require these documents to track shipments, determine their legitimacy, and assess duties and taxes.
Transport and logistics paperwork includes the bill of lading, commercial invoice, packing list, customs bond, and freight insurance certificate.
- Financial documents: They are financially binding documents between the buyer and seller, providing accountability and transparency.
They detail the cost implications of the import transaction, terms of payment, and proof of payment. Examples of financial documents include commercial invoice, proforma invoice, insurance certificate, letter of credit, and bank records.
3. Paying Duties, Taxes, and Tariffs
The importer of record must fulfill duties and tax requirements for imported goods to facilitate timely clearance. From HS classification to accurate valuation, the IOR ensures goods are neither undervalued nor overvalued for compliance.
Here are the various activities the IOR can conduct to ensure cost-efficiency while remaining compliant with tax requirements:
- Identify applicable duty rates based on the product type, trade agreements, and the destination country’s laws.
- Register for VAT (if required) and calculate the rates based on the customs value of imported goods.
- Determine if imported goods are subject to excise duties.
- Determine any additional duties, such as anti-dumping and waste management charges.
- Identify any free trade agreements, duty exemptions, or preferential tariffs to apply.
- Identify any deferred payment programs to settle duties later and cut importation costs upfront.
4. Handling Customs Clearance
For the customs authorities to release the goods for delivery to the final destinations, the IOR must demonstrate:
- Technical compliance with safety, quality, and environmental regulations
- Compliance with local and international import laws
- Adherence to documentation requirements
- Alignment with packaging and labelling requirements
- Compliance with local tax regulations
Additionally, some products, especially restricted goods, can prompt the customs authorities to request additional documentation or conduct further inspection.
Hence, the IOR must be present during customs clearance to fulfill any additional requirements during clearance.
5. Preparing Customs Audits and Inspections
Under certain circumstances, customs authorities may need to audit your import transaction. Here are some of the reasons your shipment may require further inspection:
- Customs agencies may select random shipments to inspect based on the destination country’s regulatory requirements.
- High-risk shipments such as dual-use and electronics may require additional inspection to prove compliance.
- If customs authorities suspect undervaluation, misclassification, or regulatory violation, a compliance audit is necessary.
As the importer of record, you must prepare for such inspections by:
- Conducting pre-shipment compliance audits.
- Being available to respond to compliance queries and participate in the auditing process.
- Partnering with a global export licensing consultant when importing licensed or restricted products, such as IT hardware and medical equipment.
6. Managing Logistics
A safe, efficient, and compliant shipment requires the importer of record to coordinate logistics operations from source to destination country by:
- Selecting the right shipping method considering the nature of goods and delivery timeframe.
- Working with reliable freight forwarders and carriers to ensure safe handling, storage, and last-mile delivery.
- Identifying customs-approved warehousing facilities for storing imported goods (when necessary).
- Determining the right insurance cover, especially for high-value goods, to minimise the risk of damage or loss.
- Ensuring compliance with international shipping regulations.
7. Handling Post-Delivery Compliance
Once goods reach the final destination, the importer of record must ensure ongoing compliance through quality control and licensing management.
Here are the roles of the IOR in ensuring post-delivery compliance:
- Maintaining import transaction records for the minimum required duration to facilitate post-import audits.
- Providing technical support and maintenance for technical equipment such as IT hardware to maintain quality standards and meet regulatory requirements.
- Track regulatory updates to ensure adherence to new or updated laws and requirements.
- Renew licences and certifications based on renewal guidelines for validity.
How Shipping Agreements Influence IOR’s Responsibilities
Shipping terms and agreements (incoterms) determine the level of responsibility for the importer of record. Understanding who plays the IOR role under various contractual agreements is essential to make the right decision for your business.
Here is a summary of the IOR’s responsibilities under the various shipping agreements:
You can learn more about the IOR responsibilities in DDP, DAP, and DAT from our previous article.
How to Choose the Right IOR for Your Business
Here are the key considerations to make when choosing an importer of record for your business:
- Compliance expertise and experience: Consider an IOR that has experience fulfilling local and international trade regulations
- Geographic coverage and local presence: Choose an IOR with a local presence in your target market
- Licensing and accreditation: An approved IOR with official accreditation, like Blackthorne, is invaluable when importing restricted goods
- Import and export licensing expertise: The IOR should be capable of securing relevant export and import permits for controlled goods, preferably, an IOR in your industry.
- Data security and record keeping: The IOR should be capable of storing import transaction records compliantly and securely for the minimum required duration
- Supply chain processes integration: An IOR that handles all the processes in the global supply chain saves you time and unnecessary costs
- Technological integration: An IOR that offers real-time tracking of costs, cargo status, and regulatory updates is essential in reducing non-compliance risks.
Benefits of a Third-Party Importer of Record
We discussed what a third-party importer of record is, and when you need them. But what responsibilities can a third-party IOR handle?
A third-party importer of record like Blackthorne offers three main benefits over direct importing:
- Global compliance and risk mitigation: The IOR has legal expertise to ensure compliance with technical, customs, and documentation requirements, lowering the risk of non-compliance.
- Integrated supply chain processes: By combining customs operations, compliance management, freight forwarding, and logistics management, the IOR leaves little to no burden on the importer.
- Hassle-free market entry: You do not need to establish a local presence in the destination country to import. The IOR can offer entity representation and fulfill all import requirements on your behalf.
Import Compliantly with Blackthorne
Blackthorne IT is your solution if you want a third-party IOR that can offer the above benefits with transparent pricing. Besides, we have over 25 years of experience working with IT equipment importers to deliver tech products and data centre equipment compliantly.
Additionally, offering IOR and EOR services, we ensure your goods adhere to local and international import requirements in the source and destination countries.
You can call or email us at sales@blackthorneit.com to start importing into your favorite destinations cost-efficiently and compliantly.
