How can we help you?
How can we help you?
If you are in the tech industry, scaling internationally can be both overwhelming and sustainably rewarding.
Most countries require a local presence before you can start shipping, a costly and time-consuming process.
Thanks to a foreign importer of record (FIOR), you can ship equipment, fulfill contracts, and deploy products globally, without a local presence. All you need to do is prepare the necessary documentation and work with a reliable compliance partner.
But how does the foreign importer of record make international shipping possible without a local presence? What does it take to become one? And how does the FIOR differ from an importer of record (IOR)?
In this guideline, Blackthorne delves deeper into the concept of the Foreign Importer of Record, from its definition to the requirements and obligations associated with it.
Let’s keep the ball rolling!
The FIOR is liable for the safety and compliance of goods throughout the global supply chain, assuming all the responsibilities of an importer of record, including:
The foreign importer of record (FIOR) and the importer of record (IOR) perform similar roles, but their legal obligations differ.
The IOR is the legally recognised party for import compliance, usually with a local presence. In most import transactions, the consignee assumes the IOR responsibility.
The FIOR, on the other hand, is a non-resident entity that assumes the same responsibilities without a locally established presence in the destination country.
Every import transaction must have an importer of record to handle import compliance and facilitate the customs clearance process. So, what happens if you are designated as the IOR but have no local presence in the destination country?
You can import as an FIOR or hire the services of a third-party IOR to assume the role on your behalf.
Becoming an FIOR gives you more control over your global import operations.
Here are the top five benefits:
Additionally, DDP shipments clear customs faster than DDU or DAP, as duties and taxes are prepaid electronically.
The requirements for becoming an FIOR differ from country to country.
Generally, they revolve around legal representation, financial guarantee, and registration with customs authorities as discussed here:
As a foreign entity, you cannot be physically present at every port of entry. As such, you need to appoint a local, licensed agent to act on your behalf. The agent handles the physical filing of customs entries and acts as the liaison with customs officials.
You must also sign a formal, legal Power of Attorney document, authorising the customs broker (agent) to act on your behalf on all customs matters. The broker signs the document as a witness, reinforcing the legal relationship.
In regions such as the EU or UK, you need a fiscal representative established locally and accredited by the local tax authorities to manage VAT obligations. The entity can be a freight forwarder, accountant, or tax advisor.
Customs authorities require a financial guarantee in the form of a customs bond. A customs bond is an insurance policy you (the importer/FIOR) buy to guarantee payment of duties, taxes, and other import charges in case you default on payment.
The customs broker can facilitate the purchase of the bond from a licensed surety company.
As a foreign business, you must formally identify yourself to the destination country’s government officials to obtain an importer ID. The importer ID is equivalent to a domestic tax ID that facilitates the importation process.
Where and how to register for the ID is specific to your import destination. For instance, when importing to the US as an FIOR, you must submit the CBP Form 5106 to get a CBP-assigned importer number.
If your goods are subject to VAT or Goods and Services Tax (GST), you must also register with the destination country’s tax authority.
So, what is the procedure to become an FIOR?
Here’s the general procedure for becoming a foreign importer of record:
For a better understanding of how different the procedures of becoming an FIOR are, let’s discuss how you can become an FIOR in the US and Canada.
Here is a step-by-step guideline to becoming a FOIR when importing to the US:
You need a customs broker to act on your behalf in filing customs documentation and facilitating customs clearance.
To avoid missing, incomplete, or inaccurate information, ensure you prepare the following documentation:
With the documentation you provide, the broker applies for CAIN on your behalf.
You can also apply for the CAIN by completing and submitting a CBP Form 5106 to a CBP port of entry.
Your customs broker can help you obtain a single-entry bond (for a specific shipment). For multiple shipments in a year, you’ll need the continuous bond.
While the customs broker handles the customs filings and documentation, it’s your responsibility to oversee import compliance.
You must ensure compliance with all import regulations and requirements for your shipment, including accurate HS classification and valuation and adherence to safety, environmental, and technical standards.
Canada allows foreign companies to import goods without establishing a local entity through the Non-resident Importer (NRI) program. The program is more suitable for US companies selling to Canadian consumers.
Here are the steps to becoming a foreign importer of record when importing to Canada:
Apply for a BN9 on the Canada Revenue Agency (CRA) website to access the CARM client portal and be able to appoint a broker.
If your goods are subject to GST/HST, you must also register for a GST/HST account under the BN to facilitate the payment of duties and taxes.
Before registering in CARM, you should appoint a licensed customs broker. The appointment includes signing a power of attorney and finalising contractual agreements.
This step is important as you will need the specific “Broker Account Number” or business details to delegate authority in the portal.
Once you have your BN9 and broker details, you must create a CARM Client Portal account as a Business Account Manager (BAM) and link your BN/ Import-Export Program (RM) with your CCP account.
Inside the CARM portal, you must approve your Canadian broker to act on your behalf. Once approved, the customs broker can view your account, file entries, or manage monthly statements.
You must post a security bond (financial deposit) if you wish to utilise the Release Prior to Payment (RPP) program. The program allows goods to clear through customs before settling applicable duties.
Your customs broker can help with posting the security bond into the CARM system.
Becoming an FIOR doesn’t eliminate legal accountability. You are responsible for ensuring compliance, coordinating the transportation of the goods, and addressing any issues that may arise from your shipment.
Here are the three key risks to evaluate before becoming an FIOR and how to mitigate them:
Managing regulatory compliance requires a clear understanding of local import regulations and continuous visibility into the regulatory changes.
This is because import regulations vary by country and are frequently updated, increasing the risk of noncompliance.
Besides hiring accredited local expertise, such as a customs broker or a third-party IOR, ensure you conduct due diligence. This includes establishing strict internal procedures to verify supplier documentation and product compliance before shipping.
As an FIOR, you must coordinate customs brokers, carriers, freight forwarders, and customs authorities in the destination country. Communication gaps can delay customs clearance or raise noncompliance issues.
Working with logistics and compliance partners, such as Blackthorne, that coordinate a global supply chain simplifies execution. It provides a single point of contact, eliminating the need to engage multiple service providers and increasing accountability.
While you may save on the costs of setting up a local office, hidden costs and accumulating charges can lower your profit margin. Hidden fees can arise from currency fluctuations, storage and demurrage charges, and shipment delays.
Utilising financial tools to track expenses can help predict the cost of importation. Also, it’s essential to conduct a feasibility and cost-risk analysis before shipping your products.
Becoming an FIOR is beneficial. However, you may be unable to act as an FIOR as a foreign entity in the following cases:
If you cannot act as your own FIOR, you can appoint a reliable third-party IOR to fulfill the importation obligations on your behalf.
Using their local credentials, the IOR fulfills all import requirements and facilitates customs clearance, allowing you to import without a local presence.
If you are looking for a credible third-party IOR to import technology devices such as data centre equipment, Blackthorne IOR has you covered.
We help foreign importers to ship goods to desired destinations without establishing a local entity. With a physical presence in over 200 import destinations, we ensure your shipment is compliant, handled safely, and delivered on time.
Ready to venture into a new market with a streamlined market entry?
You can call or email us at sales@blackthorneit.com so we can deliver those devices to your customers abroad.
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