When UK businesses or consumers ship free samples, promotional items, or goods for trial, understanding customs regulations is paramount. The process involves specific documentation, valuation rules, and potential duty exemptions that vary by destination and shipment type. This article outlines the key considerations for handling such shipments, drawing on established customs and shipping guidance.
Understanding Customs Valuation for Zero-Cost Goods
A fundamental principle in customs clearance is that every physical item possesses a value, regardless of whether a commercial transaction occurs. When shipping gifts or samples, the value declared on customs forms should reflect the cost to replace the item if it were lost or damaged. This is not a commercial price but a value for customs purposes only.
To facilitate smooth clearance, the description on customs documents should clearly indicate the nature of the goods. Terms such as "sample," "personal effects," "gift," "not for resale," or "value for customs purposes only; no commercial value" can assist customs officials in understanding how to handle the shipment and apply any relevant duties or taxes correctly.
Documentation for International Shipments
The type of invoice used is critical and depends on the destination country. A Pro Forma Customs Invoice is commonly used for gifts or samples, as it signals an informal nature to customs officials. However, some countries do not accept Pro Forma Invoices for non-document shipments and require a Commercial Invoice format instead.
Countries that typically do not accept Pro Forma Invoices for customs clearance include: * Aruba * Bahamas * Barbados * Belize * Bermuda * Bolivia * Cayman Islands * Chile * Congo * Curacao * Ecuador * French Guyana * Grenada * Guatemala * Guyana (British) * Haiti * Honduras * Jamaica * Liberia * Madagascar * Martinique * Montserrat * Namibia * Nevis * St. Barthelemy * St. Eustatius * St. Kitts * St. Lucia * St. Vincent * Suriname * Trinidad And Tobago * Turks And Caicos Islands * Uruguay * Virgin Islands (British)
For these destinations, a Commercial Invoice must be used, even for informal shipments. This document must state the reason for sending the item so customs officials can handle clearance appropriately.
Duty-Free Provisions for Commercial Samples
Specific Harmonized Tariff Code (HTS) provisions exist to allow for the duty-free importation of commercial samples. One such provision is HTS number 9811.00.60, which covers any sample (excluding alcohol or tobacco samples) valued not over $1 each, or marked, torn, perforated, or otherwise treated so that it is unsuitable for sale or for use other than as a sample.
Under this provision, samples can be imported duty-free if: * Merchandise is permanently marked as a "sample," or cut or torn in a visible manner. * Additional marking and defacing requirements for textile products and footwear are met, which may depend on the type of fabric, size, and other considerations. * Commercial documents show a value for the samples (even if they have no commercial value) and include the specific statement "mutilated samples – 9811.00.60" to ensure duty-free treatment.
It is important to note that samples imported under this provision must typically be destroyed or donated to a charity or other non-commercial entities after use. Importers are not permitted to sell them or reconstitute them into articles suitable for sale.
Temporary Importation Options for Soliciting Orders
For businesses importing samples to solicit sales or exhibiting goods at trade shows, temporary importation schemes may be appropriate. These schemes allow goods to enter a country free of duty, provided they are exported or destroyed within a specific timeframe.
Temporary Importation under Bond (TIB)
Commercial samples may be admitted into the United States under a TIB, which temporarily permits duty-free importation when the importer posts a bond. TIBs are used for the exclusive purpose of soliciting orders.
Goods imported under a TIB must not be sold or offered for sale and must be exported or destroyed within one year from the date of importation. Extensions can be requested for additional one-year periods, not exceeding three years total. Failure to export or destroy them before expiration results in liquidated damages equal to double the estimated duties for the samples.
Carnets
Carnets are another option for temporarily importing commercial samples to solicit orders. A carnet serves as both a customs bond and entry documentation, purchased in advance of shipment. It simplifies the customs process and can be used in several countries. The United States accepts two types of carnets.
Carnets are valid for one year. If soliciting orders is anticipated to take longer than a year, a TIB may be a better choice. Goods imported under a carnet cannot be sold. If they are sold, the importer must pay the duties, fees, and taxes on the goods, plus a penalty equal to 10% of the duties and taxes owed for the sold goods.
Low-Value Shipments
For commercial samples valued at less than $800, importers can use entry type 86. This allows goods valued under $800 to be imported free of duties, taxes, and fees. However, the goods would remain in the United States indefinitely, and the importer would retain the right to sell the samples after use.
Prototypes and Other Specialised Goods
Prototypes may be imported duty-free in limited non-commercial quantities under HTS 9817.85.01. The eligibility for this provision depends on the goods not being subject to antidumping, countervailing duties, quotas, or requiring additional fees or IRS taxes.
Export Considerations for UK Businesses
For UK-based businesses exporting free samples, the same principle of valuation applies. Even when items are shipped free of charge as an incentive for a bulk order or as samples, their actual value must be listed on the commercial invoice. A notation stating there was no charge to the customer and that the value is for customs use only is the correct approach. This reporting is required for Electronic Export Information (EEI) through the relevant export control systems.
Conclusion
Shipping free samples and promotional goods internationally requires careful attention to customs regulations. Key steps include accurately declaring the value for customs purposes, selecting the appropriate invoice type for the destination country, and understanding the specific provisions for duty-free treatment. For temporary importation to solicit orders, options like TIBs and carnets offer structured pathways but come with strict conditions regarding sale, duration, and potential penalties. Consulting with a customs broker or shipping specialist is advisable for complex shipments to ensure compliance and avoid unexpected costs.