The Importance of Import - Export DocumentationTax Professionals' Resource
October 15, 2012 — 22,900 views
The Importance of Import - Export Documentation
One of the most crucial components of a successful international business transaction is the accurate completion of required export documentation and import documentation. Failure to produce such documentation can hinder the dispatch of products by a manufacturer or supplier, and can ultimately impede the timely receipt of goods by the customer. In more severe cases, business owners can be subject to fines or incarceration for failing to comply with import or export documentation requirements.
There are three common documents that businesses typically need to produce in order to ship products outside the United States or to receive goods from another country. The first is a commercial invoice. The commercial invoice contains a formal list of each product purchased along with purchase price and quantity ordered. The commercial invoice includes the full name and address of the shipper or supplier and the complete name and address of the consignee or designated recipient. Also included in the commercial invoice is the signature of the supplier and a statement indicating the nature of the products purchased. The commercial invoice is perhaps the most important piece of import/export tax documentation because it serves as an official record of the financial transaction between the exporter and importer.
The second document that is typically required with an international shipment is a packing list. The packing list also contains the name and address of both the supplier and consignee, but focuses more on the contents of the shipment as opposed to pricing. The packing list provides a detailed list of the components of the shipment and often contains information pertaining to the total number of boxes and cartons supplied with the shipment.
A third document that is often required when participating in international trade is a Certificate of Origin. Also known as a C/O or COO, the Certificate of Origin is completed by the exporter and indicates the specific country where the goods were originally manufactured. Such documentation is particularly important because businesses may be forbidden to ship to or receive goods from a particular country. For instance, business owners in the United States are prohibited from shipping goods to Cuba and Iran due to longstanding trade embargoes. Attempts to ship to or receive goods from embargoed countries could result in serious penalties.
In addition to the three common documents listed above, there are other less commonly requested items that may be required in order to engage in international trade. Examples include a certificate of free sale, the shipping airway bill, or a copy of the exporter's FDA registration. The airway bill indicates the date of dispatch and expected date of arrival and is often requested by customers who must travel to their local airport or customs office to retrieve goods.