Incoterms

The most common and widespread error in the procedures is the incorrect application of the Incoterms or International Commercial Terms, since its declaration on the commercial invoice depends on whether or not to include in the CALCULATION SHEET the amount of transportation and insurance costs up to the point of entry of the merchandise.

In many cases the incoterm is not defined and a FOB or CPT price is taken for granted, doubling the value of these concepts. It is definitely very practical for the import or traffic areas to accept from the customs agent the elaboration of the manifestation and spreadsheet, but if the timely information is not reviewed or not sent to the Customs Agent, it is subject to innumerable inaccuracies in the declaration of value, since it is difficult for the service provider to know of any other commercial agreement defined between buyer and seller and these errors lead to tax repercussions of diverse nature such as tax evasion.

Incoterms are a set of international rules, governed by the International Chamber of Commerce, that determine the scope of the commercial clauses included in the international contract of sale.

Incoterms are also called price clauses, because each term allows to determine the elements that compose it. The selection of Incoterm influences the cost of the contract.

The purpose of the Incoterms is to provide a set of international rules for the interpretation of the terms most used in international trade.

The Incoterms determine:

  • The scope of the price.
  • At what point and where the risk transfer occurs on the seller’s merchandise towards the buyer.
  • The place of delivery of the merchandise.
  • Who hires and pays transportation
  • Who hires and pays insurance
  • What documents are handled each part and its cost.