How do FOB and CIF differ? How do you choose among the eleven Incoterms 2020 rules?
In three sentences
First, Incoterms are not law; they are trade rules compiled by the International Chamber of Commerce (ICC) and apply only when the buyer and seller specify “under Incoterms 2020” in their contract. Second, the eleven rules differ in just four respects: where risk transfers, who pays freight, who arranges insurance, and who handles export and import customs clearance; EXW imposes the fewest responsibilities on the seller, and DDP the most. Third, for importers in Taiwan, the most practical impact concerns tax: Taiwan’s customs value is based on CIF, so when a transaction is priced FOB, customs will add international freight and insurance before calculating tax. Even if DDP is agreed, the consignee remains legally liable for customs duty (Article 6 of the Customs Act: “The person liable for customs duty is the consignee, the holder of the bill of lading, or the holder of the goods”). The seller paying on your behalf does not mean you can disregard the declaration details.
What exactly are Incoterms? Do they have legal force in Taiwan?
Incoterms stands for International Commercial Terms. Compiled by the International Chamber of Commerce (ICC), these three-letter terms provide standard clauses for common sources of disputes: where the seller must deliver the goods, where risk transfers, who bears which costs, and who handles export and import customs clearance. The current edition is Incoterms 2020, comprising 11 rules.
This is the most common misunderstanding. Compiled by the ICC, a private organization, Incoterms are not themselves law or a treaty and have no mandatory binding force. The buyer and seller must expressly specify the edition in their contract (purchase order, quotation or letter of credit), for example, “FOB Kaohsiung, Incoterms® 2020,” before the rule becomes part of the contract and binds both parties. In academic terms, they “are neither a treaty nor mandatory law and therefore have no mandatory binding force on the parties to a transaction.”
Omitting the edition year can lead to another dispute over which edition applies, and differences between editions can have financial consequences (for example, the minimum insurance coverage required under CIP was increased in the 2020 edition). Even when Incoterms are agreed, national mandatory laws (customs, import and export controls, and tax laws) still take precedence; the rules do not and cannot alter obligations under public law.
Also, Incoterms® is a registered trademark of the ICC, and the text of the rules is protected by copyright. Formal references should include the trademark symbol.
Incoterms cover only four matters: the place of delivery, the point of risk transfer, cost allocation, and responsibility for export and import customs clearance and permits. They do not cover when ownership of the goods transfers, payment terms and methods, breach and remedies, governing law and jurisdiction, or product quality specifications. These must be agreed separately in the sales contract. Treating “CIF means ownership transfers when the goods are loaded on board” as common knowledge is incorrect.
How are the eleven rules divided into four groups?
Traditionally, the 11 rules are divided into four groups—E, F, C, and D—in ascending order of the seller’s responsibilities. This classification is commonly used in Taiwanese teaching materials. ICC’s own official classification has two categories: 7 rules for any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU, DDP), and 4 rules exclusively for sea and inland waterway transport (FAS, FOB, CFR, CIF). This latter classification matters more in practice: using a rule that does not match the mode of transport is the most common misuse.
| Group | Rule | Full name | Applicable transport | Generally understood delivery / risk transfer point |
|---|---|---|---|---|
| Group E | EXW | Ex Works | Any mode | When the goods are ready for collection at the seller’s premises |
| Group F | FCA | Free Carrier | Any mode | When the goods are delivered to the carrier nominated by the buyer |
| Group F | FAS | Free Alongside Ship | Sea/inland waterways only | When the goods are placed alongside the vessel at the named port of shipment |
| Group F | FOB | Free On Board | Sea/inland waterways only | When the goods are loaded on board the vessel |
| Group C | CFR | Cost and Freight | Sea/inland waterways only | When the goods are loaded on board the vessel |
| Group C | CIF | Cost, Insurance and Freight | Sea/inland waterways only | When the goods are loaded on board the vessel |
| Group C | CPT | Carriage Paid To | Any mode | When the goods are delivered to the first carrier |
| Group C | CIP | Carriage and Insurance Paid To | Any mode | When the goods are delivered to the first carrier |
| Group D | DAP | Delivered at Place | Any mode | When the goods arrive at the named place, ready for unloading |
| Group D | DPU | Delivered at Place Unloaded | Any mode | When unloading is completed at the named place |
| Group D | DDP | Delivered Duty Paid | Any mode | When the goods arrive at the named place, ready for unloading |
Under Group C (CFR/CIF/CPT/CIP), the point where cost responsibility changes is not the point where risk transfers: the seller pays freight to the destination port or place, but risk transfers to the buyer much earlier, when the goods are loaded on board or delivered to the first carrier. If something happens to the goods at sea, the seller has paid the freight, but the buyer bears the loss. This is why Group C requires insurance.
Where do responsibilities fall under EXW, FOB, CIF and DDP?
Of the eleven rules, these four are the ones Taiwan importers encounter most often. The following explains the division of responsibilities under each.
EXW Fewest seller responsibilities: delivery occurs when goods are ready at the factory
The seller only needs to make the goods available at its premises (factory or warehouse) and notify the buyer; even loading them onto a vehicle is not the seller’s obligation. The buyer is responsible for arranging collection and loading, handling export customs clearance, international transport, insurance, import customs clearance and duties and taxes, and last-mile delivery.
Practical difficulty: export declarations usually must be filed in the name of a business established in the exporting country, which foreign buyers often cannot do themselves. For this reason, the ICC also recommends using FCA for cross-border transactions. The “factory prices” quoted by suppliers on 1688 or in Yiwu generally reflect the EXW concept.
FOB For sea transport: risk transfers when the goods are loaded on board
The seller is responsible for export customs clearance, transporting the goods to the named port of shipment and loading them on board. The buyer is responsible for sea freight after loading, insurance, import customs clearance and duties and taxes, and delivery after unloading.
Note: FOB applies only to sea and inland waterway transport. Using FOB when handing a full container over at a container terminal or shipping by air is a common misuse; use FCA for container shipments.
CIF The seller pays freight and insurance to the destination port, but risk transfers much earlier
Seller’s responsibilities: export customs clearance, ocean freight, arranging insurance and providing the policy, and carriage to the named port of destination. Buyer’s responsibilities: import customs clearance, duties and taxes, unloading, and last-mile delivery.
Key details: CIF requires only minimum insurance cover (Institute Cargo Clauses ICC(C) or similar terms), which provides limited coverage and does not cover all damage. For high-value goods, additional insurance under clauses offering broader coverage is recommended. Also, risk transfers to the buyer when the goods are loaded on board, not upon arrival at the destination port.
DDP Most seller responsibilities: the seller even bears import duties and taxes
The seller is responsible for transport throughout the journey, export and import customs clearance, and import duties and taxes, delivering the goods to the buyer’s named place ready for unloading. The buyer is responsible for unloading and receiving the goods.
Important reminder for Taiwan: DDP is an agreement allocating costs between buyer and seller; it does not change who is the taxpayer under public law. When importing in your own name, you remain the taxpayer/consignee on the declaration and remain responsible for inaccurate declarations. The seller paying tax on your behalf does not mean you can ignore the declaration.
The more capable you are of arranging transport and customs clearance yourself, the more you should consider EXW/FCA (usually lower total costs and more transparent information); the more convenience you want and the less familiar you are with importing, the more you should consider DAP/DDP (higher unit prices, but the other party bears the risks and incidental costs). The one thing to avoid is a mismatch between the rule and the mode of transport, such as insisting on FOB for air or container shipments.
How do trade terms affect customs value in Taiwan?
This is a point most Incoterms guides omit, yet it has the greatest financial significance for Taiwan importers. Taiwan Customs assesses tax on the customs value. Under Article 29 of the Customs Act, this is calculated using the transaction value of imported goods, with freight, loading, unloading and handling charges to the port of importation (Paragraph 3, Subparagraph 5) and insurance (Subparagraph 6) included in the customs value. In other words, valuation uses a CIF basis. The rule used for your transaction therefore directly affects the tax base presented to Customs.
This is the largest gap between Taiwan customs practice and Incoterms, and one of the least clearly explained points on Chinese-language websites. According to the instructions for field (39) of the import declaration (NX5105) in the Customs Administration’s Advance Cargo Clearance Declaration Manual: Imports, if the unit price term on the invoice is not one of the following 6, it must be converted to one of them before filing:
FOB (free-on-board price, excluding freight and insurance), FAS (free-alongside-ship price), CFR (price including freight), C&I (price including insurance), CIF (landed price, including freight and insurance), and EXW (ex-works price, permitted only when all unit prices on the invoice are EXW).
⚠️ Note that C&I is a code specific to Taiwan customs declarations, not one of the 11 Incoterms rules. Conversely, the 6 rules FCA, CPT, CIP, DAP, DPU and DDP cannot be entered directly on the declaration.
A Customs Administration press release dated 2019-12-11 gives a specific example: if the contract uses FCA, the buyer bears handling, loading and unloading charges incurred after delivery to the buyer’s nominated carrier but before departure from the port. If the business chooses to declare on an FOB basis, it must add these handling, loading and unloading charges itself and enter them in the declaration’s “Additions” field, while declaring freight and insurance separately. Omitting them understates the customs value.
The phrase “Ship to Taiwan, tax included,” often seen on overseas brands’ official websites, effectively means DDP. The buyer indeed does not need to pay the tax personally, but this is a private-law agreement on costs; you remain the person liable for customs duty on the declaration. Under Article 6 of the Customs Act, the person liable for customs duty is the consignee, the holder of the bill of lading, or the holder of the goods, and you still bear the risk of additional tax assessments and penalties for inaccurate descriptions or values in the declaration.
The value fields on the declaration have a defined calculation relationship: Landed value(22) ＝ FOB value(17) ＋ Freight(18) ＋ Insurance(19) ＋ Additions(20) − Deductions(21). If the invoice amount is CIF, freight and insurance must be deducted before entering the amount in (17). If it is EXW, “EXW additions,” such as inland freight from the factory to the port of export and customs clearance fees, must also be entered in (20).
💡 If you are importing commercially and have questions about how to declare the value, Article 36-1 of the Customs Act allows you to submit supporting documents to the Customs Administration, Ministry of Finance, before the goods are imported and apply for an advance valuation ruling. Customs will respond in writing; if you disagree, you may apply for a review before importation. This costs far less than facing a valuation inquiry and additional tax assessment afterward.
Which common claims are actually wrong?
The following six misconceptions are among the most widespread on Chinese-language websites and the most likely to cause actual losses.
Incorrect—and many Chinese-language guides, including the previous version of this page, have made this mistake. DDU (Delivered Duty Unpaid) was removed in Incoterms 2010 and is not among the 11 rules in the 2020 edition. Its function was taken over by DAP—note that this was a functional replacement, not a renaming (DAT→DPU was an actual renaming). “DDU” remains common industry shorthand, but use DAP in formal contracts; otherwise, there is no current rule to invoke in a dispute.
The opposite is true. Under EXW, export customs clearance is the buyer’s obligation and expense; the seller only needs to make the goods available at its own premises. Foreign buyers often cannot file export declarations in their own name in the seller’s country, which is precisely why the ICC recommends FCA for cross-border transactions.
You cannot. Taiwan import declarations accept only six unit price terms: FOB, FAS, CFR, C&I, CIF and EXW. Other rules must first be converted to one of these, with the difference entered in the “Additions” field. For example, when converting FCA to FOB for declaration, you must add handling, loading and unloading charges incurred before departure from the port.
FOB, FAS, CFR and CIF are the four rules that apply only to sea and inland waterway transport. Misusing FOB for air shipments or delivery at a container terminal makes it impossible to identify the risk-transfer point defined as “loaded on board the vessel.” Use FCA for container shipments, and FCA/CPT/CIP for air shipments.
There are two errors. First, under CIF, risk has already transferred to the buyer when the goods are loaded on board. The buyer bears losses at sea, although an insurance claim may be made. Second, CIF requires only the minimum cover provided by Institute Cargo Clauses ICC(C), which has limited coverage. The 2020 edition raised the minimum insurance requirement for CIP to ICC(A), which provides broader coverage, but CIF remained unchanged—the two are no longer aligned.
No. The insurance field must show the actual amount paid as stated on the invoice, insurance documents or premium receipt. If the goods are uninsured and no insurance premium was actually paid, no insurance amount needs to be added. Enter “0” in the field and note “Uninsured” on the value declaration or in the import declaration’s “Other Declaration Particulars” field as required. There is no need to invent a percentage-based estimate.
DDP only stipulates that the seller bears the costs. Under Article 6 of the Customs Act, the person liable for customs duty is the consignee, the holder of the bill of lading, or the holder of the goods. This is a status under public law and does not transfer because of a cost agreement between buyer and seller.
Incoterms do not govern the transfer of ownership at all, nor do they govern payment terms, remedies for breach or governing law. When ownership transfers must be determined under the sales contract and governing law. Also, in legal scholarship, “transfer of risk” and “bearing of risk” are two different issues, although Chinese-language literature often uses the terms interchangeably.
Incoterms are issued by the ICC, a private organization; they are not a treaty and have no mandatory binding force. They become contractual terms only when the parties agree to incorporate them. Writing only “FOB” without the edition year can still lead to a dispute over which edition applies. The correct wording is “FOB Kaohsiung, Incoterms® 2020.”
The rules determine who does what, who pays, and when risk transfers; they do not determine ownership or how Customs assesses value, and they do not remove your declaration responsibilities in Taiwan. Also, Taiwan declarations recognize only 6 unit price terms, so the rule you negotiate and the term you declare may well be different.
What changed between Incoterms 2010 and 2020?
If your existing contract or template specifies Incoterms 2010, note the following differences. The previous edition has not become invalid: the parties may still agree to use the 2010 edition, provided they clearly specify the year in the contract. (Incoterms have been revised several times since their first publication in 1936. Teaching materials differ slightly on the dates of early revisions, so this page does not list them individually.)
FCA, DAP, DPU and DDP, the parties may transport goods using their own means of transport and need not necessarily engage a third-party carrier.Always include the edition year in the contract, for example, “CIF Keelung, Incoterms® 2020.” Writing only “CIF Keelung” may allow parties to argue for different editions in a dispute, and the difference in CIP insurance requirements can have real financial consequences.
Which rule should you use when shipping through a Shenzhen consolidation warehouse?
HowBridge has only a Shenzhen consolidation warehouse and a Taoyuan operations warehouse, and provides consolidation services only for China → Taiwan. We do not have warehouses in Europe, Japan, Korea or the United States, and we do not provide consolidation, purchasing-agent or payment-on-behalf services for those regions. This page’s discussion of international trade terms is general trade knowledge and does not mean that we provide services in those regions.
Different considerations apply to personal consolidated shipments and commercial imports, so they are explained separately below.
Personal consolidated parcels: Incoterms are usually unnecessary
Incoterms govern the relationship between buyer and seller. When you order on Taobao or 1688, the seller’s shipment to the Shenzhen warehouse is part of a domestic transaction within China, usually governed directly by the platform’s rules rather than Incoterms. The Shenzhen-to-Taiwan leg is covered by a contract of carriage between you and the consolidation provider, which likewise falls outside the scope of sales terms. For personal consolidated shipments, what really matters is who is the taxpayer on the declaration (you) and whether the declared details match the actual goods.
Commercial full-container or bulk imports: match the rule to the mode of transport
If you purchase from a Chinese supplier in your company’s name and import full containers, suppliers most commonly quote EXW (factory price) or FOB (including export clearance and loading on board). For full-container shipments, FCA is recommended instead of FOB: containers are handed over at a container terminal rather than loaded on board alongside the vessel, so FCA’s delivery point matches actual operations. If you want the supplier to handle transport all the way to a Taiwan port, use CFR/CIF, but remember that CIF provides only the minimum level of insurance.
Whatever rule you use, Taiwan’s tax base is CIF
The practical point is this: whether you negotiate EXW, FOB or CIF with the seller, Taiwan Customs assesses customs value on a CIF basis including freight and insurance. Compare total landed cost (goods price＋international freight＋insurance＋customs duty＋business tax＋domestic delivery), rather than the unit price on the invoice.
What sources support these statements?
The explanations of trade rules on this page are based on the International Chamber of Commerce’s (ICC) Incoterms 2020; Taiwan customs practice is based on current Customs Administration filing instructions and press releases; and academic literature supports the discussion of legal status and disputes over applicability. The sources and the extent of this site’s verification are identified below.
Rules and official sources (verified individually)
- The International Chamber of Commerce’s (ICC) definition of Incoterms: “a set of eleven three-letter trade terms, reflecting business-to-business practice in contracts for the sale and purchase of goods”; Incoterms® is an ICC registered trademark, and the text of the rules is protected by copyright. iccwbo.org
- Customs Administration, Ministry of Finance press release (2019-12-11), “Customs Administration Urges Businesses to Accurately Declare Import Customs Value When Using the New Incoterms Trade Terms”: expressly states that Taiwan customs declarations accept six trade terms: EXW, FAS, FOB, C&I, CFR and CIF. Other terms must be converted when filing for customs clearance, with relevant costs added. It gives the example of converting FCA to FOB, requiring handling, loading and unloading charges to be entered in the “Additions” field. mof.gov.tw
- Customs Administration, Advance Cargo Clearance Declaration Manual: Imports, field-by-field instructions for the integrated import declaration (NX5105): definitions of the six unit price terms in field (39), and filing rules and calculation relationships for fields (17) FOB value, (18) freight, (19) insurance, (20) additions, (21) deductions and (22) CIF value. web.customs.gov.tw
- Article 29 of the Customs Act: customs value is calculated using transaction value; “freight, loading, unloading and handling charges to the port of importation” under Paragraph 3, Subparagraph 5, and “insurance” under Subparagraph 6 must be included in customs value. Paragraph 5 also sets out the procedure where Customs doubts the authenticity of transaction documents. law.moj.gov.tw
- Articles 30–35 of the Customs Act: the sequence of customs valuation methods is transaction value (§29) → identical goods (§31) → similar goods (§32) → domestic selling price (§33) → computed value (§34) → reasonable means (§35). The taxpayer may request that the order of Articles 33 and 34 be reversed. law.moj.gov.tw
- Article 36-1 of the Customs Act: an application for an advance valuation ruling may be submitted to the Customs Administration before importation, with a written response required; an applicant who disagrees may request a review before importation. Article 36 of the Customs Act also allows the taxpayer to request a written explanation of the valuation method from Customs. law.moj.gov.tw
- Article 19 of the Enforcement Rules of the Customs Act: defines “reasonable means” under Article 35 and lists seven prohibited valuation methods, including “minimum customs values set by Customs” and “arbitrary or fictitious values.” Article 13 requires Customs to explain its reasons for doubt, provide an opportunity to respond, and give written reasons after valuation. law.moj.gov.tw
- Teaching material titled Introduction to Incoterms 2020, published on the International Trade Administration, Ministry of Economic Affairs website (presenter: Chen Hsien-fen): expressly states that Incoterms are not law and apply only by agreement between the parties. (Site note: the file is hosted on an official domain, but its publication date and parent webpage could not be confirmed. It is therefore classified as teaching material, not a formal interpretive ruling.)
Key facts and their sources
- Incoterms 2020 comprises 11 rules: 7 apply to any mode of transport (EXW, FCA, CPT, CIP, DAP, DPU and DDP), and 4 apply only to sea and inland waterway transport (FAS, FOB, CFR and CIF) — Official ICC Knowledge2Go Incoterms 2020 comparison chart
- Substantive changes from the 2010 to the 2020 edition: DAT renamed DPU; CIP minimum insurance coverage increased to an all-risks level while CIF remained unchanged; under FCA, the parties may agree that the buyer will instruct the carrier to issue the seller an on-board bill of lading; express recognition of performance using a party’s own means of transport (FCA/DAP/DPU/DDP); and clarification of security obligations and cost allocation — 曾文瑞, “Revisions to Incoterms 2020 and Arrangements for the Cargo Insurance Period,” Non-Life Underwriters Society of the Republic of China, Issue 80; cross-checked against Taiwan Academy of Banking and Finance teaching materials
- Taiwan import declarations accept only 6 unit price terms: EXW, FAS, FOB, C&I, CFR and CIF. C&I is a code specific to Taiwan declarations, not an Incoterms rule; FCA, CPT, CIP, DAP, DPU and DDP cannot be declared directly and must be converted — Customs Administration press release dated 2019-12-11; NX5105 filing instructions (verified by this site on 2026-09-08)
Academic and research literature
On the Application of Incoterms and Revisions in the New Edition
This article is the main basis for this page’s discussion of the legal status of Incoterms. It expressly states that Incoterms “are neither a treaty nor mandatory law and therefore have no mandatory binding force on the parties to a transaction”; the parties must agree to invoke them. ⚠️ The publication year is inferred: the PDF does not state its publication month or year. This site inferred the year because the latest reference is dated 2010/5 and the article discusses Incoterms 2010 throughout as a “draft of the new Incoterms.” Before formally citing it, confirm the volume, issue and publication date with Trade Policy Review.
The Legal Framework of the ICC’s 2020 Trade Terms (Incoterms® 2020’s New ICC International Trade Law)
Traces ICC’s efforts to standardize international trade terms since the 1920s and analyzes the impact of the 2020 edition. According to its abstract, the first edition of Incoterms, published in 1936, was intended to reduce transaction costs arising from contract negotiations and make international contracts for the sale of goods more stable and predictable. ⚠️ This site accessed only the bibliographic record and abstract, not the full text; the abstract’s wording was also paraphrased by a search tool rather than reproduced verbatim from the original. Verify it in the original database before citing it. The volume/issue information for this entry also differs across search portals.
Determining and Assessing the Customs Value of Imported Goods: Taiwan’s Current Valuation System and the WTO Customs Valuation Agreement
Directly relates to this page’s section on “trade terms → customs value.” Its abstract states that determining customs value “has long been one of the issues disputed between Customs and taxpayers.” The full text selects 11 court judgments on the determination of customs value for imported goods to organize the disputed issues and recommends expressly codifying the customs case consultation system. It helps explain why the declared price is the starting point of valuation, not the endpoint. ⚠️ This site has read only the bibliographic record and complete Chinese abstract, not the full text.
A Study of the Transfer of Risk in Sales Contracts
Supports this page’s statement that transfer of risk is a separate issue. Its abstract offers a notable correction: “Most current Chinese-language literature mistakenly considers transfer of risk to be an issue related to bearing of risk; in fact, the two are unrelated”. Bearing of risk concerns the binding force of the contract, while transfer of risk concerns the allocation of contractual disadvantages. ⚠️ This site has read only the bibliographic record and complete Chinese abstract, not the full text.
On the Transfer of Ownership of Goods in International Sales
Supports this page’s statement that Incoterms do not govern the transfer of ownership. Ownership transfer is a separate legal issue that must be determined under the sales contract and governing law; it cannot be inferred from trade terms. ⚠️ This site has read only the bibliographic record and abstract, not the full text.
To avoid presenting information with excessive confidence, the checks this page could not complete are described below:
① This site has not read the actual text of the Incoterms® 2020 rules (ICC publications require payment and are protected by copyright). The specific obligations described on this page are drawn from accounts in Taiwanese official teaching materials and academic literature. For the “Generally understood delivery / risk transfer point” column, only DPU, EXW, and FCA are explicitly documented in the sources this site obtained; the remaining rules have not been individually checked against the actual ICC rule text. If you need to verify the complete obligations under A1–A10/B1–B10 for each rule, purchase an authorized copy of ICC’s rulebook.
② Different teaching materials give conflicting years for past Incoterms revisions (for example, 1953 or 1957 for the first revision). This site did not obtain an official ICC history page to resolve the discrepancy, so this page does not give definitive years for the early revisions.
③ The Customs Administration, Ministry of Finance, press release dated 2019-12-11 is nearly 7 years old. This site cross-checked the current NX5105 completion instructions to confirm that the “6 unit price terms” remain valid (verification date: 2026-09-08). However, the instructions PDF does not show a version date, so a newer version may exist.
④ Taiwanese court judgments concerning Incoterms: none found. This site could not obtain results from the Judicial Yuan’s search system using its query method, so this page does not describe “how Taiwanese courts view Incoterms.”
⑤ For all the theses and journal articles listed above, this site accessed only the bibliographic records and abstracts, not the full texts (the article by 蔡孟佳 is an exception; its full 56 pages were read). The abstract of the article by 謝宗興 and 江崇源 was paraphrased by a search tool, not reproduced verbatim from the original.
⑥ This page does not address whether any goods may be shipped or the import requirements applicable to them. Trade terms concern the allocation of responsibilities; whether the goods may be imported is a separate question and must be assessed separately.
Frequently asked questions
FCA, CPT or CIP for air shipments.You may choose either online real-name authorization or paper authorization (the regulations do not require a particular app). If neither form of authorization is completed, customs may decline to accept the declaration. Also, under Article 6 of the Customs Act, the person liable for customs duty is the consignee, so you should still confirm that the declared descriptions and values match the actual goods. See “What is the difference between a simplified declaration and a formal customs declaration?”.
FCA instead of EXW for cross-border transactions.DAP (a functional replacement, not a renaming). DDU remains common industry shorthand for “the seller delivers to the destination, but the buyer bears import duties and taxes,” which is precisely what DAP provides.There is only one difference from
DDP: who pays import duties, taxes, and charges. Under DAP, the buyer pays; under DDP, the seller pays. Use DAP or DDP in formal contracts. If you write DDU, there is no current rule to invoke in a dispute.According to the Customs Administration, if you choose to declare on an
FOB basis, the handling, loading and unloading charges incurred after delivery to the carrier but before departure from the port are borne by the buyer under FCA. You must add these charges yourself and enter them in the declaration’s “Additions” field, while declaring freight and insurance separately. Omitting them understates customs value and may result in additional tax assessments. If unsure how to convert the price, commercial importers may apply for an advance valuation ruling before importation under Article 36-1 of the Customs Act.Further reading
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