Why End Users don't want to be the IoR
Released On 16th May 2018
Your client wants the kit in another country, but doesn't want to be involved in getting it there - sound familiar?
So you've closed the deal, and got the PO. Months of demonstrations, evaluations, price negotiations and, quite frankly, blood, sweat and tears have come to a head and you have won the deal! It maybe your biggest deal to date, or just another day in the office, either way it's a global win.
Now comes the time to ship the kit, get the revenue recognition and the commission. But there's a problem: at the last minute your client tells you they don't want to be involved in importing it into the various countries, they want you to to deliver it. Easy right? WRONG.
Why? Why can't the kit just go via courier? Why can't the end user be recorded on the shipping paperwork as the Importer?
The import process of IT hardware into countries can be very complex. Movement of tech kit needs to be tracked a bit like us humans: Where has it come from? Where is it going to and why? It's understandable that end-users often want someone else to act as the importer of record.
To submit the answers to these questions and obtain approval to get kit into international countries there is a lot of paperwork that has to be completed for the import process; tariff classification, valuation, country of origin labelling, and duty assessment – even to the most experienced importer, navigating these obstacles and moving requirements have long presented compliance challenges.
Additionally, there is the "act" of being the Importer of Record, or IoR. An IoR is a legal entity who is responsible for the import documents and permits to be filled with the relevant authorities, in addition to paying duties and taxes. Typically, to act as an Importer of Record, the company must have a registered entity within the country they want to import into.
This can introduce a level of risk to the Importer of Record.
- Navigate strict governmental customs authorities
- Complex rules regarding import and export controls for the movement of technology goods
- Non-compliance can result in fines, penalties, legal issues, seized shipments, delays and losses
- Ever-changing regulatory environment
This isn't very exciting is it? And the process sounds like a pain - that's because it is and it's different for every country. End users don't want their engineers from their data centers having to deal with this, or their sales people - they want someone to just deal with it for them.
Lastly, but maybe most importantly in this scenario is a funny thing called 'Taxable Assets'. In short, an end user may have used a centralised budget for a global project, meaning the kit purchased is actually an asset of their HQ. If they want that kit in a data center or office in Sydney, and that Australian office is listed as the Importer of Record, the kit then potentially becomes an asset to the Australian office to pay tax on, or not reclaim the duty - but that's another blog altogether and complicated, but it is a big part of the reason why your end user is quite certain they don't want to import the goods themselves.
Can Mouse & Bear Solutions help?
Yes of course! Mouse & Bear Solutions is a group of interdisciplinary professionals with over 20 years’ experience in:
- Trade compliance
- Supply chain logistics
- Business management
- Project Management
We employ a hands-on, project management approach for the delivery of our clients’ technology hardware into international markets. We pride ourselves on our ability to work closely with our clients to create bespoke personalised solutions to suit any global project, independent of size.
Providing exceptional customer service and support, we walk our clients through the entire logistical and customs clearance process; continual progress updates allow you peace of mind and the freedom to pursue your core business activities.
01 October 2019