Who generally bears the import agency fee in international import trade?

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I am a small and medium-sized e-commerce enterprise that has just started import business. I recently negotiated two orders for imported cosmetics, one signed with an overseas supplier under FOB terms and the other under CIF terms. I haven't dealt with import agency related links before.

Last time when calculating costs, finance asked me whether the import agency fee should be counted as our cost or borne by the supplier. I flipped through several contract templates but couldn't find a clear standard reference for the stipulation.

I heard from a peer before that some practitioners didn't clarify this matter in advance, and in the end, the relationship between both parties turned stiff, the goods were withheld, and tens of thousands of demurrage charges were incurred. I am afraid of falling into pitfalls now. I want to figure out who actually bears the import agency fee, whether there is a difference under different trade terms, and how to stipulate it in the contract to avoid problems.

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Expert Answer

Robert
RobertYears of service:6Customer Rating:5.0

Warehouse Management AdvisorStart a Chat

In most cases within the industry,it is defaulted that the party commissioning the import agency bears the import agency fee. That is,the domestic consignee,as the entrusting party,bears the corresponding agency service fee. This is the current general rule. However,in many traditional trade cooperations,both parties often ignore prior written stipulation and include the agency fee implicitly in the cargo price or logistics costs. This eventually leads to double billing or mutual shirking between the supplier and the buyer,directly causing customs clearance stagnation,generating additional demurrage and detention fees,and driving up the overall import cost.

Under the traditional model,many overseas sellers will designate their own cooperative agents and pass the agency fee on to the domestic buyer by adding it to the cargo price. Many first-time import buyers are unclear about industry rules and can only accept it passively,resulting in the overall import cost being about 10% to 15% higher than finding an agent themselves,incurring unnecessary expenses in vain.

If the buyer is responsible for the customs clearance link during the transaction,the contract must separately list the bearer,amount,and payment method of the import agency fee,clearly stating that it is borne by the buyer,and the agency fee is calculated separately without additional markups. If the overseas seller is responsible for the full-process customs clearance and delivery,it needs to be clearly stipulated that the import agency fee is borne by the seller and cannot be additionally passed on to the buyer.

For enterprises with long-term stable import needs,they can evaluate their own procurement volume and customs clearance frequency,sign an annual service agreement with a fixed agent,obtain more favorable package rates,and lock in the agency cost for the whole year in advance,avoiding disputes and additional expenses caused by vague rules.

Olivia
OliviaYears of service:5Customer Rating:5.0

Senior Customs AdvisorStart a Chat

If there is a discrepancy between the declared entity and the actual consignee in the import customs declaration link, the bearing of the import agency fee also needs to be adjusted according to the declared entity. If the agent acts as the declared entity, the entrusting party must stipulate the payment node of the agency fee in advance to avoid the agent refusing to submit declaration materials due to fee disputes, which in turn leads to cargo detention and additional losses.

If a price review controversy occurs requiring subsequent material supplementation or deletion and re-declaration, the additional agency fees generated also need to have the bearer stipulated in advance: if the anomaly is caused by false information provided by the entrusting party, it is borne by the entrusting party; if it is caused by the agent's operational error, it is borne by the agent itself. Under the facilitated customs clearance policies of some Free Trade Zones, for paperless declaration agency business, the agency fee can be paid in installments according to customs clearance nodes, avoiding the situation where anomalies occur after a one-time payment making it impossible to pursue accountability. The rules need to be confirmed clearly before cooperation to avoid issues like account hanging and bill pushing affecting customs clearance progress.

William
WilliamYears of service:10Customer Rating:5.0

International Logistics AdvisorStart a Chat

Under different logistics terms, the bearing of the import agency fee can be adjusted in combination with logistics costs. If it is FOB terms, the overseas seller is responsible for delivering the goods to the port, and the buyer is responsible for subsequent sea freight, customs clearance, etc., so generally the buyer bears the import agency fee.

If the import agency you choose is equipped with international logistics services, you can negotiate a package price for the agency fee, sea freight, and port miscellaneous charges to get a lower overall price. If it is CIF terms, the overseas seller is responsible for sea freight and insurance to the port. If the customs clearance agency fee after arrival at the port is not stipulated in advance, it defaults to being borne by the buyer.

If the seller includes double clearance to door, the seller needs to bear the full-process import agency fee, included in the quotation. If abnormal logistics situations such as port change or transshipment are encountered, the additional agency service fees generated also need to be allocated according to responsibility division: whoever caused the anomaly bears the corresponding fee, to avoid unnecessary disputes.

Emily
EmilyYears of service:3Customer Rating:5.0

Client Success AdvisorStart a Chat

The bearer of the import agency fee affects the VAT deduction in the import link and needs to be clarified in advance. If the buyer bears the import agency fee, the VAT special invoice issued by the agent can be normally deducted by the buyer as input tax, reducing the overall tax cost.

If the seller bears the agency fee, the invoice title is issued to the seller, and the buyer cannot deduct it. Therefore, if the buyer is a general taxpayer needing to deduct input tax, it is best to stipulate that the buyer bears the agency fee and collects the invoice themselves.

If the VAT deferred customs clearance mode is adopted, the bearing of the import agency fee does not affect the application for deferred qualification, but the agency fee needs to be included in the cost accounting of the import link, accurately recording expense expenditures to meet the inspection requirements of tax authorities and avoid tax risks caused by unclear cost accounting. For import business involving cross-border related transactions, the bearing of the import agency fee needs to comply with the arm's length principle, and profits cannot be transferred by shifting the bearing to avoid the risk of eroding the tax base.

John
JohnYears of service:6Customer Rating:5.0

Export Tax Rebate AdvisorStart a Chat

The payment of the import agency fee needs to comply with the regulatory requirements of cross-border receipt and payment of foreign exchange. If the domestic buyer bears the agency fee, it is paid directly to the domestic import agency institution in RMB, which does not involve cross-border receipt and payment, so the compliance risk is extremely low.

If it is stipulated that the overseas seller bears the agency fee, the seller needs to cross-border pay the fee to the domestic agent. This must be done through formal cross-border settlement channels and declared as foreign exchange under service trade.

Private transfers through personal accounts are prohibited; otherwise, it will be judged as non-compliant settlement, affecting the enterprise's foreign exchange receipt and payment quota. If CIPS RMB cross-border settlement is adopted, the transaction code in the SWIFT message needs to be filled in correctly, clearly marking it as an import agency service fee, to avoid the bank message audit failing and causing funds to be suspended, affecting fee payment and customs clearance progress.

Sarah
SarahYears of service:3Customer Rating:5.0

Foreign Exchange AdvisorStart a Chat

The stipulation on the bearing of the import agency fee must be written into the contract terms in written form and cannot be merely an oral agreement; otherwise, there will be no evidentiary basis when disputes arise. If there is no clear stipulation in the contract, according to industry practice, it will be judged that the party commissioning the agency bears it, that is, the actual entrusting party pays the fee. If the seller requires the buyer to bear the import agency fee not stipulated in the contract, the buyer can refuse to pay. The resulting customs clearance delays and losses shall be fully borne by the seller.

If the import contract is signed through an agent, the agency agreement needs to specify the bearer, amount, payment time, and liability for breach of contract regarding the agency fee. It should be stipulated that if one party delays the payment of the agency fee, they need to bear the corresponding late fee, to avoid malicious arrears and protect the legitimate rights and interests of all parties. For import business involving transfer of cargo title, the bearing of the agency fee needs to be clearly stipulated along with the transfer of title to avoid the situation where no one claims the fee after the title is transferred.

David
DavidYears of service:3Customer Rating:5.0

Business Development AdvisorStart a Chat

The bearing method of the import agency fee can be included in the scope of overall supply chain cost optimization and adjusted according to the enterprise's procurement scale and supply chain architecture. For enterprises with an annual import value exceeding tens of millions, they can build their own import team.

However, considering comprehensive manpower and compliance costs, it is mostly higher than outsourcing to an agent in most cases. Therefore, it is more suitable to choose a fixed agent for long-term cooperation, with the buyer bearing the agency fee to obtain a favorable package price and reduce overall costs.

For small and medium-sized import enterprises with small volume and multiple batches, they can also choose the consolidation agency model to share the agency fee and reduce the cost per shipment. If the trade term needs to change from FOB to CIF, or from CIF to FOB, the stipulation on the bearing of the import agency fee needs to be adjusted synchronously to match the new trade architecture, avoiding deviations in cost calculation that affect the profit calculation of the overall supply chain.

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