Delivered Duty Paid is the only Incoterms 2020 rule that obliges the seller to take care of the import process and to pay local taxes such as VAT and GST – convenient for the buyer, but often a huge problem for the seller.
- Local taxes can be subject to frequent change
- The import processes can be complex and bureaucratic
- The seller must bear any costs due to delays in import clearance
The conventional advice to sellers is to avoid DDP if at all possible, and to leave these matters to the buyer, who has local knowledge.
However there are situations where there are compelling reasons for using DDP:
- With the increasing importance of cross-border online sales – both to businesses and to consumers – there are huge advantages for the seller who can present customers with a fixed “all in” price at the point of sale, thereby sparing both the customer and the carrier the hassle and uncertainty of collection of money at the point of delivery.
- Buyers with sufficient negotiating power may insist on DDP as a condition of doing business. For example, Amazon fulfilment centres, some supermarkets.
These pages will focus on trading with the EU, though these principles may apply elsewhere.
General principles – fiscal representation
Delivered Taxes Paid