The main body responsible for customs duties and value-added tax in international air transportation depends on the trade terms agreed upon by both parties, and is also the most prone to disputes in foreign trade quotations and cross-border shipments. Tariffs are trade taxes levied by the destination country's customs on imported goods, while value-added tax is the turnover tax after the goods are imported. There is no fixed party responsible for these two fees, which are fully defined according to trade terms. DDP and DDU are the two most commonly used tax payment models for air freight.
DDU stands for Delivered Duty Unpaid, with the core definition being that the shipper is responsible for the entire transportation process, while the recipient bears the destination country's customs duties, value-added tax, and clearance fees. Under this clause, freight forwarders and shippers only need to complete domestic customs clearance, international transportation, and goods arrival at the port, without bearing any import taxes and clearance risks. After the goods arrive at the destination port, the recipient will handle customs clearance, pay taxes and fees independently, and complete the pick-up and delivery. This is the most commonly used term in foreign trade, with controllable costs and extremely low risks for the shipper, suitable for most conventional cross-border trade orders.
DDP stands for Delivered Duty Paid, which is completely opposite to DDU. All customs duties, value-added tax, and customs clearance fees are borne by the shipper/freight forwarder, and the recipient only needs to wait for the goods to be received, with zero fees and zero operations. This clause belongs to one-stop tax payment services, including transportation, customs clearance, taxes, and all delivery costs. The quotation is an all inclusive price. For the recipient, the experience is excellent and risk-free, which is a common mode of cross-border e-commerce, sample delivery, and overseas private goods. However, the risk for the shipper is extremely high, and the tax cost is uncontrollable. In the event of customs inspection or tax increase, additional expenses will be incurred.
The core differences between the two are concentrated in three aspects: cost, risk, and applicable scenarios. In terms of cost, the DDU quotation only includes transportation fees, and taxes will be paid separately upon arrival at the port; The DDP quotation is an all inclusive price, including taxes and fees. In terms of risk, the risk of DDU customs clearance failure and tax disputes belongs to the recipient; All customs clearance risks and tax fluctuation risks of DDP shall be borne by the shipper. In terms of scenario, DDU is suitable for formal foreign trade enterprise orders, with transparent and controllable costs; DDP is suitable for small sample items and e-commerce retail orders to enhance customer receiving experience. Clear trade terms before shipment can completely avoid tax disputes in the later stage.
