Does the thought of having to get to grips with customs and tariff regulations in Cambodia put you off expanding your business there? Figuring out the red tape, avoiding unexpected fees, and keeping up with the regulations is time-consuming for any company, so it’s not a surprise many are put off. But with the right help from an experienced freight forwarder like us at SL Global Logistics, you can turn those challenges into opportunities and make the process smoother.
Trade Agreements Affecting Exporting to Cambodia
International trade agreements can make it easier to overcome trade barriers and reduce the costs of importing and exporting. By getting familiar with which agreements apply to your business, you can make shipping from the UK to Cambodia more efficient.
ASEAN-UK Economic Integration Programme
The ASEAN-UK Economic Integration Programme focuses on making trade between the UK and ASEAN countries easier. For UK businesses, it means fewer administrative hurdles and more streamlined customs processes when importing into Cambodia.
Although it doesn’t directly lower tariffs, it will make dealing with Cambodian customs easier and quicker, helping you save time on your deliveries and reduce hassle.
ASEAN Free Trade Area (AFTA)
The ASEAN Free Trade Area (AFTA) agreement lowers or removes tariffs on goods traded between Southeast Asian countries, including Cambodia. Although this doesn’t directly impact goods shipped from the UK, it’s good to be aware of it because it shapes the overall trading environment in Cambodia.
If your business re-exports goods from Cambodia to other ASEAN markets, AFTA can help. For example, after your shipment arrives from the UK, you might process or assemble products in Cambodia and re-export them to other ASEAN countries. Thanks to AFTA, those re-exported goods could benefit from reduced tariffs, so you save on costs and remain competitive in other ASEAN markets.
Import Authorities and Governing Bodies
When exporting goods from the UK to Cambodia, it’s helpful to know which organisations you’ll be working with on the Cambodian side. These authorities oversee customs procedures, enforce tariff regulations, and make sure that all imported goods meet local standards.
Ministry of Economy and Finance
The Ministry of Economy and Finance decide how trade works in Cambodia. They set the rules for import and export, including what import duties and taxes apply and how customs processes work. While you probably won’t deal with them directly, the policies they create shape the entire customs process.
For businesses, it’s important to stay updated on any changes the Ministry makes to import rules, as these can impact how you bring goods into Cambodia.
General Department of Customs and Excise (GDCE)
The General Department of Customs and Excise (GDCE) is the main agency you’ll work with when importing into Cambodia. They handle inspecting shipments, calculating duties, and making sure that all goods meet Cambodian regulations. You can avoid delays caused by unexpected issues by having a good relationship with the GDCE or using a customs clearance broker who understands their procedures.
Tariff Structures in Cambodia
Customs tariffs are taxes placed on imports, and they vary based on the type of product, its value, and other factors, like the country of origin, the quantity of goods, and how the product is classified. You need to allow for the tariffs in your cost strategy to keep importing profitable.
Ad Valorem Tariffs
Ad Valorem tariffs are a percentage of the product’s value. For example, if a 10% ad valorem tariff applies to an electronics shipment valued at £2,000, you would pay £200 in tariff duties. These tariffs are added to many imported goods like machinery, clothing, and consumer electronics.
Specific Tariffs
Specific tariffs are fixed amounts charged per product unit, regardless of its value. For example, Cambodia might charge a specific tariff of £5 per bottle of imported wine. So, if you import 500 bottles, you’d pay £2,500 in tariffs, no matter the price of each bottle. These tariffs are often used for products like alcohol, tobacco, and certain agricultural goods like rice or sugar.
Compound Tariffs
Compound tariffs combine both ad valorem and specific tariffs. Cambodia might impose a 5% ad valorem tariff plus a fixed £3 per unit on imported luxury watches. If a shipment includes 100 watches valued at £500 each:
You will pay a 5% ad valorem tariff (5% of £50,000 = £2,500) plus £300 (100 units x £3) in duties, totalling £2,800.
These tariffs usually apply to high-value items like luxury goods, cars, and specialised equipment, where the product’s value and quantity both affect the final tariff amount.
Calculation of Tariffs
Import tariffs in Cambodia are calculated based on:
- Customs Value: This is the declared value of your goods, which includes the cost of the product, shipping, and insurance. The customs authorities use this value to work out the ad valorem tariff.
- Harmonised System (HS) Codes: HS codes are used worldwide to classify goods and determine the tariff rate that applies to your product. You need to get this right, as a mistake here could lead to paying higher tariffs or delays in customs clearance.
- Trade Agreements: Trade agreements can indirectly influence tariff rates. While they may not always apply directly to shipments from the UK, they can impact the competitiveness of the market and pricing when selling in Cambodia.
Customs Procedures for Importing Goods to Cambodia
Pre-Import Regulations and Requirements
You must get all your documents in order before shipping your goods to Cambodia. Depending on the type of product, you might need an import license or permit. For example, pharmaceutical products (HS Code 30) or chemicals often require special authorisation.
A Certificate of Origin is also essential, as it shows where your goods were made and can influence tariff rates, especially if trade agreements apply. Certain products, such as electronics or food items, may need extra certifications to guarantee they meet Cambodian safety and quality standards.
Customs Declarations and Submissions
When your shipment arrives in Cambodia, you’ll need to complete a customs declaration with accurate information, including its value, the correct HS code, and contact details for both the exporter and importer. You can do this online, which speeds things up and reduces the risk of errors compared to using paper forms. Be sure to include supporting documents like invoices, packing lists, and the bill of lading, as these help customs confirm the contents and value of your shipment.
Customs Duties, Clearance and Tariff Calculation
Once your declaration is submitted, the GDCE will review it and calculate the duties you owe. They may also inspect the shipment to make sure it matches the declaration. If everything is accurate, the review will move quickly.
The GDCE will work out the duties based on the declared value of your goods and applicable tariffs. You’ll need to pay these duties before the shipment can be released.
Common Penalties for Non-Compliance
Getting customs clearance wrong is more than just a pain to fix; it can cost you time and money. One common mistake is the misclassification of goods. If you use the wrong HS code or fail to declare your goods correctly, you could face fines or end up paying extra duties, which can quickly increase the cost of your shipment.
Another serious issue is the under-declaration of value. Some businesses might be tempted to report a lower value for their goods to reduce tariffs, but this is considered a serious violation. If you’re caught, the penalties can be severe, including heavy fines, additional duties, and increased scrutiny of your future shipments.
Finally, failing to obtain the required permits for restricted or dual-use goods can lead to even more trouble. If you try to bring in these items without the proper documentation, your shipment could be seized, and you may face further fines.
Working with an experienced freight forwarder can help avoid these issues, as they will understand the local regulations. At SLG Logistics, we make sure your paperwork is in order and help you stay compliant, reducing the risk of delays and penalties.
Restricted and Dual-Use Goods
Before you send your shipment, you must be certain that it doesn’t include prohibited and restricted goods. You’ll have to get additional permits if your products have special restrictions.
Prohibited Goods
There are certain items that are not allowed to be imported into Cambodia under any circumstances, these include illegal drugs, counterfeit currency, and materials that threaten public health or safety. If you are caught trying to bring in prohibited items you may be fined and have your shipment confiscated.
Dual-Use Goods
Dual-use goods can be used for both commercial and military purposes, like specific electronics, chemicals, or machinery. Importing these products requires special permits because they could be used in a way that impacts national security. If your shipment includes dual-use goods, you’ll need to get the necessary permits from Cambodian authorities before importing.
Customs Clearance Exemptions
Certain goods are exempt from import duties, so they follow a slightly different customs clearance process. Items such as raw materials, manufacturing machinery or items used in Special Economic Zones often qualify for duty exemptions. And if you’re in the logistics or transport industry, some airport equipment can be exempt from airport duties, saving you even more.
You will need to prepare your cargo for shipment in the same way as for regular goods, as you will need the documentation to prove your goods are exempt. On your customs declaration, you will indicate that the goods are duty-exempt and put in the relevant HS codes. Customs will then review your paperwork and inspect your goods. This is generally faster than going through regular customs, as no duties need to be calculated or paid. When customs are satisfied that everything is in order, they will release your goods without charging value-added tax.
Tips for Handling Customs and Duty Regulations in Cambodia
If you’re looking for ways to cut costs, you should consider Cambodia’s Special Economic Zones (SEZs), which offer tax breaks and reduced duties for businesses. Setting up a warehouse or operations there can really simplify your supply chain, especially if you handle large volumes or frequent imports.
Customs bonded warehousing is another useful option. It allows you to store goods without paying duties upfront, which can help with cash flow. You’ll only pay duties when your goods are released for local sale, or you may avoid them altogether if they are re-exported.
Cambodia also offers pre-clearance options, which can significantly speed up the customs process. By submitting paperwork, like invoices and customs declarations, before the shipment reaches the port, customs can start processing your goods early. This reduces the time your shipment spends at the port and helps avoid potential delays or storage fees. Pre-clearance is especially helpful for time-sensitive shipments like perishable cargo that needs to move quickly.
Finally, it’s a good idea to choose a reliable freight forwarder experienced in Cambodian customs. A knowledgeable partner can help you navigate local regulations, avoid common mistakes, and keep your shipments moving smoothly.
Shipping to Cambodia? Let SLG Logistics Handle It.
Getting through Cambodia’s customs and tariff regulations can be complicated, but SLG Logistics is here to make it easier. As a leading freight forwarding company, you will save time, cut costs, and focus on growing your business while we handle the logistics.
Get a quote today, and we’ll get your business exporting to Cambodia.