In today’s globalized economy, expanding business into overseas markets is a common yet challenging strategy for small and medium-sized enterprises (SMEs). This is particularly true when importing goods into a new market like Vietnam. The conventional approach—establishing a business entity, securing import permits, and registering products—can take at least three to six months to complete.

Therefore, the emergence of the Importer of Record (IOR) in Vietnam is both inevitable and highly effective. These services allow you to import goods quickly, efficiently, and cost-effectively. This article will provide a comprehensive overview of the services offered by IORs and highlight their benefits. Additionally, you will understand the common terms associated with using IOR services.

What is the Importer of Record (IOR)?

An Importer of Record (IOR) is a legal entity responsible for ensuring that imported goods comply with all customs regulations and laws of the destination country. The IOR is recorded on all entry documents and is responsible for the shipment if it does not comply with the destination country’s regulations.

Typically, IOR service providers are specialized third-party entities selected by exporters or importers to handle the import process of goods. The IOR’s main responsibilities include handling all necessary documentation, ensuring legal compliance, paying duties and taxes, managing the customs clearance process, and delivering the products to the final destination.

Additionally, the IOR can also be responsible for the following:

• Risk Management: Identifying and mitigating potential risks associated with the import process, including compliance risks and logistical challenges.
• Reporting and Record Keeping: Maintaining detailed records of all import activities, including invoices, receipts, and customs documentation for auditing purposes.
• Product Labeling and Compliance: Ensuring imported products meet local labeling and regulatory compliance standards.
• Coordination with Suppliers and Logistics: Coordinating with suppliers and logistics providers to ensure timely and efficient importation of goods.

Responsibilities of the IOR

In Vietnam, you need to set up a business entity to hold an importing license or submit a customs clearance form. However, establishing a business entity in Vietnam takes time and resources, which can lead to missed opportunities with potential partners and customers. Additionally, after the establishment, you will also need some time to prepare for the initial operations such as building teams, organizing SOPs, handling internal and external paperwork, and familiarizing yourself with Vietnamese business regulations.

In this setting, the Importer of Record (IOR) emerges as an effective alternative, helping to reduce market entry time and the costs associated with operating an overseas business entity. As its name indicates, the IOR is responsible (on your behalf) for the entire import process into Vietnam, ensuring all imported goods comply with laws and regulations, handling necessary paperwork such as Commercial Invoices, Bills of Lading, and Customs Declarations, calculating and paying applicable duties, tariffs, and taxes, and coordinating with suppliers, freight forwarders, and customs authorities. This comprehensive approach facilitates a seamless import process, allowing you to focus on your core activities.

While the primary focus of the IOR is on legal compliance and customs clearance, they often take responsibility for the final delivery to ensure the importer receives the goods smoothly. This is especially true if the IOR service is provided by a logistics company that handles end-to-end import processes.

Trade compliance

The Importer of Record (IOR) is responsible for ensuring that all legal documentation for shipments adheres to the regulations for importing goods into Vietnam. The responsibilities may involve:

• Preparing and submitting all required documents, such as commercial invoices, packing lists, and customs declarations, ensuring they are precise and complete.
• Ensuring goods are correctly classified under the Harmonized System (HS) code and accurately valued to determine applicable duties and taxes.
• Obtaining necessary import licenses and permits for regulated goods, ensuring they meet all legal requirements.
• Complying with any import restrictions or special regulations related to the goods being imported, such as quotas or embargoes.
• Ensuring compliance with relevant trade agreements to benefit from preferential treatment or reduced tariffs, and providing necessary documentation to leverage these agreements.

These responsibilities ensure that all imported goods comply with the regulations of the destination country, facilitating smooth and compliant import processes. Failing to comply as an Importer of Record (IOR) can lead to fines, shipment delays, and even seizure of goods. 

Common importing documents in Vietnam

The Importer of Record (IOR) also ensures that the import process is completed under Vietnamese regulations. This includes precisely providing the necessary documentation to the customs. Some common documents required for importing goods into Vietnam include:

• Purchase Order & Commercial Invoice: Outlines the goods being purchased and terms of the sale. Details the goods sold and their value, used by customs to assess duties and taxes.
• Transport Document & Packing List: Includes Bill of Lading or Air Waybill, serving as a receipt and contract for transportation. Details shipment contents, helping customs verify the goods.
• Customs Declaration: Declares the nature and value of imported goods, crucial for customs compliance.
• Letter of Credit & Insurance Certificate: Guarantees payment to the seller, providing financial security. Proves shipment insurance, covering risks during transit.
• Certificate of Origin: Certifies the country of origin, affecting duties and tariffs.
• IOR contract: Authorizes the IOR to manage customs-related matters.
• Import License & Fees Documentation: Required for regulated goods, ensuring import permissions. Related to payment of applicable fees and taxes.

Taxes and duties in Vietnam

The Importer of Record (IOR) is also accountable for covering the necessary payments for importing goods into Vietnam, such as taxes, fees, and duties. These payments include:

• Customs Duties: Taxes based on the value and classification of goods.
• Value Added Tax (VAT): Standard rate of 10%, applicable to most imports. Some special products will have varying VAT rates applied.
• Special Consumption Tax (SCT): Applied to luxury items like alcohol, tobacco, and cars.
• Environmental Protection Tax (EPT): Taxes on products impacting the environment, like petroleum.
• Processing and Handling Fees: Includes import processing, harbor maintenance, and merchandise processing fees.
• Logistics Costs: Insurance, freight charges, and potential storage fees.

Common terms and definitions related to the IOR in Vietnam

When working with an Importer of Record (IOR), it is important to be familiar with and understand some common terms and key positions in the IOR supply chain process. This includes the following:

Consignee: The consignee is the importer responsible for being named on shipping documents and handling customs clearance. This role can either be the Importer of Record (IOR) or the actual owner of the goods at the import destination.

Consignor/ exporter: The party (business, individual, Exporter of Record, etc) sending or shipping the goods. The consignor is responsible for arranging the transportation and ensuring that the goods are delivered to the consignee.

Customs Broker: A licensed professional who helps businesses navigate the complexities of customs regulations and ensures that imported goods comply with all legal requirements. Customs brokers can assist with documentation, duty payments, and customs clearance.

Incoterms: International commercial terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international trade transactions. Common Incoterms include FOB (Free on Board), CIF (Cost, Insurance, and Freight), and DDP (Delivered at Place).

IOR contract: A contract that authorizes one party to act on behalf of another. In the context of IOR services, the IOR contract may be used to appoint a third party to handle customs and import-related responsibilities.

Classification: The process of categorizing goods according to a standardized system, such as the Harmonized System (HS) code. Proper classification is essential for determining duties and tariffs.

Who should use the Importer of Record to Vietnam?

The Importer of Record (IOR) service can be utilized by both sellers and buyers for various reasons due to the significant convenience it offers:

For Foreign Sellers (Exporters)

Small and Medium-Sized Enterprises (SMEs): SMEs looking to minimize investment in establishing a company in Vietnam should consider using an IOR. Setting up and maintaining a business in Vietnam involves extensive administrative procedures and costs. By using an IOR, these businesses can focus on their core activities like production and sales, while a professional handles the import documentation and processes, reducing risks such as documentation errors, delivery delays, and disputes.

Businesses New to the Vietnamese Market: Companies new to Vietnam and unfamiliar with its legal framework will benefit from an IOR. Vietnam’s customs regulations are complex and frequently change. Using IOR services allows businesses to quickly introduce their products to the Vietnamese market, facilitating market evaluation and business opportunities.

Businesses with Small Import Volumes: Companies importing small quantities of goods can avoid the expense and labor of warehousing by utilizing IOR services. This approach provides flexibility, allowing businesses to adjust import quantities without substantial investment in logistics infrastructure.

For Domestic Buyers (Importers)

Small Import Businesses: Local importers with limited customs experience should consider using IOR services. Handling customs procedures independently can be time-consuming and prone to errors. An IOR can help reduce personnel costs and other associated expenses, ensuring a smooth import process.

Businesses Importing High-Compliance Products: Companies dealing with goods that have stringent technical requirements (eg, civil cryptographic products) often require expert support to navigate complex customs procedures. Partnering with a professional IOR ensures that these goods meet quality and quantity standards, facilitating compliance with local regulations.

Businesses Seeking to Diversify Suppliers: Companies looking to work with multiple suppliers will find IOR services beneficial. An IOR can provide flexibility in selecting suppliers and managing various shipments, ensuring efficient and compliant import operations.

VNBG’s Importer of Record services

At VNBG, we have a branch called VNBG ACCESS which specializes in providing top-tier business processing and consulting services, tailored to meet the needs of companies looking to expand and operate in Vietnam. Our experienced team ensures that your business navigates the Vietnamese market efficiently and effectively.

Our Importer of Record (IOR) service offers comprehensive importation coverage, including product classification, document preparation, settlement of duties and taxes, customs clearance, and storage and delivery solutions. Leveraging our experienced team, highly knowledgeable in Vietnamese customs procedures, and adept at handling a diverse range of goods, our Importer of Record (IOR) service ensures your import process is swift, efficient, and fully compliant with all regulatory requirements.

In addition to our IOR services, we offer a wide range of logistics and import-export support services such as sourcing, warehousing, and freight forwarding. We also provide comprehensive business setup and operational support in Vietnam, including incorporation packages, recruitment, accounting, bookkeeping and compliance, tax advisory, location search, and document drafting.

Interested in expanding your business in Vietnam? Schedule a 15-minute consultation with our expert to learn more.