5 Facts About Custom Bonds That Every Trader Should Know

Custom bonds are a legal contract between an importer, a CBP (Customs and Bond Protection), and a surety company that guarantees the importer obeying the customs regulations. CBP is paid for the provided importer duties, fines and taxes. In this article, we’ll explore the most important facts about custom bonds that every trader must know.

Types Of Custom Bonds

Broadly speaking, there are two types of customs bonds that you as a trader must know about.

1. Single Transaction Bonds

Single transaction bonds, also known as single entry bonds, guarantees payment to the customs office for the required duties and taxes to import goods in a country. A single transaction bond is only applicable for one import transaction. The cost of a single entry bond is known to be between USD 30 to USD 40. It further depends on the commodity.

2. Continuous Customs Bonds

A continuous custom bond is important for large shipments and helps in covering multiple entries made by an importer at different entry ports. This bond is valid for one year from the date it is issued.

An importer has to pay anywhere between USD 50,000. Or, they must pay 10% of the tax and fees accrued over the last year as it is the minimum customs bond cost of a continuous customs bond.

Important Facts About Types Of Custom Bonds

Customs bonds are important in the importing process, and there are five important details about these bonds that every trader should know.

1 . Custom Bonds Do Not Provide Coverage

Custom bonds serve a unique function. They are a legal contract between an importer, a CBP and the surety company. This document guarantees payment to the CBP for their services. If the payment is not made, the surety company that issued the bond fulfils it.

Thus, this document acts as a third-party agreement. Customs bonds prevent a chance of loss for the CPB as they are guaranteed fees for their services. These bonds help in running the import/export process smoothly.

2. A Customs Bond Is Not Optional

A customs bond is mandatory for importing goods. For example, suppose you want to import goods in the US; you will need a US customs bond to import your products in the country. It is important because the US customs and border protection requires this document to approve the imported goods.

3 . A Continuous Bond Does Not Expire

Once a continuous customs bond is with the CBP, they are known to be active for one year from the date it was issued. A customs bond is important for importers who have large shipments.

However, it does not expire as long as the client pays the required amount for each renewal. This bond is automatically renewed if it is not cancelled. It does not get renewed if either of the three parties involved (Importer, Surety company, CBP) terminates it.

4. There Maybe Pre-Existing Custom Bonds

If you regularly import goods in a country, say the US, you might have a continuous customs bond. It represents itself as a line item to your logistics service provider. This type of bond is not usually owned by importers who import small amounts of goods.

However, this is important for an importer who regularly welcomes large shipments regularly. The minimum customs bond cost of a continuous bond is more expensive than a single entry bond.

5. Surety Companies Sell Custom Bonds

You can purchase bonds from a legal customs broker or a forwarding agent, but they are expensive. Some surety agencies provide customs bonds to consumers at low prices. Buying from surety companies will save you some money.

What Else Can You Tell Me About Custom Bonds?

Custom bonds are important in the import/export process. That’s why you should make sure you know such important facts as the customs bond cost before entering the domain. Bonds like continuous bonds are very important for importers to run the import/export process smoothly. US customs bond and protection require this document to approve the cargo in the country.

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