Knowing your Incoterms can help you more reliably project costs and establish your product pricing. Matt Parrott, Deringer’s Director of Transportation, provides insight regarding the differences between DDP (Delivered Duty Paid) and DAP (Delivered at Place).
Under DDP, the Buyer is only responsible for unloading. The Seller is responsible for everything else including packing, labeling, freight, Customs clearance, duties and taxes. Conversely, under DAP, the buyer is responsible for not only the unloading, but the Customs clearance, duties, and taxes as well.
If you’re the seller under DDP or the buyer under DAP, you will need to be familiar with the Customs clearance and duties and taxes of the importing country. For more than 160 countries around the world, taxes may include value-added tax (VAT). At an estimated 20% to 30%, VAT could change dramatically impact your product pricing.