How to Go Global: What Is An IOR, and Why Do You Need One?

If you think moving mountains is a tall order, you probably haven’t explored the maze of global tech deployment.

International trade is complex, with various moving parts and country-specific provisions. Staying abreast of political developments, changes in customs requirements, and ensuring logistical transparency is nearly impossible for a company to maintain in-house. A trusted Importer of Record (IOR) can streamline the deployment of IT hardware.

Here we explore the fundamentals of an IOR, how they work, and why using an expert in the field will simplify global deployment.

Do You Know How to Ship to Any Global Destination?

International shipping is more than moving products from one country to another. It involves a thorough understanding of compliance policies affecting licenses and permits, which depends on the product type as well as the destination county. For example, to import IT hardware into India, you require a BIS certification, which in itself is highly nuanced and contextual. This is where a trusted business partner can empower you and enhance your supply chain. A professional IOR’s job is to streamline import compliance, ensure customs clearance, and get your goods to the final destination on time.

What is an IOR?

No matter the contents, importing products into any country requires an Importer of Record (IOR). The IOR is responsible for ensuring that the goods fall within legal parameters following the laws and regulations of the destination country. Any mistake can result in stuck shipments, increased costs, impacted timelines, and seized goods.  An IOR is also the legal entity listed on the shipping documentation, which takes on all audit, financial, and reporting risks from an import and customs perspective. The IOR requires a local business entity and specific authorizations. As such, the IOR is subject to enforced compliance within that territory. This includes inspection, documentation audits, monetary penalties, civil penalties, criminal penalties, and investigations. Some government agencies, such as the Environmental Protection Agency and the Food and Drug Administration, can overrule the IOR and deny entry to imported goods if they believe they may pose a threat.

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Importer of Record Documentation Responsibilities

When importing goods, you must comply with the customs requirements of the destination country. The most common documentation requirements include the following:

• Product classification – this will detail the type and value of goods being imported,
• Import and export licenses – proof that you have permission to import/export goods,
• Permits – specific documentation relating to your importing activities,
• Duties and taxes – when paying associated fees, taxes or duties, the associated paperwork will need to be filled out,
• Power of Attorney (POA) – documentation that appoints a POA to take on legal responsibilities, acting on behalf of the importer of record when they are not on site.

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Why Would I Need an IOR?

Going down as the importer of any goods comes with significant personal and business risks. Combined with various compliance regulations associated with IT hardware, it becomes an onerous task to ensure that you are up to date with country-specific customs requirements. These import requirements are deliberately demanding, ever-changing, and depend on the imported commodities, which will differ by brand and function of hardware.

The IOR must be a locally registered entity. Online service providers, such as software vendors or cloud services, may not have a local entity in the destination country to import their goods. This is a similar sentiment to data centers with clients needing to import goods to these facilities. Without a registered importing entity, your gear will not pass customs and will not enter the country. However, in instances where there is a local entity, it is still not an easy feat. Acting as an IOR can result in Permanent Establishment risk affecting taxation in the destination country.

These various risks could be anything from increased costs through fines or miscalculated duties and taxes, to the complete removal of your importing license and closure of the importing entity. On top of this, an audit and investigation can take place at any time for up to ten years from the date of importation. Overall, the risks facing your business will impact your bottom line as well as your reputation.

The benefits of keeping something as complex and high-risk as import compliance and IOR duties in-house are limited. Training a team and keeping them up to date on the requirements and intricacies of international customs in multiple countries takes significant resources. Additionally, expecting a team to master this specialist and high-risk area in a company whose specialty lies elsewhere is a big ask for even the brightest minds. The risk of stuck or even seized shipments warrants working with a specialist to ensure risk-free international shipping.

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The Risks Associated with Acting as the IOR

Any failure to comply with the import destination laws and regulations will result in:

• Seizure and disposal of shipment.
• Forced return of shipment.
• Fines/penalties if the value of the goods is incorrectly declared.
• Delays that affect essential deadlines and engineering teams.
• Major storage costs.
• These consequences could apply for up to 10 years.

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Dual-use Challenges

Tech equipment, specifically data center networking equipment, is one of the most highly regulated product types for import compliance. This is due to its tendency to be “dual-use.” Dual-use goods are items that can be used both for civilian and military applications. A thorough understanding of the compliance requirements is necessary when deploying these goods. Any mistake or non-compliance can have severe implications for you and your business.

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Central Procurement Versus In-country Procurement

While it may seem to be an easy solution, sourcing products in-country can work out to be more expensive. It can also be challenging to source the correct products and volumes required. Some companies have brand loyalty agreements or even preferences that need companies to use specific hardware products across the globe. Also, impacts on the global supply chain, such as the chip shortage, justify central procurement to ensure you receive the correct volumes of goods.

Some benefits of central procurement include:

• Financial: The client is subject to local taxation, which often cannot be planned for, while an IOR like TecEx ensures that you are quoted upfront on all duties and taxes before you even begin to ship.
• Compliance: Certain country restrictions may impose additional tariffs on certain goods and restrictions governing the origin of the goods imported into the country, and potential brand restrictions may apply. For example, refurbished or second-hand products may be prohibited in certain territories or require additional compliance documentation. TecEx knows to provide these details upfront, so there are no hidden costs. We also offer central staging opportunities to consolidate shipments, repackaging if required, and collation of any additional compliance documentation.
• In-country: When no local entity exists, other influencing factors, such as potential language barriers, may prevent a client from sourcing the correct material in-country. TecEx has in-country teams ready to assist in over 200 destinations.

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Why Should I Use a Professional IOR Service?

• Mitigate your import risks.
• Deliver your business requirements without needing to become an import compliance specialist.
• Fulfill a client’s DDP (Delivered Duty Paid) requests without risk or responsibility.
• Mitigate Permanent Establishment risk (revenue tax risk)
• Enjoy risk-free, professionally handled, and efficient shipping.

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TecEx’s Oliver Nouwens discusses the difference between an IOR and a carrier.

What is EOR?

Like an IOR, the Exporter of Record (EOR) fulfills the same service but applies to exports. The EOR is the legal entity listed on all export documentation and has the necessary licenses and registrations.

The Supply Chain Solution

Appointing a specialist IOR ensures a resilient supply chain. The role of the IOR is to maintain compliance and ensure that the deployment runs smoothly, from pick-up to final delivery.

Assigning TecEx as the IOR ensures first-time customs clearance and transparent project management of the movement of your goods across the world. TecEx will streamline your procurement team’s administrative process and open central procurement opportunities. In doing so, we significantly decreased your or your clients’ administrative burden, removing the need for multiple invoices and replacing them with one comprehensive invoice. We take on all the responsibility for the shipment, pay the duties and taxes, ensure all compliance requirements are met, source documents, and handle final-mile delivery. Let TecEx move the mountain of global deployment for you.

In international shipping and logistics, we are the global leader in import compliance. Contact us today.