What is an Importer of Record? Definitions & FAQs

When shipping goods internationally, you must assign an Importer of Record (IOR) to your shipment. An Importer of Record is an entity (typically a business) responsible for ensuring that the goods you’re looking to import comply with all customs, tariffs, and legal requirements of the country you’re shipping into. Depending on the specifics of your shipment (including where you’re shipping from, where you’re shipping to, and what you’re shipping), you have options on who can be the IOR.

Choosing who acts as the IOR for your shipment is critical. During customs clearance, customs officials evaluate the Importer of Record as one of the most crucial pieces of information. Customs officers want to understand who is responsible for the imported goods, whether or not they are eligible to import, their import history, and other criteria. In some regions, like Western Europe,  requirements are more lenient, but others, like South America, have very strict requirements.

Many businesses will work with IOR service providers to give their shipment the best chance of clearing customs – but working with an IOR provider who will act as the IOR for your shipment isn’t always necessary and sometimes isn’t even an option (like when you’re shipping into Brazil). More than that, there are drawbacks to letting a third party act as the IOR.

To help you make the right choice when deciding who will be the IOR for your shipment, this post covers the following:

• Who can act as the Importer of Record

• Why businesses hire IOR service providers (and when they’re better off not using one)

• Types of IOR services available

• How FGX works as an IOR provider and consultant for IT shipping (which you can learn more about here)

A quick note about the nuances of international shipping: We aimed to make this post helpful for several types of decision-makers who want to understand the role of an IOR in helping a shipment clear customs. But there are significant nuances to global trade and international shipping. Variables—including what you’re shipping and the shipment’s country of origin—change what is the best approach for your shipment. When possible, we recommend you contact an expert in your industry. Please reach out if you’re interested in learning more, or continue reading to learn more about the different ways of handling the importing of goods.

Who Can Be the Importer of Record on a Shipment?

The short answer here is that it depends.

When evaluating who can be the IOR on your shipment, you want to factor in where you’re shipping from, where you’re shipping to, and who can and who is willing to bear the legal responsibility attached to being the IOR. 

This means who can act as the IOR isn’t so straightforward.

Let’s say you’re shipping routers into Vietnam. It might seem like it would make sense that the receiver (often referred to as the consignee) would act as the IOR for the shipment.

But the Importer of Record doesn’t have to be the consignee and in fact, sometimes it can’t be the consignee.

Let’s look at two different examples.

1. Say you want to ship servers to your data centers in India. You might think of listing the receiving data center as the IOR. But data centers often don’t want the liability of acting as an IOR for that shipment, especially in IT, where the customs requirements are more complex. (And sometimes data centers don’t even have the legal right to act as an importer.) If whoever is receiving the goods can’t or won’t act as the IOR, then you need to assign a different entity as the IOR – this can mean reaching out to an IOR service or customs broker (more on this below). 
   
   

2. Let’s say you’re a US-based division in a multi-national business that’s shipping routers into Egypt and you have an office there and you want your business entity within Egypt to act as the IOR. Egypt requires that the entity serving as your shipment’s IOR be majority-owned by Egyptian citizens. So, if your business in Egypt is not majority-owned by Egyptian citizens, it can’t act as the IOR.

These are two broad examples of what one must consider when assigning an IOR to their shipment. Again, these rules change by country and are based on not just where you’re shipping to, but also where the shipment is coming from. Navigating a country’s import process can be complicated and time-consuming, which brings us to our next section – using Importer of Record services.

Why Businesses Hire Importer of Record Services (and When You May Not Need One)

Many businesses turn to IOR providers to help get their shipments through customs*. An IOR provider will act as the IOR for your shipment. So, if you’re shipping something to India, your IOR service provider will be or will coordinate with an importing eligible in-country business entity. 

A good IOR provider will handle all the compliance checks, duties/taxes, import fees, and questions that arise in the process of getting your shipment approved by customs authorities and into your destination country. The best IOR service providers will clearly understand what you’re shipping (which helps with product valuation, classification, and compliance), where you’re shipping from, and the country you’re shipping to.

A quick note: Certain countries don’t allow a third party to act as your IOR, for example, Brazil. If you need to import IT equipment into Brazil, FGX can help you. We can assess what you need to ship and offer alternative strategies for importing your gear—legally and quickly—into Brazil. We can also manage the entire import process while making sure you’re still the IOR for your shipment.

Here are the main reasons why you may want to (or need to) work with an IOR service:

• You don’t have a business entity in the country you’re shipping to. As mentioned above, an IOR must be an established entity within your destination country that can legally act as an importer. At FGX, we have clients that are startups or newer businesses that want to ship IT equipment for the first time into countries where they don’t have a business entity set up. This is especially common for “closed markets” (i.e., a market trying to limit international competition) like Brazil, India, China, Mexico, etc.)
  
  At FGX, we ship IT infrastructure to over 170+ countries. When looking for an IOR service, ensure they can ship successfully to your target country and have a proven shipping record.
  
  

• You want a turnkey solution. Even if you have a business entity in the country you’re shipping to, it may not be in your best interest (when conducting a cost-benefit analysis) to be your shipment’s IOR. Being an IOR on a shipment can get complicated and nuanced, depending on what you’re shipping and where you’re shipping to. You may not have the time or resources to act as an IOR and ensure customs compliance. For example, shipping network routers to Hong Kong entails preparing dozens of legal documentation prior to your shipment being exported.

Here’s a non-exhaustive list of what an IOR is responsible for: product classification and compliance, attaining appropriate import licenses and import permits, payment of duties/fees/taxes (and showing the right paperwork that attests to proper payment), handling potential future audits, and more. Businesses will seek an IOR service for a turnkey solution to avoid the headache of doing these tasks themselves (and potentially making a critical mistake that leads to denied entry and potential monetary penalties).

But, having another business entity serve as your shipment’s IOR has drawbacks. When you’re not the IOR for your shipment, the entry documents and import documentation won’t be in your business’s name which will reduce the amount of financial and operational flexibility your organization may have around the imported assets.

If you’re not the IOR for your shipment:

• You can’t* reclaim the GST (Goods and Services Tax) and VAT (Value-Added Tax) of that shipment. These are taxes accrued during the shipping process that normally can be reclaimed by a business, but these taxes become a sunk cost if you’re not the IOR on your shipment.
  
  *Some providers will offer to reclaim your import VAT, but they don’t disclose that you’ll have to enter into a fiduciary, contractual relationship where you give up a large % of the VAT (up to 50%) of the amount you’re reclaiming and they don’t guarantee that any of the claims will be awarded at all. At FGX, we think a better practice is to help businesses use their own entities to act as the IOR in the country they’re shipping to so that they can reclaim all of their VAT, not just a portion.

• You can’t easily manage or benefit from certain accounting practices, like asset depreciation. For example, you ship servers into India using an IOR provider. Your business in India won’t be able to depreciate the goods because they weren’t the importer.

Another example is that you can’t easily make international monetary transfers. Let’s say you buy servers in the US and want to ship them to China. You have a valid business entity in China that can theoretically act as the IOR, but you don’t have the time or resources to handle the IOR duties. So, you work with an IOR broker. But down the line, you want to transfer money from your business entity in China to your US business or vendor for the goods, but the Chinese bank won’t let you because the import documents don’t show your business entity as the IOR in China.

Finally, there are several types of IOR services and providers, which we cover in the section below. And just because you find an IOR service doesn’t mean they’re personally going to oversee shipment preparation, pre-customs inspection, freight forwarding, product valuation, and last-mile delivery or that they will be able to tell you confidently – before the shipment has even started – if your goods will make it through customs. It’s all too common for IOR vendors to offer little to no insurance on the shipment, give customers wide-variance lead times on when the shipment will clear customs (if it clears at all), and to not be upfront with how much tax or duties will be charged on the imported goods. At FGX, many of our customers find us after dealing with bad experiences, such as: getting their shipment denied at customs, having their shipment arrive into its destination country far behind schedule, or paying a lot more than they expected in broker fees.

Of course, this doesn’t mean you shouldn’t use an IOR provider/broker (as we covered above, sometimes it’s the only option, and sometimes it’s the right option). Instead, we recommend treating IOR services as a tool in your logistics and shipping strategies, instead of a one-size-fits-all solution. 

That’s how we view IOR services at FGX. When a client comes to us and wants to utilise IOR services, we take an integrated and consultative approach to make sure the cost-benefit analysis shows that using an IOR provider is the best decision for that client. This means looking at the shipment in front of us as well as how the client’s business will use those goods in the future. If we can get your shipment into your target country without having to charge you for IOR services, then that’s the solution we’re going to recommend. 

Many multinational enterprises trust our team at FGX to deliver best-in-class, seamless, global IT shipping solutions for their infrastructure. We provide coverage to 174 countries with a 99.98% customs clearance and delivery success rate, even to challenging countries like Brazil and China. Please reach out if you’re interested in learning more.

Types of IOR Services

A significant challenge in choosing IOR as a service is understanding the different types of IOR vendors and what they’re offering.

Generally speaking, when you’re looking up IOR services for your shipment, you’re going to find one of these three types:

• IOR brokers. An IOR broker typically works by contacting in-market IOR companies. So you reach out to an IOR broker, requesting help with getting an IOR for your shipment. They’ll contact in-market IOR companies (that is, IOR companies that operate within the country you want to ship to), and then they, more or less, work as a middleman between that in-market IOR company and you.
  
  But generally speaking, you should only consider using an IOR broker if you’re confident that you understand the duties and regulations associated with your shipment, including any potential drawback to using a third-party IOR. This is because IOR brokers typically just request relevant information from you and then hand it off to an in-country IOR. This is also inefficient. Because if the in-market IOR needs supporting documents from you, they’ll have to ask the broker, and the broker will ask you, creating a game of telephone between three parties.
  
  Reaching out directly to the in-market IOR companies would be cheaper and potentially more efficient. This can be a good solution for some shipments, but you still have the drawbacks of having a third-party act as an IOR, which we discussed above. Plus, for larger companies, managing dozens of in-market vendor relationships is a significant time strain on their operations – you’re tasked with managing different IORs which means dealing with different time zones, points of contact, issuing payments in their currency, and other operational challenges.
  
  

• Freight forwarder + IOR services. You can work with freight forwarders who handle your types of shipments and also offer IOR services. These freight forwarders tend to have existing relationships with the IOR brokers we discussed above. 
  
  Unlike working with just an IOR broker, you do have communication with the freight forwarder, who is the party responsible for getting your shipment from a warehouse into customs.
  
  But think of most freight forwarders as similar to major shipping companies like FedEx or DHL. They deal in bulk quantities of shipments to make a profit. They’re not experts in shipping any one kind of commodity to any one country, they mostly want to handle transportation and warehousing. As a result, they’re not interested in ensuring your shipment passes through customs. They generally will just contact an IOR broker themselves who will serve as an IOR for your shipment and play telephone for you, and won’t offer any strategic guidance or even provide any sort of insight or insurance on whether or not your shipment will clear customs.
  
  Custom clearance is critical to a shipment and is one of the key metrics by which you can evaluate an IOR provider.  In 2022 and 2023, across thousands of our clients’ shipments, FGX had a 100% success rate clearing customs.
  
  

• Using IOR services from your supplier. When you purchase goods from a VAR or your supplier, you might have the option of asking them to also handle fulfillment of your goods to your destination. If this is the case, your VAR will be the one figuring out how to get your desired hardware in the country. This could mean they’re working with an in-market VAR (so your VAR is now also bringing in another VAR into the transaction) or they could be shipping your goods into your destination country and working with an IOR service (as discussed above).
  
  However, both of these options can lead to detrimental business outcomes, including higher shipping costs and the loss of operational opportunities, such as consolidated material handling (asset tagging, configuration, rack and stack), increased buying power, greater SKU availability, detailed tracking, low variance timelines, etc.

Using FGX as an IOR Expert and Consultant

At FGX, we provide logistics and shipping services – including IOR services – to help companies send shipments to their IT infrastructure all over the world. 

But before recommending that you use our services, we look at your goals and figure out what are the best tools for the job. 

When we recommend that you use our IOR services, we can offer to:

• Act as the IOR for your shipment. If you reach out to us because you need an IOR service for your upcoming shipment, we’re going to evaluate your shipment and confirm that that’s truly the best option. This means we’re going to discuss the advantages and drawbacks of this solution with you. This transparency is especially important because of how high value and mission critical IT hardware is, which impacts customs clearance success and the impact of the goods on your balance sheets.

• Help you act as the IOR of your shipment (while still executing all associated IOR processes on your behalf). Whenever possible, it’s generally in your business’s best interest to act as the IOR on your shipment. The problem is 1) sometimes you can’t as you don’t have an established business entity in the country you’re shipping to or 2) you don’t have the time or resources to efficiently handle all the tasks an IOR has to take care of. 
  
  At FGX, we make it possible for our clients to reap the benefits of legally acting as their own IOR (such as reclaiming VAT), without having to deal with the headaches of international shipping (such as finding and filling out the right forms, getting the right licenses, double checking the freight documentation, hiring any relevant subcontractors, and more). 
  
  We have helped our clients act as their own IOR in over 60 markets (and we’re always adding more), where they get the benefits of acting as the IOR without any of the operational and customs clearance concerns. 

Regardless of whether FGX or your business is listed as the responsible party on your IOR documentation, there are some constants to what FGX offers, such as:

• Product compliance, e.g., what’s needed for X product to be imported

• Product valuation 

• Assigning international trade codes  

• Assessing and paying any fees/import duties/taxes on your behalf

• Handling any unexpected complications that arise during shipments, like customs clearance

• Obtaining permits and licences, e.g. HKTID permits in Hong Kong or wireless permits in India

Plus, because we take a fully integrated approach to international shipping, all of our customers get the following:

• Direct air freight shipments. We don’t compromise the shipment’s integrity – or risk delays or mishandling – by working with a hub-and-spoke logistics model. We ship only through direct air freight.
  
  

• Dedicated delivery. When your goods are at the last-mile delivery, they’re delivered by a dedicated shipment, not as part of a delivery route that has to make multiple stops for other clients. 
  
  

• We handle all relevant paperwork, permits, and licenses. This includes encryption permits for firewalls, routes to electronic conformity documents for PDUs, and all country-specific licenses and permits.
  
  

• Insurance on your shipments. If something goes wrong, your coverage won’t be voided and you’ll get the full insurable value of your hardware back.

It’s not about shipping servers, it’s about delivering better business results with IT. When multinational enterprise companies work with FGX, they navigate their global IT logistics with confidence. Please reach out if you’re interested in learning more.

Definitions & FAQs

Can the Shipper be the IOR?

When answering if a shipper can be the IOR, we must clarify who the shipper is. If, for example, you’ve bought goods that you need to export out of one country and into another, then you can be the IOR as long as you’re an established business entity in your destination country with the right to import.

Similarly, if you’re buying goods from suppliers, value-added retailers (VARs), or in-market sellers, they can serve as the IOR if they’re operating as an established business entity in the country they’re shipping to.

Often, suppliers and VARs – those that are not necessarily operating within the same market that you want to ship to – will work with IOR brokers to offer you IOR services on your shipment, though this can be costly, and the quality control is hard to verify.

What are the Responsibilities of the Importer of Record?

Every shipment must have an Importer of Record, and the responsibilities of the IOR include preparing the shipment so it can clear customs and arrive in its destination country. The specific requirements will depend on what you’re shipping and where. 

But generally, the IOR is responsible for things such as:

• Product compliance, e.g., what’s needed for X product to be imported

• Product valuation 

• Assigning international trade codes  

• Assessing and paying any fees/import duties/taxes on your behalf

• Handling any unexpected complications that arise during shipments, like customs clearance

• Obtaining permits and licences, e.g. HKTID permits in Hong Kong or wireless permits in India

What’s the Difference between IOR and Consignee?

The difference between an IOR and a consignee comes down to their respective duties.

The IOR is responsible for making sure all accurate documentation has been kept regarding the shipment – so that it can clear customs. The shipment at this stage is their legal responsibility. 

The consignee is responsible for receiving the shipment once it has been cleared by customs. 

The IOR and consignee can be the same entity but do not have to be.