May 23, 2019 by Andrew Minalto - 42 Comments

WARNING: The DDP China Alibaba scam is REAL!

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Delivered Duty Paid

DDP: Delivered Duty Paid! It sounds like a dream come true for so many Amazon sellers importing products from China! Isn’t it great that you can pay a slightly higher price for the product and get it delivered to you with all taxes already paid for? Perfect! Or… is it?

I’m afraid that when it comes to offers like these, we always come back to the age-old truth that if it looks too good to be true, it probably is. And DDP is no exception.

If you’re importing goods from China using Alibaba.com to sell on Amazon, eBay or anywhere else, you should read this article very carefully, because the chances are you’re currently breaching the law and could be facing severe problems due to tax evasion.

Sounds terrifying? I agree. So, let’s clear the air once and for all and learn about DDP Incoterms and how you CAN and CAN’T use it in your importing business.

DDP Explained

As I have already said, DDP stands for Delivered Duty Paid, and in simple terms, it means that the SELLER covers ALL the costs associated with the goods and the shipment of your order from their door to yours, which includes:

  • Cost of goods
  • Exporting duties/fees
  • Shipping
  • Import duties/fees/VAT/Customs clearance
  • Delivery to the specified address

Sounds great, right? Yes, it does! It’s a great, hassle-free way to import goods from abroad and not have to worry about any of the problems usually associated with importing from China.

Another huge advantage is that you eliminate all the guesswork from the landed cost of the items you buy. The price you pay the supplier is the final price and will be the cost of your landed goods.

This makes it super easy to make P/L calculations, especially for Amazon FBA sellers who have to take into account Amazon seller fees and FBA fees to get their numbers right.

So far, so good—and no signs of any scams! Yes, DDP terms are perfectly legit and used a lot in B2B transactions around the world. The problem is that many Chinese suppliers have a different understanding of what DDP stands for, so they use it illegally. Here’s how…

How DDP Becomes a Tax Evasion Scheme When Importing Goods From China!

Tax Evasion DDP

Here’s how it works: Your supplier will tell you that they can send you the goods via DDP terms for X amount of money, but in reality, they DON’T clear the goods through Customs for your shipment! What happens is your goods are smuggled into the EU without paying all the proper taxes (import duty and VAT).

And they achieve this in various ways:

1) If it’s a tiny package, they will try to pass it through Customs by putting a deficient value on the Customs declaration. If you get caught by Customs and asked to pay taxes, the supplier will come up with some stupid excuse about why it happened, but you will still have to cover those taxes.

2) They will send your goods via ship or train as part of a more significant shipment, allowing them to clear the goods through Customs while paying minimal taxes due to the incorrect classification.

3) They somehow manage to smuggle your goods into the EU without declaring anything. I have heard that the new train shipping method is used extensively for this. I don’t know the exact mechanics behind how they do it, but again, it doesn’t matter. If the appropriate taxes are not paid, you’re essentially taking part in a tax evasion crime and it will come back to bite you.

EU Border Customs

I hope that this information opens your eyes to the potential legal trouble that comes with accepting DDP terms when importing from China.

In my opinion, it is not the smartest move to make. In most cases, you will still receive your goods, but you won’t have any documents or proof to show that the correct taxes have been paid on them. This means you can’t even correctly document these orders/stock on your books! And if HMRC does check your books, you will certainly be in trouble.

There’s a small chance that some Chinese suppliers use legit DDP shipping terms. Perhaps they have a contract in place with the courier/shipping company to make this happen. It is possible, yes, but in those cases, they won’t have any problem showing you the proof/documents that the correct taxes have been paid for the goods you are importing (and you will need these for accounting anyways).

However, it will be rare that you will find genuine DDP terms on Alibaba.com. A super simple way to tell that supplier is NOT offering genuine DDP terms is to look at the price. For example:

If the cost of goods with the “normal” shipping is £3000, but they offer you DDP terms for an additional £200 (total £3200), it’s 100% a clear sign that it is a scam!

The VAT alone on a £3000 order will be £600 (at 20%), PLUS there’s import duty, Customs clearance fees, etc. The additional cost should be a minimum of 25% of the total (£750 in this example).

It’s just common sense; you can’t waive the VAT on imported goods because you use DDP terms, that’s not how it works.

Sometimes suppliers are smart and will add a premium of say 25% or 30% if you choose DDP terms—but they still won’t pay the taxes with it! They still try to smuggle the goods in and keep the difference for themselves.

So, what can you do? What is the solution to this problem? In which cases can we still use DPP terms to make importing life easier? Let’s find out…

Conclusion

Freight Forwarder

My advice is to completely stay away from using DDP terms when dealing with suppliers on Alibaba.com.

It’s not worth the risk when you know that 99%+ of suppliers will scam you this way. I’m sure that Chinese suppliers don’t even see this as a scam—they think that they’re helping us! Just like they do when they continuously undervalue smaller shipments so that they get them through Customs without fees.

The ONLY time that DDP terms should be used is with US-based suppliers and legit companies who have contracts in place with the courier companies. These people will be happy to provide you with all the appropriate paperwork for all the taxes paid on your goods.

For example, Amazon offers DDP terms when you buy from Europe on the Amazon.com website. eBay also provides a very similar feature via their Global Shipping program (which also has plenty of weaknesses when used across the EU).

If you plan on importing goods from China, Alibaba.com, or any other website, stick with simple shipping terms where you are in control of how your products are processed through Customs:

1) With small shipments, it will usually be a courier company.
2) With larger purchases, you will want to use sea freight or air freight handled by a freight-forwarding company (such as Woodland Group).

As long as you ask the supplier to write down the correct VALUE on the Customs declaration and get a proper invoice from them showing all the goods, the amount paid, etc., you will have no problems clearing your goods through Customs, paying the taxes and getting the relevant documents that prove those payments were made.

Have you been using DDP terms and been scammed? I would like to hear your story! Leave your comment or question below the post, and I will personally get back to you within 24h, Monday to Friday.


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42 Comments
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  1. Hi Andrew,
    Thanks for the brilliant information you provide. You seem to have a great handle on this complicated subject.
    I was hoping you could clarify a couple of points as I am trying to get my head around shipping and import taxes (for some reason I seem to be going around in circles in my head). Let me see if I’ve understood correctly…

    1. Am I correct in saying that for goods sent express/courier, eg. Fedex or Alibaba Parcels, there is no need for a freight forwarder as the courier clears the customs?
    2. Am I correct in saying that for goods sent express, either via Alibaba Parcels or Fedex, it best to ask for DAP terms? If that is the case, will you get an invoice from the carrier to settle the duties when they arrive? Will the goods still be delivered to the address specified, eg. your home, office or amazon and a customs receipt provided by the courier company?
    3. For an order that is DAP and shipped express, is it just a question of paying the supplier as per the contract and then paying the courier company when prompted?
    4. As a tangent to question 2, if you get a DDP quote should you assume it is DAP? Effectively, assume it pays for shipping but the customs hasn’t actually been paid correctly? In this case could you get a request for customs payment anyway? As you said above, if you don’t pay the customs when prompted I guess you won’t get your goods.
    6. And finally, for anything that is not sent via Express, should you use a freight forwarding company? Should we tell Woodland that you have recommended them?

    P.S Any plans for any more youtube videos?

    Thank you again!
    Alex

    1. Andrew Minalto

      Hi Alex,

      Thanks for your comment and questions. Will try to answer them one by one:

      1) Yes, that is correct.

      2) Yes. Yes, the courier will invoice you for VAT, import duties and clearance fee. Yes, to your address, but not to Amazon directly, as Amazon can’t act as the importer for your shipment.

      3) Yes, correct. Just make sure the supplier shows REAL/FULL value of goods on the invoice and customs form.

      4) You should avoid DDP quotes altogether. Just say you’re not interested in DDP.

      5) Yes & Thank you! 🙂

      Hope this helps Alex!
      Andrew

      1. Hi Andrew,
        Thank you for taking the time to respond. Frankly up to this point I had been requesting DDP quotes thinking it was the easiest way, but you have really helped me understand why this is not a good idea.
        Alex

        1. Andrew Minalto

          You’re welcome Alex! 😉

  2. Hi Andrew,

    I want to drop ship leather dress shoes from China to Canada. I want to prepay all duties and import taxes for the end consumer. How do I go about this? Is there a way to prepay import duties and ship the product without showing an invoice price of what I paid the manufacturer for the product? I don’t want the end consumer knowing what I paid for the product. What can I do to ensure this while prepaying all duties?

    Thanks,
    Griffin

    1. Andrew Minalto

      Hi Griffin,

      Thanks for your comment.

      The only way to get this done is to open an account with a courier company (DHL, UPS etc.) who can then offer you such service, at an additional cost of course.

      Chances are that they will ask for decent minimum order number per month before they will even consider doing this.

      Thanks,
      Andrew

  3. Chris Arnfield

    Hi Andrew,
    I am one of your older customers from the eBay days.
    I have been importing from a couple of suppliers in China. I have started getting massive invoices from the courier companies, TNT and FedEx. All the documentation seems above board and stated correctly, including the amounts. My daughter-in-Law is an accountant and she says that as my contract details from the supplier state that the goods are to be sent under DDP, I should not be getting bills from the courier for customers duty and VAT, as they should have been paid by the supplier.
    Is that correct?
    I have gone back to an older supplier who I know was always honest. They told me upfront that I could pay a bit extra and they would organise the freight etc. under DDP with UPS. True to their word, the consignment took slightly longer as they organised the import etc.
    What do I do now with all these invoices from TNT and FedEx which I guess should have been dealt with by the suppliers?

    Regards

    Chris

    1. Andrew Minalto

      Hi Chris,

      Thanks for your comment.

      Yes, in theory, that’s true, but as you did learn from my article, 99% of Chinese suppliers are scamming the system and selling the DDP as an easy up-sell, while smuggling goods into the EU without paying proper taxes.

      What can you do with those invoices?

      a) you can contact suppliers and ask them to cover them for you. Which will never happen.

      b) simply pay those invoices by yourself.

      Either way, you’re the one who will have to pay them as you’re the importer and you’re responsible for this, not your supplier.

      And of course, in the future, don’t fall for this scam again and don’t use DDP terms when importing from China.

      Thanks,
      Andrew

  4. Hi Andrew!

    This article has been very helpful for clearing some of the confusion surrounding DDP terms vs FF.
    We are arranging our first shipment from China. I’m curious about what you think:

    1. FF quote is 900usd by sea plus 4% duty plus 25% tariff (Trump list), that totals to about 2300usd for import.
    2. DDP term from supplier is 780usd including everything. That is about 16% of the value of goods.

    According to what you said it is a red flag, as its nowhere near the duty alone.
    Is that right? The supplier says that 99% of their clients use DDP term. The quote from the FF is so high with this new tariff, that I want the DDP to be legit..

    Thanks for your time!
    Kriszta

    1. Andrew Minalto

      Hi Kriszta,

      Thanks for your comment.

      Yes, 100% red flag. It simply can’t be legit. That is – if you want to stay within the line of law and pay all the taxes that you need to pay.

      Suppliers will tell you all kinds of stories, just to get the order from you. Don’t take their advice, especially when it comes to taxes!

      Thanks,
      Andrew

  5. Hi Andrew
    Thank you for great article.
    I am new to Amazon FBA business and I am thinking to order my product from alibaba. If I tell them I want to use UPS/FEDEX etc. Will these cause trouble and smuggle the product if I use Delivery Duty Paid method (DDP). Also using this method will I be required to provide to the UK customs any paper like VAT paper or anything as I am new to the business and have not sold anything before. I think I have seen somewhere that I will be required VAT form and confused about it. I did some research and nothing show the solve. thank you in advance.

    1. Andrew Minalto

      Hi Said,

      Thanks for your comment.

      Don’t use DDP terms, forget about them. If the order/package is small, yes, ask the supplier to get you a quote for express/courier shipping and add it to the final invoice. Also, make sure to ask them to put the REAL/FULL value of the goods on the Customs declaration and commercial invoice. To be 100% safe your goods get properly declared through customs, once you have the tracking number and see that shipment has arrived in the UK, you can contact the courier company and inform them that Customs clearance procedure will be necessary.

      No, you don’t need to be VAT registered to import from China, that’s a lie.

      Andrew

  6. Hi,

    Just came across this as I used DDP for my supplier and the total ddp fee (shipping, duty and vat) was less than what it should’ve been. So they under declared the value. I didn’t know any better at the time, so not sure what to do now that I know what happened.

    What should I do now? Do I contact HMRC and explain the situation, and will they know how much was paid and simply allow me to pay the remaining so it is correct?

    Please help, as I am quite worried.

    1. Andrew Minalto

      Hi Joe,

      Thanks for your comment.

      Yes, you need to contact HMRC, fill out a special form there to correct the issue and pay those taxes. There shouldn’t be any fines for doing this, as long as you show the initiative and contact them first.

      Thanks,
      Andrew

  7. Hi Andrew
    Great article !
    I am very new to importing. I wanted to order chiavari chairs for a wedding $17 each MOQ 50 which would equal to $850 they offered dpp shipping for $790 which sounds high considering is almost the same price as the chairs on top of that I would still pay customs and duty correct ?
    If I purchase the chairs in the USA each chair is around $49 with freight shipping cost. Would you recommend to just stick buying from an USA supplier ?

    Thanks !

    1. Andrew Minalto

      Hi Lucero,

      Thanks for your comment.

      50 pieces is not enough to import from China, forget about it.

      Find a good wholesaler in the US, who can give you a good discount on 50 chairs, hassle free.

      Thanks,
      Andrew

  8. Hey Andrew,

    I have just read your article, it is an amazing one.

    Now, I am about to start a collaboration with a chinese supplier from Alibaba to send my products in the US to be sold on Amazon.

    My Q for you is: for products worth 7000 $ they offer me shipping 455 $ DDP by sea… is this a scam ? … for me it seems one but just double check.

    Many thanks,
    Nick

    1. Andrew Minalto

      Hi Nick,

      Thanks for your comment.

      You can’t send goods directly from China to Amazon like that – Amazon can’t act as your importer.

      You need to use a freight forwarding company or Amazon FBA prep house so they can receive/import goods on your behalf and then send to Amazon.

      As for the quoted shipping cost itself – hard to say, it depends on the size of the shipment.

      Thanks,
      Andrew

  9. Hi Andrew, I am about to buy a small oven with the molds which do not exceed 46 kilos of weight together nor a meter apart in addition to its price is 379 dollars, I already asked the corresponding questions to the supplier in Alibaba, it has all the filters that you suggest to do business, however, at the time of asking for the proforma invoice to review all the details, before sending me the formal quotation he told me that he was sorry, that he changed the shipping price from $ 291 to $ 472. What would you do in this case? This factory has several profiles with differences basically in prices of the same product or years of experience in Alibaba … 6 – 2 years of experience, however it is the same brand and factory, why is this, can I trust? What do I do about the sudden change in shipping price, is it normal before proforma? I clearly want to use Trade assurence as a means of payment. If you can answer me it would be helpful.

    1. Andrew Minalto

      Hi Guillermo,

      Thanks for your comment.

      They can do whatever they want really… the real question is – do you really want to take all the risk buying just ONE unit of such an item?

      When you count in shipping, taxes and everything else, it would probably be cheaper and safer for you to buy that item locally. Alibaba is a B2B platform where people buy items in bulk, it’s not really suited for retail sales.

      Thanks,
      Andrew

  10. I saw a new product on Alibaba.com which interested me, the product itself was cheap to buy at around £2.20 each and with an order of around 240 of each product, they are advertising free shipping to the UK. So after reading what you’ve stated about some Chinese companies believing that they are doing you a favour should I stay clear of this offer ?? or should I go back to them and ask them to send me the goods via a more safer way of receiving goods ??

    Best regards

    Glen

    1. Andrew Minalto

      Hi Glen,

      Thanks for your comment.

      FREE shipping doesn’t necessarily mean that they’re using DDP terms. It could be just that – free shipping.

      You should contact them and ask about the shipping method they use. Most likely it will be a courier – then clearly state them that you want the REAL value to be
      shown on the invoice and Customs declaration, so that you can properly pay taxes when goods arrive in the UK.

      Thanks,
      Andrew

  11. Jae from Gorilla ROI

    Hey Andrew. It’s not uncommon that manufacturers from abroad will usually misunderstand some rule or regulation. But unfortunately, this doesn’t excuse anything. The problem magnifies when the manufacturer throws you, the client, under the bus.

    Btw, we’ve started listing our products on Amazon UK now. Wish us luck!

    1. Andrew Minalto

      I think they know EXACTLY what they’re doing – they have been doing this for many years with small packages sent via normal mail and now have “transferred” this knowledge to B2B orders as well.

      Good luck! 🙂

      1. Jae from Gorilla ROI

        Oh wow! So you really think they do know, huh? I was being optimistic and giving them too much credit then. Doing it repeatedly throughout the years is a big red flag. That really sucks.

        1. Does that mean that you have received goods for years via DDP without having any customs charges or any other problems ??

  12. Hi, I will be placing my first order. I will shipping via air express through my supplier. Should I ask my supplier to ship air express door to door? Or is all air express shipping door to door? Is there a difference in air express shipping DDP, DAP, etc? I keep hearing about the DDP scam with Alibaba suppliers, but not sure if that applies to air express shipping as well.

    1. Andrew Minalto

      Yes, in 99% cases EXPRESS means door to door.

      If your supplier offers DDP terms, with express, most likely they will under-value goods. In same rare cases they could have a genuine DDP contract in place with the DHL, but that’s very rare in China.

      How to know they’re trying to scam you? Simply ask for two quotes:

      1) One ex-works (EXW)
      2) One with DDP

      The DDP one should be at least 25% higher. If that’s not the case, they’re not offering you true DDP terms.

      Good thing with couriers though is that when you get a tracking number, you can contact them in advance, supply the real invoice to them so that they use that for Customs clearance and you can pay all the taxes properly.

      Thanks,
      Andrew

  13. Theresa Brown

    Thank you once again for a very informative post. We are hoping to make our first order very soon, so it came at a great time. So, am I right in saying we should ask for FOB and then if we want our goods shipped by sea, arrange with a company like Woodland Group?

    1. Andrew Minalto

      Yes, that is correct.

  14. Hi Andrew,

    I just discovered your blog, it’s great and full of info. You have a new reader 🙂

    This post on DDP is somehow spot on for my situation. I am a quite new FBA seller and have just imported my third stock via sea shipment. I use a freight forwarder separated from my supplier. I have requested DDU for this shipment.
    I have to say that I am not Vat registered, however I have been told that I can claim back the VAT paid on this import once I will register for VAT (hopefully in 3-4 months).
    Few days ago my freight forwarder sent me the custom and vat bill, which was just a PDF showing the breakdown of VAT and Custom fees. In this document my company name shows up as “Importer”. The FF said that they had already paid it on my behalf. The PDF doesn’t not show the VAT number used to import. A few seller friends told me that it should show the FF’s VAT number, so that when I will claim this vat back, HMRC can track who paid it. Obviously in this scenario my FF is not authorised to claim it.

    My FF refuse absolutely to provide me with the same document showing their VAT number for several reasons which sound all kind of BS. I was going to pay anyway fearing that my goods would be held at custom, however the good news is that the goods have actually been shipped and are now at the amazon FC. In this scenario now I have more leverage as I am already in possession of my goods.

    what do you think I should do? I think I will refuse to pay until they prove that they have paid the right VAT and Custom amount. I am afraid they might have paid less than the due amount and just pocket the difference. Do you think that if I dont pay the FF and arrange payment with HMRC, the FF has some legal way to sue me?

    Thank you so much for your help Andrew I really appreciate the support you give to your community!

    1. Andrew Minalto

      Hi Mike,

      Thanks for your comment.

      Hmm, hard to say what is going on there… In my mind, they should have no problem in showing their VAT number on the invoice. On the other hand, I don’t know ALL the legalities of this…

      Can they show you the Customs declaration or something that proves that they have paid all the taxes?

      Thanks,
      Andrew

      1. Hi Andrew, thank you so much for your prompt reply. No, they refuse to show any kind of Custom receipt or any proof that they have actually paid. I think I would just rather avoid paying the freight forwarder and arrange things directly with HMRC…

        thanks a lot mate – appreciate your help 🙂

        Have a great day!

        Mike

        1. Andrew Minalto

          Yeah, that sounds very scammy to me….

  15. Melodee Lucido

    Andrew, thank you so much for being such an amazing, brilliant person. You put so much value into all you do. I heard about you thru Dylan at flipflip. I am a brand new reseller and my head is spinning with info 🙁 I am 67 yrs young and starting over after getting wiped out by hurricane Michael—business and all. So it will be a bit til I can jump into your course. I was so excited after watching all the intro video (yes, it was loooong; I stayed til the last breath) I couldn’t sleep at all . . so I got up and re-watched it hahaha. I look forward—so very much—to being in your program. It is never too late to start all over again. Thank you more than words can say. I believe that the Uni brings just the right teacher when we are ready—-if we are showing up to life daily. I will implement the things in the video and have new joy and excitement at my j.o.b. Mannny blessings to you.

    1. Andrew Minalto

      Thank you so much, you made my day! 🙂

      and best of luck with the new venture!

      Andrew

  16. Hi andrew, i have just started shipping from china so very new to importing and im guessing my supplier has used the DDP as he hasn’t sent me any tax or duty documents so i have now asked for these, i would like to do the process properly and would like to use a freight forwarder, would you recommended using the company that you mentioned above? I will be using sea freight mostly all of the time due to the weight of product. Thanks

    1. Andrew Minalto

      Hi Craig,

      Thanks for your comment.

      Yes, absolutely – Woodland Group is a great company to work with.

      Andrew

  17. Marcin Kozlowski

    Hi Andew,
    Thanks for a great article. How do you think when you use a courier for a smaller orders for example up to 60 kg.

    It’s best to organize a courier company from my end and let them to collect an orders from the chinese factory or let to organize my chinese supplier but choose exw service and tell them to use a real value of the goods on the declarations?

    Thanks for your support
    Martin

    1. Andrew Minalto

      Hi Martin,

      Thanks for your comment.

      Let Chinese supplier organise courier delivery, yes. They will get a much better price than you.

      Just make sure they declare full value of the goods, include REAL invoice with the shipment so that everything goes smoothly at Customs. If you have a tracking number on hand, you can contact courier company directly on your own and say that you will need to declare goods, send them invoice etc. so that they have REAL numbers on hand.

      Thanks,
      Andrew

  18. Very interesting!!
    I have used DDP and challenged my supplier to provide proof of tax payment. They failed to show any documentation hence I am very certain I have been scammed. This was my very first shipment from China. Is there any action I would need to take to rectify this error and pay my tax accordingly? How can I do this? Or should I hope this one-time “offence” won’t be recognised by HRMC and I will ensure for future shipments that everything will be paid correctly? Thanks!!

    1. Andrew Minalto

      Hi Alicia,

      Thanks for your comment.

      Yes, you need to contact HMRC and ask them for a special form – so basically you need to do the Customs clearance procedure now, after the goods have been already delivered to you.

      You can of course hope that no-one will notice this one transaction, but I personally wouldn’t do that.

      Thanks,
      Andrew

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