|Research by Industry/Sector
April 24, 2014
Full Article (publish article page)
|FAQs About Exporting IT Products and Services |
If you have any questions or comments on these FAQs, please contact the IT team of the Office of Information Technologies and E-Commerce.
A. FAQs about classifying IT exports for customs purposes
B. FAQs about export documentation for software
C. FAQs about U.S. export restrictions on IT products
D. Exporting used or refurbished computer equipment
E. FAQs about other countries' import duties and taxes on IT products and services: valuation method and values, software (physical shipments), software (electronic shipments), bringing personal laptops abroad temporarily, IT services
F. Specific countries' customs and documentation requirements for IT products and services imports
G. The Information Technology Agreement (ITA)
H. Obtaining information about importing computers and software
I. Obtaining computer and software industry sales data, trends, and forecasts
A. FAQs ABOUT CLASSIFYING IT EXPORTS FOR CUSTOMS PURPOSES
How do I classify my software and hardware exports for customs purposes?
Most countries, including the United States, classify exports and imports using a standard set of Harmonized System (HS) codes.
Computer hardware falls in HS headings 84.71 (“units of automatic data processing machines”), or in 84.73 (“parts thereof”).
Computer software falls in HS heading 85.24 (“records, tapes, and other recorded media…”).
Manuals fall in HS heading 49.01.
Particular products are classified by more specific HS numbers that can be six or more digits in length. Only the first six digits of HS codes are harmonized globally. Countries may designate more specific product classifications beyond those six digits. The United States defines products using 10-digit HS codes.
U.S. export codes, called Schedule B codes, are administered by the U.S. Census Bureau’s Foreign Trade Division. This Census Bureau website can help exporters classify their products and find the appropriate Schedule B number. If additional clarification is needed, please call the Census Bureau’s Commodity Classification Division at 301-763-3484.
U.S. import codes, known as Harmonized Tariff Schedule (HTS) codes, are administered by the U.S. International Trade Commission (USITC).
In some cases, customs authorities may dispute the general classification of a product altogether based on an interpretation of its purpose and use. The rapid evolution of information technologies is making the process of classifying products more difficult and can outpace updates to existing HS codes, so exporters should check with national customs authorities to ensure correct product classification.
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B. FAQs ABOUT EXPORT DOCUMENTATION FOR SOFTWARE
How should software products be valued on a Shippers Export Declaration?
Packaged vs. customized software: According to the U.S. Census Bureau and 15 C.F.R. 30.55 as amended, the full commercial value of a software product should be reported on the SED for mass market (packaged) software, which is "defined as software that is generally available to the public by being sold from stock at retail selling points or directly from the software developer or supplier" via mail order, telephone or electronic mail order and "is designed for installation by the user without further substantial technical support by the supplier." For exports of customized software, the Census Bureau requires only the value of the underlying medium be on the SED (assuming this value is less than $2500, no SED is required).
Software delivered electronically: A SED is not required for "intangible exports of software and technology, such as downloaded software and technical data, including technology and software that requires an export license and mass market software exported electronically." This is true regardless of value.
Demo version: Since there is no commercial value, an SED is not required.
Updates: If you are physically transporting an update, and its cost is greater than $2500, an SED is required (there is no SED requirement for electronic shipments of updates, regardless of value).
How should software be documented on a commercial invoice?
For those countries that assess duties only on the software’s medium, in order for customs officials to assess duty solely on the medium, the value of the medium should be indicated separately from the intellectual property (IP) on the commercial invoice.
sample invoice used for a normal sale of software
sample invoice for an update of software that has already been purchased;
sample invoice for marketing purposes (a demo version/not for resale);
(All files are in PDF format)
Must software that is embedded or pre-loaded on hardware be documented separately for customs purposes?
No. You should just document the value of the hardware.
General information on export documentation for software and other exports
The Department of Commerce’s Trade Information Center has general information on export documentation, including the Shippers Export Declaration (SED), commercial invoice, and other forms. Click here.
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C. FAQs ABOUT U.S. EXPORT RESTRICTIONS ON IT PRODUCTS
What are the general U.S. government rules in this area?
If an IT product uses encryption technology it may require an export license from the Department of Commerce’s Bureau of Industry and Security (BIS). BIS’s website explains information such as
1) whether you need an export license,
2) whether you need (and how to get) an Export Commodity Classification Number,
3) what forms you must submit,
4) in what cases licenses are also required from the Department of State, etc.
If, after reviewing their site, you are unclear on your obligations, please contact BIS staff directly. They can counsel you on your obligations under the Export Administration Regulations and assist in determining your licensing requirements.
For information on the export of high performance computers, call 202-482-0707 or visit this BIS website.
Can I bring my own laptop out of the United States on temporary travel if it has encryption software loaded on it?
Yes; this is a case of a license exemption. According to the Bureau of Industry and Security, you may do so as long as the laptop remains under your control at all times. You do not need to file any forms before you leave the United States. If, however, you are asked at a customs station about a license for your encryption software, and are asked to fill out any forms, you need to indicate the license exemption. The term on the form you should use is "BAG," which indicates that the laptop is part of your baggage.
What about other countries’ import restrictions on encryption products?
Some countries have specific requirements on the importation or use of encryption technology. This site (non-governmental) is an excellent resource on regulations governing encryption software worldwide (note: this is not a U.S. Government site. Although we believe this is a regularly updated and thorough site, the U.S. Department of Commerce does not take responsibility for the information in this site).
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D. EXPORTING USED OR REFURBISHED COMPUTER EQUIPMENT
Can I export used or refurbished computer equipment?
The same U.S. export regulations on exports of new computer equipment apply to exports of used or refurbished equipment. Different countries will have different regulations about allowing used or refurbished equipment imports, however. We have recently received information on a country-by-country basis from many of the Commerce Department's overseas offices. Click here.
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E. FAQs ABOUT OTHER COUNTRIES' IMPORT DUTIES AND TAXES ON IT PRODUCTS
VALUATION METHODS AND VALUES
How are customs duties assessed on my IT product?
Computer hardware: duties are applied to the cost, insurance, and freight (C.I.F.) value, unless noted otherwise.
Computer software: duties are generally applied either to the value of the underlying floppy or optical disk or tape (the blank carrier media) only, or the full market value of the software (content, or intellectual property). This decision is made on a country-by-country basis.
What are the foreign import duties and taxes on my IT product?
Please see our tariff and tax tables.
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SOFTWARE (PHYSICAL SHIPMENTS)
Valuation of software imports for the purpose of assessing customs duties
Countries vary in their methods of valuing software imports and assessing import duties. In 1984, the Committee on Customs Valuation of the General Agreement on Tariffs and Trade (GATT) published decision 4.1, Valuation of Carrier Media Bearing Software for Data Processing Equipment. "In determining the Customs Value of importer carrier media bearing data or instructions, only the cost or value of the carrier medium itself shall be taken into account. The Customs value shall not, therefore, include the cost or value of the data or instructions, provided that this is distinguished from the cost or the value of the carrier medium."
The 1984 GATT decision gave recommendations, not requirements, on how customs authorities should value software imports. Thus, the GATT decision has granted customs authorities broad latitude in determining software valuation.
--The United States values software only on the medium, as do Canada, Western Europe, and many Asian countries.
--Many Middle Eastern countries value software on its full commercial value.
--In Africa and Latin America, there is no standard valuation method.
In spring 2003, we collected information on valuation methods in a variety of countries. Click here.
For those countries that assess import duties only on the software’s medium, in order for customs officials to assess duty solely on the medium, the value of the medium should be indicated separately on the commercial invoice (samples of invoices are in section 4B below).
It is important to note that, because computer software generally was text-based in 1984, this GATT ruling was not written to cover software including features such as sound, cinematic, or video recordings. Even those countries choosing to value software imports on the basis of medium could subject software incorporating these features, such as entertainment software, differently from standard business software.
Valuation of software imports for the purpose of assessing taxes
Value-added (VAT) and other taxes are generally applied to all imported products and are assessed on their full commercial value. However, countries vary in how they assess taxes on software imports-- some assess taxes on the value of the content plus medium, others just on the medium. We have recently received information on a country-by-country basis from many of the Commerce Department's overseas offices. Click here.
Withholding taxes on software sales
This page has information on withholding taxes. For information on how software sales to a certain country are treated for tax purposes, contact theTreasury Department's Office of International Tax Counsel at 202-622-1317.
Customized vs packaged software-- customs treatment
Most overseas customs agencies treat the two types of software the same in terms of assessing duties and taxes on imports. (However, U.S. Census Bureau regulations treat U.S. exports of customized software differently from packaged software in terms of Shipper’s Export Declaration (SED) reporting).
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SOFTWARE (ELECTRONIC SHIPMENTS)
Are there taxes on software delivered electronically?
This kind of purchase should be treated like any other sale to a foreign customer. It generally is the responsibility of the customer/importer to declare their purchase and pay any taxes.
We recently received information on a country-by-country basis from many of the Commerce Department's overseas offices. Click here. In addition, this website (non-governmental) has information on e-commerce tax rules in some foreign countries.
New EU law in this area: In July 2003 the European Union (EU) began requiring overseas exporters to collect and remit the appropriate value-added tax on digitally delivered products sold to EU consumers. The U.S. Department of Commerce's office at the U.S. Mission to the EU has prepared a document explaining the effects of this change for U.S. exporters. Click here.
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BRINGING PERSONAL LAPTOPS ABROAD TEMPORARILY
Can I bring my own laptop into a foreign country temporarily without paying import duties?
Yes. A laptop is generally considered to be a "tool of the trade." Traveling with laptops is common now, so it probably will not be an issue. However, you may be asked to supply documentation that supports your claim of doing work in the country, such as a letter from the foreign company inviting you to do work, or even the address of where you are going. The Department of Commerce’s Trade Information Center has detailed information on tips for business travelers which includes a section entitled "How Do I Take My Laptop Computer, Professional Equipment and Promotional Materials Overseas?" Click here. For additional information on temporary imports, please visit this site maintained by the Michigan District Export Council (non-governmental).
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DUTIES AND TAXES ON IT SERVICES
Are there import duties on computer services such as training and maintenance?
No, such services are uniformly free of import duties.
Are there taxes on computer services such as training and maintenance?
Most countries assess taxes on such services performed in their countries. We have recently received information on a country-by-country basis from many of the Commerce Department's overseas offices. Click here.
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F. SPECIFIC COUNTRIES' CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS
Do you have information on specific countries' treatment of IT products and servies imports?
Yes. Click here.
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G. THE INFORMATION TECHNOLOGY AGREEMENT (ITA)
What is the Information Technology Agreement (ITA)? Where can I get a list of product coverage, ITA signatories, and signatories' ITA duty reduction schedules?
ITA information is on our site here. This site also includes a complete listing of all information technology products covered by the agreement. Comprehensive lists of duty reduction schedules for signatories to the agreement are located here.
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H. OBTAINING INFOMATION ABOUT IMPORTING COMPUTERS AND SOFTWARE
Where can I get information about importing computers and software?
For information about importing, contact the U.S. Customs Service at 202-622-2000 or call 1-800-USA-TRADE to locate the U.S. Customs office nearest you.
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I. OBTAINING COMPUTER AND SOFTWARE INDUSTRY SALES DATA, TRENDS, AND FORECASTS
Where can I get computer and software industry sales data, trends, and forecasts?
The "Industry Information" section of our website has some statistics on the U.S. computer and software industries. Click here.
In addition, our chapters in the U.S. Industry and Trade Outlook 2000 contains extensive coverage of the computer and software industries, including trends and forecasts. It can be ordered from the National Technical Information Service.
Detailed statistical information on U.S. imports and exports can be found on the Trade Data Web operated by the U.S. International Trade Commission.
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SOURCES: U.S. Department of Commerce/International Trade Administration, Bureau of Industry and Security, and Census Bureau; U.S. Department of Treasury; U.S. International Trade Commission.
This page was last updated on 12/11/2003. This site is operated by the Office of Technology and Electronic Commerce (OTEC) division of the International Trade Administration, U.S. Department of Commerce.