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Lexicon
Legality of importation
Anyone seeking to import goods into the State of Israel must verify, prior to the importation, the precise nature of the existing legal and regulatory conditions for the specific goods they wish to import.
For example: authorizations for regular or sensitive foodstuff, Israel Standards Institute authorization,
Ministry of Agriculture Authorization and so forth – the link below, leading to the Tax Authority page, contains all of the relevant information and links concerning legality of importation.
Sales conditions INCOTERM
Universal sale terms used in international trade to regulate three main points between purchaser and seller.
The point in time in which the burden of expenses passes from seller to purchaser.
The point in times in which the responsibility for insurance passes from the seller to the purchaser
The point in time in which responsibility for the cargo passes from the seller to the purchaser.
It is the responsibility of the seller to register the conditions of sale on the receipt in a clear manner.
Below are the common terms of sale:
EXW
Sale at the factory gate – the moment the merchandise is ready in the factory the burden of responsibility for the costs of the merchandise and their insurance association is on the purchaser. It is up to him to ensure the collection and loading of the merchandise from the seller's warehouse and to transport it to the warehouse.
FCA
The seller transports the goods to an agreed upon point (usually the warehouse of an agent) between him and the purchaser. From the moment of delivery, the burden of the expenses associated with the goods, and the insurance linkage is on the purchaser.
FOB
The seller transfers the goods to the ship, including all customs costs during the export, and costs of loading on to the ship. From the moment of delivery, the burden of the expenses associated with the goods, and the insurance linkage is on the purchaser.
CFR
The seller is responsible for the cargo, and all of the costs of the cargo to the moment they reach the port in the country of the purchaser. The insurance of the shipping, and the total expenses from the moment they arrive in the port are on the purchaser.
CIF
All expenses and all responsibility associated with the transportation, and the insurance linkage until arrival in the port of the purchaser's country are the sole responsibility of the seller. The purchaser is responsible only for expenses in his country in release from customs.
DDP
The seller bears all the shipping expenses, including the costs of release from customs and insurance (will not pay VAT).
Free trade zone
A specified area (port/ airport / border crossing, or any other area defined as such) within a country that is not subject to the tax authorities of that country. An importer may import into this zone (such as the Israeli city of Eilat) without paying any taxes or customs duties and wait for loading, re-export or sale to final clients.
Air transportation
Air transportation means shipping and handling of goods via aerial vehicles, through airports. This type of transportation is more expensive and usually less desirable for high volume / weight shipments. Use of this type of shipments is made when the issue of time is of critical importance.
Sea transportation
A type of shipping between countries utilizing marine vessels. This type of shipping is considerably less expensive and usually preferable for high volume and / or weight shipment. Use of this type of shipping is usually made when time is not an issue.
Customs brokerage
A country whose business is the release of shipped goods from customs. The company must possess in-depth knowledge, expertise and experience with legality of imports and tax duties on each type of goods whose release it secures.
International shipping
Describes the entirety of the activities requires to successfully transport goods from the seller to the purchaser in international trade. From the stage of transportation from the warehouse of the exporter, arrival in the port, export customs brokerage, sea / air / land transport and until arrival in the destination port.
Excise
A general term for a variety for a variety of costs, some permanent, others variant, which apply to the importer during the importation process. The excises can be port excises or shipping company and airline company excises.
Trade agreements
This is an agreement between at least two states which grants the trade partners an exemption from paying customs, for those countries who have signed the agreement, subject to the document or statement on the receipt. This exemption does not apply to other taxes, such as VAT and purchase tax. Examples of such agreements: the EU – provides an exemption from customs between the EU and Israel, save for agricultural products and processed food that receive selective discounts. EFTA = a trade agreement which includes 4 states: Iceland, Lichtenstein, Norway and Switzerland. Similar in its essence to the Mercosur Union Agreement between 4 South American States – Brazil, Uruguay, Paraguay and Argentina. Existing and forming agreements are listed in the link below.
Sales bill / Supplier bill
A document representing the trade agreement between the seller of goods and those interested to purchase. It contains and presents the
Country of origin
Location and date of the bill
Name and address of purchaser and seller
Description of the goods
Amount
Value
Shipping conditions / sales conditions
Bill of Lading
BILL OF LADING – a document produced by the shipping company / ship agent / airline company / shipper which accompanies the cargo during its shipment from the state of origin to the destination state. The document describes the conditions of the agreement between the transporter and the bill of lading possessor and the responsibility for the shipped cargo. Each bill of lading will be appended with the details of the sender, the details of the receiver, the details of the party to be informed (usually the party performing the release, but not always), and will also note the number of packages, their weight and their measurements.
Packages list (PL)
Each shipment must include such an accompanying document. The document details how the shipment was packed – the number of pallets, cartons and packages, the weight of each package, and the contents of each package. In the event that this information appears properly on the receipt the PL can be avoided.
Goods
In economics terms, goods are any merchandise or service that may provide an improvement, directly or indirectly, in the condition of the receiver. Goods which are not accessible for direct use of the consumers (such as infrastructure) are considered goods by virtue of being a source of revenue or due to the benefit deriving from their reselling. Nonetheless, in macroeconomics and in accounting, goods are distinct from services. In these fields the definition of goods is restricted to physical products ("actual") which can be transferred to the clients while transferring ownership over them from sellers to consumers. Merchandise is a more general term than "goods", which preserves the distinction between goods and merchandise. In micro-economics it is common to refer to the concept of goods in its more comprehensive sense.
Standard
A standard is a document detailing technical requirements for a product to match its desired purpose. The standard describes different properties of the product such as: materials, structure, dimensions, operations, labeling and packaging. There are standards which define measurement methods, terms and content. The preparation of standards is concentrated by the Standards Division, and to this end it operates hundreds of public committees, which include thousands of representatives from different sectors of the economy, including manufacturers, contractors, science and research institutes, analytical labs and so forth. The standard is designed and determined by the Israeli Standards Institute itself, after special committees and a special marketing process, in cooperation with governmental parties. In certain cases, the Standards Institute will make do with ensuring the adaptation of the product to the existing international standard conditions, assuming this matches their procedure In other cases, the Israeli Standards Institute will demand to ensure the adaptation of the product to the conditions and demands of the standard. The importer must verify prior to ordering / collecting the products from the supplier, whether it is a standards liable goods and what he must do in order to be awarded this standard certification from the Israeli Standards Institute. Should the importer import an uncertified product to which no standard has been allocated he will not be able to release it from customs.
Customs certification warehouse
A warehouse licensed and supervised by the customs administration, which enables the importer to store his cargos prior to paying the duties for them, and prior to their release from customs supervision. The customs administration is responsible for the legal framework which regulates the existence of these warehouses, their licensing and the supervision and control of their ongoing work, in accordance with existing conditions. Licensed warehouses are a legal instrument in the service of the foreign trade community. Storage in these warehouses enables importers long-term storage of goods under customs supervision, and their release while paying the taxes for which they are liable.
Types of warehouses
General cargo warehouse – a closed warehouse or open yard storage facility intended to store goods in which any individual can store goods according to contract with the warehouse owner, with the exception of storing goods owned by the warehouse owner.
Private warehouse – intended for storing goods owned solely by the license holder. Examples of a private warehouse: duty free store, car import warehouses and car display halls.
Container
A container is a storage vessel loaded on cargo bearing transportation vehicles such as trucks, trains and cargo ships. Containers are used to transport cargo via various transportation means. Containers are produced in 5 standard lengths: 20 feet (6.1 meters), 40 feet (12.2 meters), 45 feet (13.72 meters), 48 feet (14.63 meters) and 53 (16.15 meters) – the most common containers are 20 and 40 feet long. Most containers have an identical height of 8 feet, but some containers are higher. They are called HIGH CUBE and are 9 feet and 6 inches tall, or half the height – 4 feet and 3 inches (meant to transport heavy cargos).
Customs
A tax levied on the import of goods and services. Calculated from the CIF price – expense cost + transportation cost + insurance. The State of Israel levies customs on a large variety of products. Early in the history of the state, aggressive use was made of prohibitively high custom duties to protect developing industries and local manufacturers. In the 1960s custom duties began to be reduced, but they were raised back up following the Yom Kippur War. In 1975 a free trade agreement was signed with the European Common Market, in which the Common Market countries and Israel agreed to gradually and mutually reduce customs on imports and exports to the signatories. Over the 1990s it was determined to adopt a policy of exposing the Israeli market to competing imports across the board as much as possible. Nonetheless, numerous custom duties, such as in the field of foodstuffs, remained in force. The State of Israel signed various agreements: with the United States, with the European Union, and with various other countries, such as Turkey and Jordan, which abolish or reduce the customs duties set by law for given products when they are manufactured in the signatory countries. Customs is also the name of the authority which enforces the import and export policy of the State of Israel, and which is ultimately responsible for duty collection during the import processes.
Purchase tax
Purchase tax is an indirect tax levied on a group of consumer products, calculated as a given percentage of the wholesale price of the product. In Israel, the government began levying purchase taxes in 1952, upon the introduction of the Customs and Purchase Tax Tariff law (goods and services) of 1952. The law authorizes the Minister of Finance to levy a duty on certain product, in addition to other taxes levied on them. Examples of products purchase taxes are levied on:
Alcoholic beverages
Tobacco products
Motor vehicles – including replacement parts of motor vehicles.
The tax is applied in varying rates in accordance with the type of good. Starting in the early 1990s of the 20th centuries there is a policy of gradual reduction of purchase tax rates.
VAT
Value added tax is a tax levied on consumption which constitutes an inbuilt part of taxation systems in many countries in the world. In Israel, the VAT rate is around 17% as of 2020. For every good and merchandise imported the importer is liable for payment of VAT according to the CIF value (purchase cost + transportation + insurance).
Cargo insurance
Cargo insurance policies are intended to shield clients from possible risks. The international shipment field contains risks which can have severe financial ramifications – particularly in the field of foodstuff. Part of the possible risks may be general and not dependent on the client – for example, natural disasters, financial reasons that will prevent the disembarkation of a shipment from the destination port, fire or other damage to the shipment by a third party during the transportation, theft in the middle of the sea and more…
What do you need to know before an insurance is performed?
✓ Insurance type – for all shipments or for a specific shipment. Full or partial shipment.
✓ Goods type – regular dry goods, cooling cargos, dangerous materials, oils and more..
✓ Transportation method – by sea, air, or land, in a specified vessel
✓ Liability limits, deductibles, insurance for cargo only, or additional (third party) damages. The insurance is calculated as a given percentage of the CIF + 10%.
The rate of the fee is dependent on the answers to the aforementioned questions.
To receive a price quote for personalized cargo insurance – click right here.
Customs item
A general term for an item in the customs fee. A customs item represents a group of items (such as furnishings – chair and tables will be grouped together) and they all have identical taxes (purchase and customs tax). Given a commercial account from the supplier, customs official or the classifier acting on his behalf, examine the receipt, and decide what customs item the items in the receipt should be classified under.
See below a link to the customs rate ordinance:
https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/he/CustomsBook/Import/Doubt
Classification of the item to the correct customs item is critical and requires in-depth understanding of the components of the item. An incorrect classification can result in the importer paying excessive taxes, or alternatively not paying taxes on time and retroactively receiving a deduction which includes interest and late fees. In the field of food, classification is wide and diverse – understanding of the components is critical! In "Sefi Ifrach" we have experience of many years in classifying more complex products, and particularly in the field of foodstuffs.
Importation license
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Importation declaration
An importation declaration is a formal document of the tax authority intended to release the goods from the customs authority. It details to the importer the amount of taxes paid by the importer and constitutes a "receipt" for the taxes.
PHYTOSANITARY
A certificate for plant protection from the state of origin. This document is sometimes required during the release process of certain foodstuffs.
Classification/ classifier
Upon provision of a commercial account from the supplier, the customs agent or the classifier acting on his behalf, examine the receipt, and decide under which customs item to classify the items on the receipt.
Below is a link to the customs and purchase tax tariff
https://shaarolami-query.customs.mof.gov.il/CustomspilotWeb/he/CustomsBook/Import/Doubt
Classification of the item to the correct customs item is critical and requires in-depth understanding of the components of the item. An incorrect classification can result in the importer paying excessive taxes, or alternatively not paying taxes on time and retroactively receiving a deduction which includes interest and late fees – sometimes even to be dragged into criminal proceedings. In the field of food, understanding of the guidelines is critical! In "Sefi Ifrach" we have experience of many years in classifying more complex products, and particularly in the field of foodstuffs.
Entrance into bonded warehouse declaration
A type of import declaration / log. In this type the goods are not released but are instead placed in the warehouse under customs supervision. The relevant taxes are left unpaid. What is the purpose of this procedure? There are several possible reasons: these are high taxes goods such as alcohol and cigarettes – the importer places everything into the warehouse and releases it in stages as required. In this manner he avoids paying all the taxes immediately – partial taxes are paid at every stage of release. Labelling obligation – the goods did not arrive from abroad with the necessary Hebrew language labels. Labelling is required in order to adapt the goods for marketing in Israel – indeed, labeling is sometimes required for certain goods by law. There is a problem with part of the items in the container. In order to release part of the items it is necessary to place the entire container in the warehouse, sort the goods and release what is possible. The rest of the goods need to be stored for additional handling – or else be destroyed if there is no option of releasing them.
Warehouse release declaration
A sort of import declaration /log. In this type, the goods placed in the bonded warehouse are actually released from customs supervision and all taxes for which they are liable are paid. The release can be for all of the goods in the shipment or only part of them.
