DDP, DAP or FOB for apparel imports: who pays duty, VAT and freight

What do DDP, DAP and FOB mean?

Incoterms are eleven three-letter terms published by the International Chamber of Commerce for sales contracts; as checked on 22 September 2026, ICC presents Incoterms 2020, in force since 1 January 2020, as the latest edition [1]. Each rule fixes where the seller delivers and risk passes, who books the main transport and who clears customs at each end [3]. FAS, FOB, CFR and CIF are for sea and inland waterway only [2].

ICC’s text says FOB does not fit goods handed to a carrier before loading, as at a container terminal, and suggests FCA instead [4]. EXW leaves export clearance in China to you, and ICC recommends FCA where that is hard for the buyer [5]. Under FCA, FOB and CIF the risk is yours from China, even though a CIF seller pays freight and minimum insurance to your port [4].

Who pays duty, import VAT or GST, and insurance?

ICC’s tariff guidance lists the buyer as clearing imports and paying tariffs under ten of the eleven rules; DDP alone moves both to the seller [2]. Under DDP the seller also pays taxes due on import, VAT or GST included, and you pay from delivery onward, including unloading unless the seller’s freight contract covered it [3].

A DDP seller carries the risk to your door but owes you no insurance cover; only CIF (minimum cover) and CIP (broader cover) require the seller to insure for the buyer [4]. If a DDP quote mentions insurance, ask who can claim.

Is ‘DDP shipping’ the same as the DDP Incoterm?

Often not. Many forwarders and consolidators in China sell ‘DDP shipping’ as one price covering transport, clearance and duty. That is a service bought from the forwarder, not a term of your sales contract with the supplier [1]; its scope, including whose importer number clears your cartons, is whatever its terms say. ‘Standard’ and ‘express’ DDP are speed tiers; Incoterms 2020 has one DDP rule [3].

‘Door to door’ says where goods end up, not who pays duty: DAP, DPU and DDP all deliver to a named destination, and only DDP adds import clearance and duty [2]. ‘FOB destination’ is US domestic usage rather than an Incoterm, and ICC notes that some US domestic rules give FOB a different meaning [5]. DDU is not among the eleven current rules [4]; ask for it to be restated, usually as DAP.

Is DDP shipping legal and safe?

The DDP rule is lawful: it is one of the ICC terms that UNCITRAL recognises as the international reference for trade terms [1]. The risk lies in how the import is done. In the US, the importer of record answers for the entry’s accuracy and all duties, taxes and fees, even when a broker files it [6]. So ask who the importer is and at what value the goods will be declared.

Some very low all-in rates clear many clients’ cartons under one consolidator’s importer number at values below what was paid. The legal exposure moves to a company you have never dealt with, but your goods stay exposed: US customs may examine any shipment [6], and held cartons are your stock. The name on the entry also decides who customs pursues: in Canada a broker used as importer is jointly responsible with its client for duties and taxes [10], and ICC describes Colombia, where DDP has to run in the buyer’s name under a power of attorney, leaving fines with the buyer [5].

This is general information, not legal or tax advice; check your position with a licensed customs broker in your market.

How does DDP shipping work to the US, Canada, UK, EU and Morocco?

The rule is the same everywhere; what differs is whether a Chinese seller can lawfully import where you are. ICC’s January 2025 survey finds some countries bar foreign firms from import formalities and advises DAP or DPU there [5].

What should a DDP quote show, and does DDP cost more?

There is no standard DDP price: it depends on mode, route, volume, each style’s classification and customs value, the destination’s duty and tax rules, and the seller’s allowance for duty changing before entry, a risk DDP puts on it [2]. The Incoterm does not change customs valuation: HMRC says DDP goods can still be valued on the transaction-value method [8].

A correctly declared DDP price should roughly equal DAP plus duty, taxes and a fee for clearing and funding them; ask for both quotes with those lines separate, and question any DDP figure below that sum, starting with the declared value. A usable quote names the rule, place and edition; the importer of record; each style’s HS code and declared value; duty, taxes, brokerage and delivery as separate lines; exclusions such as unloading, storage, examination and insurance; and the effect of a duty change before entry.

Which rule suits an apparel brand?

Check this against your own forwarder and customs broker.

What to put in writing

Write the rule, named place and edition into the purchase order, for example ‘FCA (forwarder’s warehouse address), Xiamen, Incoterms 2020’; risk passes at the named point [3]. For DDP, add the importer of record, declaration at the invoiced value, copies of the entry and of duty and tax paid, and the exclusions from the quote. For a variant such as ‘DDP, VAT unpaid’, state who pays each tax.

SEAMDANCE proposes an HS code for each style when it quotes, so your broker can check the duty line before you choose a term. If you are VAT- or GST-registered, read our guide to DDP quotes and the import VAT you cannot reclaim before accepting a delivered price: the name on the entry decides which import records you receive.