DDP vs DAP: Which term is better for your cash flow?
Choosing between these terms is a constant balance between customer experience and your bank balance.
DDP for Growth: You pay the duties and taxes. This removes friction for the customer but requires you to have the cash ready upfront.
DAP for Liquidity: The customer pays the tax. This protects your balance but risks the customer refusing the delivery when they see the bill.
Strategic Switching: You can start a new market with DAP to protect cash and then switch to DDP once your volume grows.
Duty Payer Change: MyDHL+ allows you to change who pays the tax on a shipment-by-shipment basis depending on your account setup and local rules.
Using a strategic approach to these terms helps you enter new markets without over-stretching your capital.
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How can accurate valuation prevent tax overpayment?
If you over-value your goods, you are giving the government an interest-free loan. A common mistake is including non-taxable costs like international freight or insurance in the taxable base where it is not required.
FOB vs CIF: You must know that Myanmar law follows a Cost, Insurance, and Freight (CIF) model for assessing customs duties on imported goods.
Separate Costs: We help you separate shipping fees on your documentation, but be aware that the final dutiable value will be based on the CIF value. This means the cost of goods, insurance, and freight are all included in the calculation.
Customs Audits: Our advisory services check your invoices to help you ensure your dutiable value is declared correctly according to local regulations.
Local Rules: You should check the official guidance from the Myanmar Customs Department to ensure you correctly declare the CIF value and avoid overpaying duties.
A variance of even 5% in valuation can lead to overpayments equivalent to millions of Kyat over a single quarter. For an indicative value, $5,000 USD is approximately 10,500,000 MMK.
Ready to reclaim your working capital?
Improving your duty and tax payments is a fast way to increase your returns. By moving away from transactional payments and using deferral schemes where available, you turn your logistics into a source of liquidity. Speak to a DHL specialist today to check your payment strategy and keep your cash in your business.
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Frequently Asked Questions