DAP vs DDP — Who Pays Import Duties and Taxes?

In short: under DAP the importer pays, under DDP the exporter pays the destination country's import duties and taxes. With international express, duties are billed to the importer unless you specify otherwise.

What are Incoterms?

Incoterms are trade terms published by the International Chamber of Commerce (ICC). In three letters, they set the point where transport costs, risk and customs responsibility pass from the exporter to the importer. The current edition is Incoterms 2020. For overseas shipments, the two terms we are asked about most are DAP and DDP.

DAP — delivered to the destination, import costs on the importer

Under DAP (Delivered at Place), the exporter pays the cost of getting the goods to the named destination. Import clearance and the destination's duties and taxes are the importer's responsibility.

The importer pays duties and taxes on delivery (or later, against an invoice).
If the importer is a business, it can often reclaim the import VAT as input tax.

DDP — the exporter pays duties and taxes too

Under DDP (Delivered Duty Paid), the exporter bears everything up to and including import clearance and the destination's duties and taxes. The importer receives the goods without paying anything.

For the importer, it is the most convenient term.
The exporter should check the destination's tariff rates and de minimis threshold before shipping, or risk unexpected costs.

At a glance

Item	DAP	DDP
Transport to destination	Exporter	Exporter
Import clearance	Importer	Exporter
Import duties and taxes	Importer	Exporter
Convenience for the importer	Moderate	High
Cost predictability for the exporter	Easy	Requires checking tariff rates

How does it work with international express?

International express carriers such as DHL, FedEx and UPS bill duties and taxes to the importer unless told otherwise — the same as DAP.

For the exporter to pay, set the duties and taxes payer to the exporter when creating the waybill. The carrier then bills the duties and taxes to the exporter after clearance, and every carrier adds a disbursement fee.

The trade term on your commercial invoice (DAP or DDP) must match the duties payer set on the waybill. If they differ, the bill can go to the wrong party at destination and delivery may be delayed.

Which one should you choose?

DDP fits when

You send samples or free replacements to an overseas partner and would rather not pass costs to them
The importer is an individual or has no customs experience
You want to avoid refused deliveries or held shipments over duties

DAP fits when

The importer is a business used to importing
The importer benefits from reclaiming import VAT
Your contract for regular trade already specifies DAP

Summary

Agree on the trade term in the contract and invoice first, then set the waybill to match. If destination duties are a concern, estimate them before shipping using the HS code and declared value.