Definition
A commercial invoice is a document used in international trade that serves as the primary record of a transaction between an exporter and an importer. Unlike a standard invoice used in domestic trade, a commercial invoice is required by customs authorities to assess duties, calculate taxes, and verify that goods entering or leaving a country comply with import and export regulations.
What a Commercial Invoice Includes
The document typically includes the names and addresses of the buyer and seller, the date of the transaction, a detailed description of the goods being shipped, the quantity and weight of each item, the unit price and total value, the currency of the transaction, the country of origin, and the applicable shipping terms (known as Incoterms).
Customs and Declared Value
Customs officials use the declared value on a commercial invoice to calculate import duties and goods and services tax (or VAT in other countries). For this reason, accuracy is not optional. Under-declaring the value of a shipment to reduce duty liability is illegal and can result in penalties, seizure of goods, or both.
Understanding Incoterms
Incoterms, published by the International Chamber of Commerce, define who is responsible for shipping costs, insurance, and risk at each point in the journey. Terms like FOB (Free on Board) or CIF (Cost, Insurance, and Freight) appear on commercial invoices to clarify these responsibilities between buyer and seller.
Commercial Invoice vs Proforma Invoice
A commercial invoice differs from a proforma invoice, which is a preliminary document used before a shipment is finalised to provide a cost estimate. Only the commercial invoice is accepted by customs as a legally valid declaration of goods and value.
For businesses importing goods into Australia, the commercial invoice must align with information on the packing list and bill of lading. Discrepancies between these documents can delay clearance at the border and result in storage fees while the shipment is held for inspection.