International shippers face the often vexing problem of understanding and estimating duties and taxes. Armed with tools and information, these Customs charges need not be so baffling. Duties and taxes are usually levied by the destination country as a way to protect local markets and to generate country revenue. Those charges are assessed based on the nature of the goods in the shipment.
Dutiable goods are those that are part of a commercial sale or are being permanently exported. Generally speaking, documents are not dutiable, though there are exceptions if the documents are deemed to have commercial value, i.e. books. Each country has its own standards for what goods are dutiable and DHL makes this information available to shippers in the DHL Trade Automaton Service (TAS). TAS is free and only requires you to establish a login credential to access a plethora of information surrounding any international transaction.
Duties and taxes are charged based on the details surrounding shipment. This is most often calculated depending on the cost or value as represented in the shipment documentation, the insurance cost and the freight charges (“CIF”). The specific commodity will also influence the percentage of duty and tax applied. Customs authorities will use the Harmonized System (HS) code assigned to a commodity to determine what level of duty and tax to assess using the CIF methodology. This is the most common methodology, though there are others, as detailed in TAS. Shippers also need to know that the HS code they assign to their goods on export documentation may not be the same as the one used at the destination country – and it’s the destination country HS code that is used in calculating the duty and tax charges.
TAS has several tools that help shippers estimate duty and tax accurately. If the HS code needs to be determined and assigned to the goods in a shipment, TAS offers a simple lookup device that selects a detailed code appropriate to the commodity. This device can be used not only to determine the export code but also the import country HS code that will be used to calculate duty and tax at the shipment’s destination. The appropriate code can be used with DHL‘s duty and tax calculator which is available through TAS and for U.S. customers at dhl-usa.com. TAS can also be used to look up the specific arithmetic for customs charges which is updated as the percentages and rules change.
Normally, the recipient is responsible for paying duties and taxes in the destination country. Some carriers, such as DHL, provide the opportunity for the shipper to pay the charges – avoiding any delay caused by Customs collecting the duty and tax from the recipient.
International shipping is an exciting business opportunity, but it can also be a complex process. Understanding duties and taxes can help in guiding your global vision, and DHL is here to help along the way.
What tools do you use to help navigate duties and taxes? Let us know at @DHLUS.