The rules and regulations of duties and taxes can be tricky and are constantly changing. But understanding the process and landed costs can save you and your customers from surprises.
In this blog post, we have compiled the most frequently asked questions on duties and taxes to help your business effortlessly navigate through the international trade process.
What are duties and taxes?
Duties and taxes are charges that are calculated by Customs using detailed information of the goods in your shipment. The duties and taxes are then applied to the cost of your shipment, typically upon entering a country.
Why do I have to pay?
Duties and taxes are implemented by government officials to protect their domestic markets, as well as generate revenue for the country of import. They are imposed on dutiable goods that move across political boundaries and enforced by local Customs authorities.
How does Customs determine if a shipment is ‘dutiable’?
A shipment is considered ‘dutiable’ when the goods shipped are part of a sales transaction and are for permanent export. Duties and taxes can vary depending on the commodity’s classification code, value, country of manufacture and associated freight charges. For example, cars and alterations made in another country to clothes already owned are both dutiable.
Each country establishes its own standards as to which goods are considered non-dutiable or dutiable. For more information on how to ensure your shipment does not get held up in Customs checkout our previous blog on import delays, or visit www.dhl-usa.com/importguidelines
Note: In most cases, documents that do not have any commercial value are not dutiable. However, documents with a commercial value are dutiable.
How are duties and taxes calculated?
Customs uses the following information found on the Commercial Invoice to calculate the duties, taxes and fees that will be applied to your shipment:
- Harmonized System codes (classification codes) for each commodity
- The country of manufacture
- Total cost of the goods (commodities)
- Other associated freight charges
For example, an electric guitar and amplifier being shipped from the US to the UK has a 3.7 percent and 2.7 percent duty tax rate, respectively. Customs then uses the other factors listed to come up with the total costs.
Who pays for duties and taxes?
The receiver typically pays Customs charges prior to delivery. DHL contacts the designated payer on behalf of Customs to arrange for payment of duties, taxes and fees to ensure our customers only interact with one company.
How can duties be paid?
To avoid shipments being held until the payment of duties or taxes are made, sign up for our optional service, Duties and Taxes Paid (DTP). Customers with a billable DHL Express account number can elect to pay Customs charges with DTP by simply including the account number on the waybill. Complete the online account request form to take advantage of the DTP service at www.dhl-usa.com/newaccount.
International trade is a complex process, but also an exciting business opportunity. DHL can help not only with global customs requirements and trade terminology but also with local import and export support and resources. For more information, visit www.dhl-usa.com/tas.
Do you have any other questions on duties and taxes? Tweet us your questions at @DHLUS.