What are Customs Duties, Taxes, and Tariffs?
Anyone that’s traveled abroad has had to first pass through customs when you arrive to a foreign country. They ask you questions like “what brings you here?” They also check to make sure you’re not sending anything prohibited in the country. The same type of questions apply to goods you ship internationally. Different countries have different regulations and allowable items you can import. Thus duties, tariffs, and import taxes vary depending on where you are exporting to. As global commerce evolves and order routing and delivery speeds shorten, the scale of foreign goods grows. There are also new procedures and protocols that businesses and senders need to be mindful of. For starters, the European Union (EU) now requires detailed customs descriptions and Harmonized System (HS) codes for any item entering the EU. But once you learn the basics, you’ll find that international shipping is actually quite simple.
What is an Import Tax?
An import tax is a tax charged by a country on products that are imported (and occasionally exported) in order to raise revenues. Examples of import taxes include customs duties and tariffs. If taxes are a certainty in life, import taxes are the certainty for when you ship internationally.
What is a Customs Duty?
Customs duties are a tax charged to the end consumer when receiving imported goods. Similar to how sales tax is applied to the items you buy, customs duties are applied to any item sent internationally. While they are typically charged to the end consumer, there are situations where the sender is also charged.
DDU vs DDP Charges
DDU (Delivery Duty Unpaid) is when an item arrives and the customer/recipient has to pay the customs duties on the item. There are DDP (Delivery Duty Paid) options available, though. ShipStation provides merchants with an option to pay the duties on behalf of their customers. This option “Bill Duties to the Payor” is only available for some carriers and services, so review which services are available before offering this service to your customers.
How Much Do Customs Duties Cost?
Duties are frequently negotiated between countries and range anywhere from 0% to 37.5% of an item’s value but consumer goods typically run about 5–7%. The duty rate paid for an imported item is based on factors associated with the item’s HS code.
Duties and Import Tax Calculator
ShipStation international shipping partner GlobalPost offers a free service to calculate the cost of customs duties without waiting on an irate customer complaining that it cost an extra $10 to receive a t-shirt. To use their Duties and Import Tax Calculator you’ll just need to know the HS code for the item you are sending. Knowing your HS code helps clear customs more quickly, and as mentioned above, is now required for shipping to the EU. To facilitate international shipping more, they also offer a free HS code lookup tool.
What is a Tariff?
A tariff is a flexible tax on imported or exported goods between countries. Tariffs make targeted foreign goods inconveniently more expensive than their domestic counterparts as a way to encourage or safeguard a country’s domestic industry.
How Much Do Tariffs Cost?
Tariffs can be harder to define than customs duties. For starters, they don’t apply to every instance of an imported item. In fact, they are much rarer. While a box of pencils would carry the same customs duty rate regardless where it was exported from, a tariff may only charge taxes on pencils from one country. Additionally, tariffs can impact more than just taxes. For instance a tariff may state “only 100,000 boxes of pencils can be imported from France.”
How ShipStation Helps With Duties and Taxes
ShipStation helps streamline international shipping by providing affordable international shipping rates, streamlined automation processes, and the generation of customs forms.
International Carriers at Your Fingertips
ShipStation Carrier Services allows you to save big on international shipping costs. It also draws funds from a single postage balance where you can access discounts on UPS, USPS, DHL Express, and GlobalPost. Many of these carriers and services are available to you upon signup.
ShipStation Carrier Services lets you access savings of up to:
- 84% off USPS® retail prices
- 82% off UPS® international
- 78% off UPS® Ground
- 78% off GlobalPost Economy
- 75% off DHL Express international
Automatically Create Customs Forms
Finding the right pricing for shipping requires you to have your international paperwork filled out. ShipStation helps by allowing you to generate customs forms automatically. If you have the item descriptions on an order, ShipStation is able to pull that information from the order and onto the customs form. We help you create many types of customs forms that you need so your customers receive their shipments as quickly as possible