The Basics: Duties and Taxes

When you ship something to another country, you may be asked to pay additional duties and taxes. They are legal requirements that must be settled before your shipment can be delivered. This is a part of the shipping process where businesses most likely make mistakes.

It is a must to understand that every new country you order from creates new tariffs, import tax, and duty obligations, with different rates, rules, and forms. Rates and taxable products change all the time. Customs procedures change at each international border and compliance, even in neighboring nations, can look drastically different.

Here are some of the most common mistakes you need to be aware of, making sure you’re not putting your business at risk of significant fines and penalties:

Compliance:

Many businesses would try to assign tariff codes to products and calculate duty rates on their own and some service providers may imply that they can classify your products and calculate duty rates but as a matter of fact, they have no obligation to get it right. If you fall out of compliance, you could be the one liable, not the shipping company that misclassified the shipment or estimated an incorrect rate.

Outdated Tax Information:

A rate that was valid last year may no longer be current and refused shipments.

Misdeclaring And Undervaluing Goods:

Some companies deliberately undervalue shipments of goods or misdeclare one type of item as another to avoid p

aying a higher duty rate.

Documentation:

Misplacing import and export paperwork or being unable to easily search for documentation when requested can lead to significant delays in processing shipments.

Research Regulated Products:

Regulated products vary from country to country and aren’t always obvious. Sometimes, products can be regulated to protect domestic trade. In many countries, specific products are flagged as regulated and subject to additional import duties and charges.

Wrong Tariff Codes:

Making incorrect determinations about tariff codes can lead to customs delays, unanticipated extra costs, and returned shipments.

Landed Cost Miscalculation:

When calculating total landed cost, ensure you’re taking every factor into account: the value of the order, door-to-door shipping costs, shipping insurance costs, customs duty, and any import taxes.

Common Tax Terms:

Import Duty

A tax imposed by a government on goods from other countries. This is being implemented to encourage support for the domestic market.

GST. Goods & Services Tax

This tax is charged in stages, then reimbursed to everyone except the end buyer. it's a flat-rate percentage of the total transaction, instead of a percentage of value added.

VAT Tax or Value Added Tax

This tax is charged to consumers when they buy any good or service

At Image International Freight we can assist with all of the above, please contact our Sales team today to find out more or to secure a shipping quote for your business.