WHAT ARE DUTIES AND TAXES?
Every country in the world has a Customs organization that determines whether your shipment is to be allowed into their country, and whether they will impose import duties and taxes on that shipment.
Duties and taxes are charges calculated by Customs using the 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. 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. A shipment is considered dutiable when the goods shipped are part of a sales transaction that is being exported permanently. The duties and taxes are assessed by Customs at the time of initial entry and may vary depending on the commodity’s classification code, value, country of manufacture and other associated freight charges.
Offix Edge has no relationship with any of the government Customs organizations, and the shippers that we represent do not have a relationship with Customs. This is a tax situation between you, the foreign government, and your recipient. We cannot possibly predict what a foreign government will do or charge, and therefore we cannot collect taxes from you to forward to the foreign government. We have no way to do that. Some of our shippers can be hired to act as a Customs Broker on your behalf, but that is an extra service that is not normally part of your shipment, and there is a separate cost for that service.
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 for each commodity
• Each country of manufacture
• Total cost of the goods (commodities)
• Other associated freight charges
To get an idea of what a Harmonized System Code is, using the USA as an example, click HERE. (Hint: type something like “computer” into the search box in the left margin. You will get a list of Harmonized Tariff codes for computer-like devices. This is government stuff. Get a cup of coffee and try not to fall asleep.)
HOW DOES CUSTOMS DETERMINE IF A SHIPMENT WILL BE CHARGED DUTIES AND TAXES?
A Customs invoice is required when sending goods to another country. There are two standard invoices to choose from:
• Proforma Invoice – the shipment contains personal effects or there is not a sales transaction between the sender and the receiver. These shipments are normally not dutiable, but that depends upon circumstances. For example, if you ship 25 pairs of brand-new American jeans to your cousin in another country, and try to call it a “gift”, Customs will probably charge duties and taxes. Customs people are not naive and stupid.
• Commercial Invoice – the shipped goods are part of a sales transaction (i.e. the goods have been purchased by the receiver) and are for permanent export. Shipments with a Commercial Invoice are always dutiable. Each country establishes its own standards for determining dutiable or non-dutiable goods.
Note: In most cases, documents that do not have any commercial value are not dutiable. However, documents with a commercial value are dutiable.
There is an agreement between Canada, the USA, and Mexico called NAFTA, which means the North American Free Trade Agreement. This normally means that goods can move across the borders without Customs duties and taxes. HOWEVER, there is a “gotcha” here, and it is best illustrated by example. A customer wanted to ship automobile parts from the USA for his Nissan automobile kept at his vacation home in Mexico. The parts were purchased from an American Nissan auto dealer. However, since the parts were Japanese parts that were manufactured in Japan, they did not originate in the USA. Therefore, Mexico charged duties and taxes when those parts crossed from the USA to Mexico. The same principle applies all three countries – if it was not manufactured inside one of the NAFTA countries, and even if duties were paid when it originally entered the NAFTA zone, you will incur additional Customs duties and taxes if you cross another border. NAFTA is NOT like the European Union where once something is inside Europe, it can freely cross borders.
PLEASE NOTE: If you purchase something new in the USA and send it to your friend or family in another country, it is NOT a personal effect. If you exceed a certain value in your shipment, and that value varies from one country to the next, you may be charged duties and taxes and it is impossible to predict. Try to keep in mind that Customs people are not stupid. They are pros. They have already seen more clever tricks than you will ever think up. They can tell a new pair of jeans from worn jeans, and your unopened milk powder shipment is obviously a new purchase. Try to remember that Customs people have a pretty good idea what something is worth, and they also have Google and Bing on their computers. Lying about it on the Invoice is only going to cause your shipment to be held until they can decide how much to charge your recipient. Honesty is the best policy. When you fill out the invoice, you can indicate that it is a gift, and gifts are normally viewed differently than commercial shipments. (That is not an invitation to cheat – again, Customs people are not stupid.)
WHO PAYS FOR DUTIES AND TAXES?
Typically, the receiver, the person to whom you are sending the shipment, will have to pay the duties and taxes. The shipment will be held in Customs until the taxes are paid. If your receiver waits too long, Customs will either destroy the shipment or return it to the shipper. If Customs returns the shipment, the shipper will return it to us, and we will return it to you. YOU WILL NOT GET A REFUND ON YOUR SHIPMENT. We did exactly what we were hired to do, ship it, and it was you and your recipient who refused to pay the foreign government. We have no control over a foreign government. At the risk of being blunt, duties and taxes are your problem, not ours. Consider yourself lucky that the shipping company did not charge you for the return shipment and that you got your goods back.
WHAT CAN I SHIP?
There is no straight answer to this. Each country has its own list of what is allowed and what is not, and some are surprising. For example, the country of Viet Nam will not allow used electronics to be imported, even as a personal gift to a relative. You may ship a new iPad or cell phone or laptop to Viet Nam, but not a used one. Apparently you can carry it in as an airline passenger and leave it in Viet Nam, but you cannot ship it. Other countries have similar kinds of peculiarities. We suggest that you do some internet research, or you may come into our store and we will show you the list of prohibited and restricted goods for each country.
NEED ADDITIONAL CUSTOMS SUPPORT?
Among other things, we are a DHL Authorized Shipping Center. DHL offers Customs brokering services in most countries for an additional fee structure. Those services include:
• Bio/Phyto/Veterinary Controls
• Bonded Storage
• Bonded Transit Documents
• General Order Warehouse Storage
• Handover to Broker
• Import Duties
• Import Taxes
• Import Paperwork
• Merchandise Processing
• Multiline Entry
• Obtaining Permits and Licenses
• Payment Deferment
• Post Clearance Modification
• Prior Notice
• Single Informal Clearance
• Temporary Import
• Under Bond/Guarantee
Please stop in our store and we can discuss your needs.
Offix Edge is not making any promises and cannot make any promises regarding your Customs experience. Again, this is a transaction between YOU, YOUR RECIPIENT, and a foreign government. We have no relationship with, control over, or financial arrangements with any foreign government.