Everything you need to know about customs duty

Published On - February 21, 2018

Faisal Sabbagh

Whenever goods move across international borders, the importing country (the country receiving the goods) charges the importer a tax as a means to earn revenue and protect local industries from foreign competition. Sometimes, the exporting country (the country sending the goods) may also charge the exporter a tax.

The tax imposed on the importation and exportation of goods is referred to as customs duty.

Each country has its own rules and regulations when it comes to

1) what is allowed to be imported and exported
2) what threshold to begin charging customs duty at
3) the rate of customs duty to be charged.

Here’s how you estimate what you owe in customs duty.

Provided your goods are legal to import and export, you need to first determine the declared value of your goods – the dollar value of the product or commodity that is presented to customs for verification.

If the declared value of your goods is below the relevant threshold, you do not owe anything in customs duty.

If the declared value of your goods is above the relevant threshold, you are required to pay customs duty, which is either specific or charged on an ad valorem basis (based on the declared value of the goods).

If customs determine your goods to be under-declared (the goods are worth more than you said they are), you will have to pay customs duty according to the adjusted declared value and, in certain cases, also face fines.

To find out the threshold and the customs duty rate for your goods in a specific country, head to that country’s official customs website (found easily with a quick Google search).

Here are the links to some of the more prominent ecommerce markets’ customs websites.

USA
https://www.cbp.gov/trade/programs-administration/determining-duty-rates#

UK
https://www.gov.uk/trade-tariff

Canada
https://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/2018/html/tblmod-eng.html

Australia
https://www.homeaffairs.gov.au/trav/impo/clea

The Netherlands
https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/belastingdienst/individuals/abroad_and_customs/receiving_goods_from_abroad/from_organizations_and_companies/how_do_i_calculate_these_import_taxes

Singapore
https://www.customs.gov.sg/businesses/valuation-duties-taxes–fees/duties-and-dutiable-goods

Customs duties sometimes dig deep into margins, but the good news is there are options when it comes to who pays them – the seller or the customer.