When you accept an order from an international customer your shipment will be subject to the duties and taxes of the local country.
For many businesses figuring out how to accurately calculate duties and taxes can be time consuming, expensive and complicated. Failing to take into account how duties and taxes are calculated can lead to delivery delays, unnecessary holds in customs, and create a frustrating customer experience.
How are duties and taxes calculated?
Local customs officials use the declared value included with your shipment to determine the duties and taxes. The customs and duty charges vary per country and are based on a tariff code classification called Harmonized Tariff Schedule Code or HTS Codes.
HTS codes are a 7-10 digit tax id classification used to assign the tax group classification when importing an item to an international country. The first six digits are recognized globally and the remaining digits are added by each individual import country. In the US the recognized format is 10 digits.
What orders are subject to duties and taxes?
Each country has their own rules and regulations related to importing goods based on the HTS code. Many countries also have a declared De Minimis Value.
The De Minimis Value is the dollar amount threshold for which a country declares that there is no specific duty or tax charged for import. For shipments that fall below the de minimums value there are no duties and taxes charged and the customs clearance process is minimal.
Shipments over the de minimums value are subject to duties and taxes and may require additional information for customs clearance based on the HTS code. Some countries require specific documentation like a customer’s ID number or a translation of the ingredients in the local language.