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Import Customs Duties Guide [Updated: Oct 2021]

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Updated on 15 Sep 20214 min read

Customs agents inspecting goods shipped with Shipa Freight

When computing the total cost of your shipments, you need to take import customs duties into consideration. Every import is subject to these fees and knowing how to compute for them and how they work will go a long way in ensuring a successful, seamless, and cost-effective shipment.

In this ultimate guide, we talk about import customs duty, its different types, how it works and what impacts it, and how to calculate the customs duties for your shipment.

What are Import Duties?

Import customs duty refers to the tax that you need to settle when importing goods to a country. This is levied by the customs authorities and is applied for foreign trade regulations and other economic purposes.

All goods and merchandise that you import to international destinations via air, sea, or land will be bound to settle import customs duties, as well as provide the necessary customs clearance documents. This is an obligation whether the shipper is an individual, business, or corporation, hence, it’s important to consider this in estimating your shipping costs and even in pricing your products.

What are the Different Types of Import Customs Duties?

Direction to the customs to pay the customs duties when shipping with Shipa Freight

Import duties come in many different forms, some applicable to specific shipments while others are not. The most common types of import customs duties that you may encounter in your shipment include:

Basic Customs Duty

The basic customs duty will apply to all imports. Its value can be computed either as a specific rate or on an ad valorem basis. Typically, the value of the goods will dictate the cost of international import duties.

Anti-Dumping Duty

The anti-dumping duty is imposed to protect the import country’s local industry and applies to goods that are imported at a price below the market rate. The purpose is to cover the difference in value and prevent the selling of goods that are sold below market value.

Countervailing Duty

Countervailing duties, or CVD, are applicable to subsidized imports and are imposed to prevent the imports from gaining an advantage over the local market. They are meant to preserve the advantage of local products over lower-priced international merchandise.

With regard to how to calculate CVD duty, the value would depend on the subsidies offered by the foreign government.

Safeguard Duty

If goods are shipped in quantities that are too large to the point that they can be a threat to the local industry, a safeguard duty is imposed by local customs. This import duty is meant to protect the local economy.

What Impacts Customs Duties?

Person shipping with Shipa Fright and checking the impact of customs duties

The minimum value for import duty imposed on your shipment may change depending on these three factors that impact customs duties.

  • Customs duty rates of the importing country - Every country has different rules on customs duties and may impose different rates.
  • The commercial value of the goods - The number of customs duties is usually calculated based on the customs or commercial value of the goods.
  • Origin country - Some countries may be bound by stricter import duties and restrictions than others. This would depend on trade agreements between countries that may affect duty and tariff rates.

How to Calculate Import Customs Duties/ Customs Duties Estimations

Calculator to represent the cost of Shipa Freight's quotes

Customs authorities compute import customs duties in various ways, but the most common is through the transaction value method. Through this, the imports duties are calculated based on the value of the goods or the amount paid by the buyer to the seller, including other expenses such as:

  • Commissions
  • License fees
  • Resale proceeds
  • Costs for processing or assembly
  • Preparation and material costs
  • Costs of land and maritime transport
  • Insurance

The formula for computing for customs duties is the importing country’s rate multiplied by the total customs value of the goods.

There are customs duty calculators that help retrieve customs duties estimations. To use these, shippers can simply search and input the commodity code of the goods they are shipping and it will generate the duty rate.

Conclusion

Customs duties can significantly impact the cost of your shipment. Hence, it’s important that you take a moment to compute how much you are bound to pay to import your merchandise. Part of determining this is, to sum up the customs value of your goods, check for trade agreements between the country of export and the country of import, and stay informed on import customs duties and how they work.