An Introduction To Import Taxes And Duties


It can be tough to understand the various taxes and fees imposed on imports and exports.Every country has its own rules and regulations related to importing, customs compliance, and taxation. If you’re sending large shipments to multiple clients in many foreign destinations or a single itemto your friend overseas, taxes will affect you and them. Below is a primer to help familiarize yourself with common terms, plus a few tips to help with shipping and refunds.

A tariff is a tax placed on goods that are imported from a foreign nation. The point of tariffs are to increase the price tag on goods bought internationally to encourage buying locally. Frequently, it is still cheaper to buy goods overseas, evenwith a higher cost. Tariffs are also a source of revenue for a sovereign state and can be fixed rates or calculated as percentages. These taxes can backfire by reducing competition and domestic prices will tend to rise, in this case.

Customs duty and import duty are often used interchangeably with tariff because they are both indirect taxes imposed on imports during international trade. The context usually changes which word is applied. Governments place tariffs on goods as part of foreign trade policy; whereas duty is a term more relevant to use when speaking about what buyers, clients, and sometimes sellers, need to pay as a tax when receiving or sending shipments.Individuals who are purchasing a single item pay duty on it, too. Export duty can also be placed on shipments that are being exported by sellers and distributors.

VAT(value-added tax) or GST(goods and services tax) or sales tax are consumption taxes placed on items according to a location-based rate (the location of the customer). These taxes are a major source of government revenue.They are calledindirect taxes because it’s the seller of the goods who pays the money to the government.Although, consumers know it’s they who bear the actual economic burden of the taxwhen they buy items from a retailer. Import VAT is an indirect, value-added tax that is paid as a percentage when goods are imported into a country. Depending on the type of goods, customs duty might be owed, in addition. Shipments and items bought within the EU are not designated as imports.

Non-resident importers need to arrange for an Importer of Record (IOR) to make sure shipments are compliant with customs rules and regulations. An IOR like TecEx that has global reach and is experienced with cross-border transactions in over 160 countries can take on the risks and responsibilities associated with importing, including filling out documents, paying taxes, and dealing with any stoppages that might occur. They stay abreast of any changes in laws and regulations, so nothing is missed. By partnering with an IORthat doubles as a tax recovery specialist, you can get help with your importer VAT refund and reduce the costs associated with international trade.

Every nation you buy from or want to sell to has their own strict set of rules regarding taxes and duties. It’s important to look up customs compliance information, especially if you’re a company who wants to expand their business. If you’re travelling, there may be customs and tax allowances within certain limits. Individuals should always research what refunds andduty-free scenarios are available to them; businesses should collaborate with an IOR to reap every tax benefit.

Author: Ryan Yarbrough