Customs Duty (關稅 ) is a type of tax that applies to the importation of goods. It is based on the product's 10 digit HTS code and can be either specific or ad valorem.
Depending on where your manufacturing network is and how you declare the certificate of origin, this can dramatically affect what you pay in duties.
Duty Rates
For most products, a tariff or duty is levied at the border. These taxes help protect each country’s economy, residents, jobs, environment and more from unauthorized goods entering or leaving their borders. The rates vary and are determined by the rules of origin, which determine what country the product is considered to originate in, as well as trade agreements and special arrangements.
Enter your commodity code (or the 10 digit HTS code) to get an estimate of the duties payable on your shipment. Keep in mind that this is just an estimate, as the final amount will be decided by a customs officer at your point of entry or the border services office.
Note that the calculator does not factor in excise duties, which are payable on alcohol and tobacco products and are separate from Customs Duty. To calculate the correct duty rate, consult the TARIC database to find your commodity code and the tariff rates associated with it.
HTS Codes
HTS codes are an integral part of international ecommerce shipping and are crucial to avoiding expensive fees and delays. These codes identify the product you’re importing in a worldwide system and determine duty rates.
These codes are categorized by chapters and sections, with each chapter having multiple subheadings. Generally, the first six digits of the code indicate what category your product is classified in, while the last two digits denote a further breakdown of that particular chapter.
The code is used by Customs officials and can affect whether or not your shipment is subject to additional regulations like heightened inspections. It’s important that you understand your HTS code and use it properly, as failing to do so can lead to unwanted delays, inflated fees and fines. Ultimately, it’s your responsibility as the importer of record to provide the correct code to your supplier and freight forwarders. This is one of the reasons it’s a good idea to work with a licensed customs broker to file entry paperwork and verify the proper codes.
Import Documents
As an importer, you must be familiar with the customs clearance process and the associated documents. Document preparation is key to a smooth customs clearance experience and avoiding unnecessary delays.
The main import document for customs duty is the commercial invoice cum packing list. It contains important information about your shipment, including the product description and value. This information is used by CBP to determine the estimated amount of duties that are payable on your shipment.
Other import documents include certificates of origin. These are essential for determining the country of origin of your goods. The country of origin determines which customs duty rate applies to the good and can significantly affect your overall costs.
You must also provide a declaration of valuation. The valuation method you choose depends on the type of goods and your trade agreements with other countries. For example, if you’re exporting to a free trade agreement country or a market with nil tariffs, you might use the transaction value method of valuation.
Customs Compliance
The goal of customs compliance is to adhere to the rules and regulations that are put in place to govern international trade. By following the rules, businesses avoid costly fines and penalties while maintaining fair practice standards that build trust with existing customers.
Importers must prove that they acted responsibly in their pursuit of accurate and complete trade information to support customs valuation and classification determinations for their imported goods. This is commonly referred to as “demonstrating reasonable care.”
This involves being aware of the complexities of HTS codes and how each type of product has a different value determined by its unique characteristics. It’s also important to understand what the origin of your goods means for you and how this may impact your duty rates (or even eligibility for trade agreements that reduce or eliminate your duties). And, by deploying duty saving mechanisms, you can maximize cash-flow while eliminating unnecessary costs.
