Duties, Taxes, & Tariffs in International Shipping

Duties, Taxes, & Tariffs in International Shipping
Duties, Taxes, & Tariffs in International Shipping

Today, businesses have the ability to ship their products anywhere in the world. They can tap into new markets, boost their profits, and build their business using international shipping. However, there are a few drawbacks to shipping products overseas. And although internationally shipping your products brings in more profit, it requires a significant amount of time and money.

In addition to transportation expenses, businesses also pay duties, taxes, and tariffs when moving cargo to different countries. If you’re not familiar with these expenses, they can be difficult to navigate, especially since they change depending on the government and economy. Unfortunately, some of these taxes can be costly, so you’ll need to take them into account before moving your shipments.

Because these additional expenses can be challenging to predict, the best way to handle duties, taxes, and tariffs in international shipping is to learn more about them before you transport your cargo.

Customs Duties

Although duties, tariffs, and taxes sound similar, they are different expenses, so we’ll go over each one separately. We’ll begin with customs duties. When you ship items internationally, your shipments must pass through customs before they can enter a different country. After customs ensures that your cargo is legal, they send it on its way.

However, if customs finds any issues with your cargo, they can detain it for undetermined amounts of time. Sometimes, you might not be able to receive your cargo back from customs, causing you to lose time and money.

One of the tasks you must do to pass customs is to pay duties. Duties are indirect taxes that the government places on businesses that import goods into the country. The business that imports the shipments is responsible for paying this expense. Duties vary greatly depending on the weight, height, and type of products you ship.

Tariffs

Many businesses confuse duties with tariffs, and although they’re similar, they’re not the same expense. Tariffs are fees that the government enforces for certain products during specific times. Tariffs change quickly, so businesses must stay up-to-date on government events to see how they will affect shipping costs. Unlike duties, customs calculates tariffs based on the value of the imported goods. The purpose of tariffs is to decrease the number of imported goods on the market and increase the number of local items.

Import Taxes

Both duties and tariffs are types of import taxes. Import taxes are fees that the government places on items that enter the country. Since duties and tariffs fit under this category, they both count as import taxes. The purpose of these taxes is to support and protect local businesses along with the economy.

Calculate Your Expenses

Now that you know more about duties, taxes, and tariffs in international shipping, it’s time to dive into how these expenses affect your business. There are multiple ways to determine or calculate your duties or tariffs.

Thankfully, customs has a database for import taxes, so all you need to do is visit their website to find more information about specific duties or tariffs. To start your preliminary calculation for your import taxes, you need the HS code and the value of the good with the freight costs, insurance costs, and any other costs included. Once you have gathered that information, you can multiply the total of that with the duty rate to find the estimated amount of import taxes you will be required to pay.

Payment Options

Customs provides multiple payment options for taxes to make the process as convenient as possible. If you are a business on US soil, then you’ll need to pay with US currency. You can use checks or certain types of cards to pay the taxes. The key to a successful international shipment is to pay the exact amount on time. If you don’t pay the correct amount or if you send the payment late, customs will hold your shipment, and you’ll have to go through many steps to get it back on track.

Essential Documentation

Without the proper documentation, customs officials won’t be able to calculate the taxes for your shipment. There are a few documents that you will need to send to customs to ensure that your cargo reaches its destination. Some of these documents include a bill of lading, a packing list, and a commercial invoice with pricing, HTS tariff classification, and the origin country.

Always double-check these documents for errors before sending them through! One minor mistake can turn into a time-consuming problem, especially if you don’t have a lot of experience when it comes to dealing with customs.

Contact Customs

If you are new to the international shipping world and need help navigating all the steps, reach out to customs. They’ll ensure that you know what you need to do to ensure that your shipments reach their destinations safely and on time. You can also take a look at the customs website for more information about a specific tax or law, which comes in handy since these laws and taxes change often depending on the current government and state of the economy.

However, keep in mind that working with customs isn’t always an easy process, especially if you aren’t familiar with the transportation industry. If you have had some experience in the industry, then you know how difficult customs can be. That’s why we offer our services here at Diversified Transportation Services to make your life easier and your transportation processes smoother.

Work With a 3PL

All these transportation processes take time, which is one of the reasons why many businesses choose to partner with a 3PL and its freight forwarder relationships to help with their international shipping needs. At Diversified Transportation Services, we have decades of experience dealing with customs, taxes, and international laws.

With our international freight services, we help businesses of all sizes ship their products safely and efficiently overseas. We work with our reliable freight forwarders to ensure that your cargo reaches its destination.

Give us a call today for a quote or more information, and see what Diversified Transportation Services can do for you.

Duties, Taxes, & Tariffs in International Shipping

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