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How Duties and Taxes are Calculated?

Know the Harmonized System (HS) Code

Duties and taxes are often determined by the Harmonized System (HS) codes assigned to goods. These codes categorize products for customs purposes. Each code corresponds to a specific product and carries information about its composition, use, and origin. Accurate classification of your items with the appropriate HS code is the foundation for calculating duties and taxes. You may learn how to assign an HS code to your parcel content from our guide here.

Understand customs valuation

Customs valuation refers to the process of determining the value of imported goods, which is essential for calculating duties and taxes. The customs value is typically based on the transaction value (the price paid or payable for the goods), adjusted for certain costs. It's crucial to provide accurate and transparent information about the value of your goods to ensure proper calculation of taxes and duties.

Consideration of Import Duties

Import duties are taxes imposed by a government on goods imported into a country. The rate of import duty is often a percentage of the customs value of the goods and can vary depending on factors such as the type of goods and their origin. Familiarize yourself with the specific duty rates applicable to your products, as this information is vital for accurate calculations.

Explore additional taxes and fees

In addition to import duties, other taxes and fees may apply, such as value-added tax (VAT) or goods and services tax (GST). These charges are based on the customs value of the goods and, in some cases, the cost of shipping. Be aware of the specific tax regulations in the destination country to anticipate and include these additional costs in your overall shipping budget.

Consider exemptions and free trade agreement

Certain goods may qualify for exemptions or reduced duty rates under free trade agreements or preferential trade arrangements. Research whether your products fall under any such agreements, as this can significantly impact the overall cost of duties and taxes. Understanding and leveraging these agreements can be advantageous for businesses engaged in international trade.

Stay informed on Tariff shift rules

Tariff shift rules are criteria that determine whether a good has undergone sufficient processing or manufacturing to qualify for a lower duty rate. Understanding these rules is crucial for accurately classifying goods and benefiting from potential duty savings. Stay informed about the specific requirements for tariff shift eligibility.

Utilize our tax and duties calculator

You may use our tax and duties calculator to get an estimation of the tax and duties that may be implied for your parcel content. Use tax and duties calculator.

EasyParcel is the author of this solution article.

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