When shipping internationally, your shipment may be subject to import duties and taxes, calculated based on the item's type and value. Each country taxes items differently.
What are Duties and Taxes?
Import duty is a tax imposed on specific commodities from other countries to make them less "desirable" and encourage support for the domestic market. The duty charged varies by item category or HS code.
For example, shipping a phone to Canada incurs 0% duty, while shipping a t-shirt results in an 18% duty.
Import tax is a flat charge imposed by customs, regardless of the commodity. This may be referred to as GST or VAT, with slight variations. For example, both a phone and t-shirt shipped to Canada are taxed at 5%.
With Easyship, you can choose to deliver shipments with duties prepaid (DDP) or with duties unpaid (DDU) at the click of a button.
What is a Tariff?
While the terms ‘tariff’ and ‘duty are often used interchangeably, a tariff is the percentage of tax charged on an item. For example, importing a carpet to the U.S. incurs a 4.5% tariff. The actual amount paid (import duty) depends on the item's quantity. Importing $1,000 worth of carpets would result in $45 in import duty.
Who Pays Duties and Taxes?
When creating your shipment, you can decide who will pay the duties and taxes.
- DDU (Delivery Duty Unpaid): The recipient pays the charges upon the shipment’s arrival and customs release.
- DDP (Delivery Duty Paid): The sender is responsible for paying the duties, which may be collected during checkout.
Not all couriers offer prepaid services, so when selecting DDP, only eligible couriers will be shown. Displaying duties and taxes at checkout is a great way to build trust with international customers.
How Duties and Taxes are Calculated?
Duties and taxes are calculated differently across countries, with two common methods:
- CIF (Cost, Insurance, and Freight): the import duty and taxes are calculated based on the value of the imported goods as well as shipping costs. An example of this is Canada.
- FOB (Free on Board): The import duty and taxes are calculated only on the customs values of the imported goods. An example of this is Australia.
Other factors include the item’s origin, category (HS code), value, and shipping costs.
More information on our blog post: What is the difference between FOB and CIF?
Additional Costs (DDP Handling Fee)
Estimating import fees can be tricky due to brokerage fees, which are charged by couriers to facilitate payment to customs (e.g., DDP handling fee). Express couriers like DHL, FedEx, and UPS charge higher fees for faster customs clearance, while postal services charge lower fees but take longer (3+ days, depending on the season). For example, UPS Canada’s brokerage fee is an additional charge beyond duties and taxes.
Duties and Taxes Resources and Calculator
Countries: This page provides a detailed breakdown of import policies for all serviced countries, making it a valuable resource for understanding duties and taxes.
Duty and Tax Calculator: Get a quick estimate of duties and taxes with our calculator.
FAQ's
Q: Why do the estimates change depending on the courier service?
A: Brokerage and handling fees vary depending on the service and courier.
Q: Do all services off pre-paid duty and taxes?
A: No. Most courier services on Easyship do not offer prepaid duty and tax options. When selecting prepaid, the list of couriers will be limited, as postal and hybrid services typically do not support this option.