International Shipping

What is Import Duty?

What is import duty and who pays it? Learn how import tax can affect your eCommerce Business and the meaning of import duties.
What is Import Duty?

By Jules


February 6, 2018

When shipping internationally, you may have to pay import duty depending on what you're shipping and its declared value.

Definition of Import Duty and Tariff

Import duty is a tax imposed by a government on goods from other countries. This increased price on imported goods is meant to make these products less "desirable" so buyers are encouraged to support the domestic market.

It's common to hear the words "tariff" and "duty" used interchangeably. However, there is a slight difference in definition.

A tariff is the taxed percentage of an item. For example, if I import a carpet to the United States, US Customs would charge a tariff of 4.5%.

Import duty is the actual amount of money paid on the imported product, and this value depends on the quantity imported. In the case of the imported carpet to the US, if I imported $100,000 worth of carpets, the import duty would be $4500.

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The importance of import duties in eCommerce

With the expansion and trend towards eCommerce in global trade, it's important to consider how duties can affect your online business. After all, countries are now taking online businesses and transactions into consideration when setting up their import duties and taxes.

Knowing how to handle import duties in different countries is vital, as an eCommerce customer's experience is based on your online store's checkout and delivery.

Prepare your customers for paying import duties

Informing your international customers that import duties may apply to their shipment is very important. To effectively communicate this, you can mention that duties may apply on your product pages, checkout, and email confirmations so it won't come as a surprise when they see the additional charge.

It can also help if you can link or embed an import duty calculator on your website. This can give the customer the chance to calculate the tax based on their country and product that they're interested in, so they have an idea of how much they'll be paying.

Calculating import duties

Import duties differ for every country. Usually, duties are calculated as a percentage of the customs value, with insurance and shipping charges included. To help simplify this, we've built a duty and tax calculator to help you get an idea of what you could expect to be charged. Try it here.

In short, whether your trade is traditional or eCommerce, knowing about import duties is good due diligence for your business.

Easyship automatically calculates import taxes and duties for your shipment so you and your customer will always know all costs upfront! Learn more.