Shipping Terms Glossary
Shipping Terms Glossary
Customs Duty (Import and Export Duties)

Customs Duty (Import and Export Duties)

Duty is a subcategory of tax, a type of tax. Essentially, you’re paying two types of tax.

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1. What is Import Duty?

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Customs Duty paid in the importing country is called Import Duty. It is a tax applicable to goods entering the importing country, and it is collected by the customs authorities.

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In the country of destination, the buyer pays import duties .

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Who pays for the Import Duty?

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It depends on your incoterms, DDP or DDU .

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DDP means the sender pays; DDU means the receiver pays.

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How do you calculate your Import Duty?

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Import Duty = Total Declared Value x Tariff Rate

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The Total Declared Value listed on the Commercial Invoice dictates your import duties.

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How do you find your Tariff Rate?

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Using the HS Code . Under the HS code schedule, different tariff rates apply for each product category and individual product.

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Download Our
‍ Import Guide

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A quick example:

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Let's try an example:

Product: 100% cotton t-shirts
Declared value: US$ 10,000
Export Country: China
Import Country: US



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Step 1: Using the US HS code Tool , you can find the HS code for cotton t-shirts, which is 6109.10.04

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Step 2: Locate the tariff rate in the table's header. For cotton t-shirts, the tariff duty rate is 16.5%

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how to find HS code

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Step 3: Calculate your Import Duty

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Import Duty = Total Declared Value * Tariff Rate

= US$ 10,000 * 16.5% = US$ 1,650.

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πŸ˜•β€œTax and Duty included” vs β€œTax and Duty NOT Included”. What is the difference between tax and duty?

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Duty is a subcategory of tax, a type of tax. Essentially, you’re paying two types of taxes.

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β€œTax” refers to sales taxes such as VAT (Value Added Tax) or GST (Goods and Services Tax).

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β€œDuty” refers to the charges you need to pay based on the tariff rates of the imported goods.

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Why does the government charge taxes and duties?

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There are plenty of reasons:

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β€’ It is a form of revenue for the government

β€’ In order to protect local businesses by encouraging everyone to source locally

β€’ To control the flow of certain goods

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2. What is Export Duty?

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Customs duty paid in the export country is called export duty.

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It is a tax applicable to goods leaving the exporting country, and it is collected by the customs authorities.

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Does every country have Export Tax?

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Nowadays, export taxes are rare. They only apply to certain products such as agricultural, mineral, or petroleum products, and they differ from country to country.

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For example, if you are exporting from China, export taxes are only applicable to semi-manufactured goods such as steel, engines or plywood.

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Who pays the Export Duty?

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The seller is responsible for making this payment.

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Still have questions?

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Xero has put together a fantastic VAT guide . If you still have any more questions, don't hesitate to contact us at hello@bookairfreight.com !

Cristian Ungureanu

Logistics nerd and resident marketing guy of Bookairfreight. I love writing content that simplifies old-fashioned industry processes and provides solid, accurate information you can base your decisions on. Outside of logistics, I enjoy nature, hanging out with friends, electronic music and spirituality.

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