What are Duties and Taxes?
Duties Calculated
Whether a shipment is a gift or not, it must still go through an import procedure as determined by customs law in the destination country. The shipment is cleared through customs based on the origin country, the value and quantity, but not its purpose. Dutiable shipments are subject to a customs duty, which is a tariff or tax imposed on goods when transported across international borders.
The calculation of duties depends on the assessable value of a dutiable shipment. For the purpose of this calculation, dutiable goods are given a classification code that is known as the Harmonized System code.
Who is Responsible for Payment?
The payment of duties and taxes is typically the responsibility of the receiver.
Taxation Across Borders
Taxes are imposed on goods when they are moved across a political boundary (although some free trade zones exist around the world). Taxes are usually associated with protectionism, the economic policy of restraining trade between nations.
Taxes are usually imposed on imported goods, although sometimes may also be imposed on exported goods.
Goods Purchased Online for Personal Use
You may be charged customs duties and taxes for something you purchased online because:
- Duties and taxes are often not included in the price of the goods you purchase online, and might not be included in the overall shipping costs you pay to the online retailer.
- When purchasing goods online, some or all of these goods may not originate in the country you reside in, therefore are subject to a customs duty, which is a tariff or tax imposed on goods when transported across international borders.
- When goods are not shipped domestically (within your country) or within a single customs union, such as the European Union, you are liable to pay any inbound duties and taxes which your local customs authority deems appropriate.
- What is payable, if anything, depends on where the goods are sent from, the type of goods, their transactional value and the weight of the package.
When buying goods online, you should always check whether they are either being sent to your address from:
- Your country
- Another country
- Outside your customs union country
Note: Different rules apply when buying goods for commercial use.
Gifts Bought Online
A gift is defined as something sent directly by one private individual to another and such goods do not attract import tax if the value is below stated local thresholds.
Ordering and paying for goods that originate outside of your country or customs territory for shipping to a person other than the purchaser, does not satisfy the customs definition of being a gift.