Understanding Duties and Taxes

It is important to consider the effects of duties, taxes, port handling fees and other customs charges when determining your shipment's total shipping charges. Depending on the content of your shipment and the destination country, customs charges will affect the price the recipient is willing to pay for your product. Being able to calculate and communicate the "landed" cost upfront can often save both you and the recipient valuable time and money.

Almost all shipments crossing international borders are subject to the assessment of duties and taxes imposed by the importing country's government. Duties and taxes are imposed to generate revenue, protect local industries against foreign competition or both. The duties and taxes normally must be paid before the goods are released from customs. A shipment's duty and tax amount may be based on:

  • Product value
  • Trade agreements
  • Country of manufacture
  • Use of the product
  • The product's Harmonized System (HS) code

Customs officials assess duties and taxes based on information provided on the air waybill, the Commercial Invoice and other relevant documents.

Please note: As per the contract of carriage with FedEx®, the shipper is ultimately liable for any duties and taxes assessed on the shipment. If the recipient refuses the package or the recipient or third party FedEx account holder refuses to pay for duties and taxes, the original shipper will be billed for duties and taxes.

Commodity Descriptions and Duties and Taxes

Provide an accurate description of your shipment contents

Duties and taxes, and other customs fees may be assessed based on the contents of your shipment. Accurate descriptions of shipment contents are not only required for this purpose, but are essential for timely customs clearance. A consistent and detailed description of your shipment contents on all documents will help reduce customs delays.

Tariff tables are based primarily on three factors, so ensure that all three are clearly addressed in your commodity description:

  1. What is it?
  2. What is it made from?
  3. What is the intended use?

Be specific. "Metal parts for hydraulic valves" is better than "machine tools." Also, use generic names, in addition to trade names.

Poor description: "Parts"
Good description: "Two steel springs for woodworking machine"

Including the product's Harmonized System (HS) code will further help customs officials properly assess your shipment and move it through the customs clearance process more quickly.

Value-added Tax (VAT) or Goods and Services Tax (GST)

A VAT is a general consumption tax assessed on the value added to goods and services. In some countries, including Singapore, Australia, New Zealand and Canada, this tax is known as goods and services tax or GST. Because this is a tax on consumer expenditure, businesses that are VAT-registered and fully taxable do not bear the final costs of VAT. Every member state of the European Union (EU) has a VAT.

A VAT is typically assessed on the "duty paid value" of the goods (which equals the cost of the goods, insurance and freight (CIF) plus duty). To see EU-specific VAT rates, please visit the International Trade Administration website.

Paying Duties and Taxes

FedEx® Advancement Fee:

In some circumstances FedEx is required to pay certain duties and taxes in advance on our customers' behalf. For instance, FedEx may pay an advancement fee when countries require that duties and taxes be paid prior to customs' release or prior to certain items clearing customs. In these circumstances FedEx will assess an Advancement Fee surcharge that will be billed to the party designated to pay duties and taxes.

Responsible Party:

Duties and taxes on international shipments will be billed automatically to the recipient, unless the shipper requests that FedEx bill the shipper or a third party. When completing the FedEx International air waybill or FedEx Expanded Service International air waybill, you can select the shipper, the recipient or a third party as the party responsible for payment.

Non-FedEx Account Holders:

Prepayment of duties and taxes before release to the recipient may be required if the recipient does not have a valid FedEx account number or a FedEx account in good credit or standing. Shipments will be held at the destination station until payment arrangements are made or the FedEx Credit department has authorized release of the shipment.

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