Need to make sure import duties for your business are on point?
There are some things you should know first.
Import duties are very important in international trade. However, there are plenty of companies and businesses that may pay more duties than is required by law. This could affect the profitability of any business greatly. It is in your best interest to make shipping as easy as possible.
Reducing Customs Import Duties for Your Business
There are a variety of ways you can reduce customs import duties. The money that you will pay on duties depends on various factors. Controlling these factors can lead to bigger profit margins.
The nature of international shipping means it can generate plenty of forms and paperwork. However, even though this can be tiresome, it is important to keep everything.
As well as keeping a check on paperwork, you should make sure forms are filed and stored correctly. If you misplace import paperwork, you can expect to find yourself dealing with many shipment delays.
Below are our favorite tips on how you can lessen the impact of importing for your business.
1. Differences Between Countries
Each country an order is made from creates a new tariff. This will include import tax, each with different rates and rules. The procedures at customs will change at each international border.
This is even a case of neighboring nations and could be very different depending on the area. Do not assume the same tariff for different countries as this can cause problems down the line.
2. Responsibility Of The Supply Chain
There are a whole host of companies that have to take on the task of assigning tariffs and calculating duty rates.
Some companies will leave the issue to the providers of transport and fulfillment. Some of these providers will suggest they can correctly classify products and calculate duty rates.
The truth? These providers are not obligated to get anything correct. It will be on your head if you do not fall in line with compliance, not the shipping provider. This is even though it was them that misclassified shipments or made an incorrect estimate.
If they make a mistake, you have to prepare to take on the burden yourself.
3. Checking Information
It can include a lot of work getting your duty and customs rates correct for all the products you have. Many times, when a rate has been calculated for a new country, companies may get complacent.
This can lead to your duty rate staying as it is in the shopping cart for many years without an update.
The obvious problem here is that rates and taxable products are always changing. drops in oil prices and changes in currency cause governments to look for new sources of tax revenue.
Many imports are also being scrutinized a lot more than before. Rates that were valid last year may be out of date. Refused shipments are usually because of a reliance on older rates.
4. Value Of Products And Goods
This goes without saying, but undervaluing goods is an easy way to incur penalties. It is actually something commonly done by many businesses.
Undervaluing items in shipments is often used by companies to avoid paying a higher duty rate. Some companies will use a lower estimated value regardless of the product actual value. This lets them take advantage of low-value policies or even duty-free ones.
The problem is, governments have begun to notice this tactic and are being less and less lenient. Custom processing delays and large fines are to be expected if you are engaging in such practices.
5. Researching Regulated Products
There are many countries where specific products have to be in line with import duties. Certain countries may incur additional charges on items with special stipulations. Unfortunately, these costs are not always small.
The products that are regulated vary from country to country, these products aren’t always obvious. In fact, some products are under regulation to maintain the state of domestic trade.
In some situations, a product may have illegal status. One particular example is Nigeria, whereby most imports are banned in order to protect trade.
6. Using Tariff Codes
Want to know one of the most difficult and time-consuming aspects of calculating customs duty correctly?
It’s making sure that every product that you have on your catalog is assigned a tariff code. With tariff codes, the first digits are always locked in internationally. The last digits vary by country.
Getting this code wrong, or using the code of another country can lead to many an additional cost. Each product your catalog needs to be looked at on an individual basis to make sure the correct code is applied.
7. Total Landed Cost
Every company should take care to calculate the international custom duties on all shipments. However, this is often not the case. Many companies do not consider VAT, GST, and other taxes locally that can impact the whole cost.
It is very important to remember that the total landed cost is a combination of many factors. Duty rates can only take you part of the way towards a comprehensive calculation.
When calculating the total landed cost, just to make sure to take all factors into account. This includes the value of your order, door-to-door costs, shipping insurance as well as other factors. This will give you a thorough picture of the cost you have to pay.
Importing The Right Way
Keeping on top of import duties costs can be difficult – however, with the correct due diligence, you can save money by moving goods regardless of taxes and duties. Need your packages handled the right way? Take a look at our services here.