For a layman, understand the taxation structure and rates is a tedious task. It will be hard to know when to pay duties and taxes (tariffs) and why. Especially when someone is ordering items from an overseas seller, there will be confusion about the duties and taxes to be paid for obtaining international packages.
Now, let us understand why we need to pay specific duties and taxes (tariffs) to obtain international package delivery. Firstly, try to imagine yourself in a situation - you ordered and purchased an item through an online store. The purchased items need to pass through a proper customs procedure for reaching your destination. It is known as the clearance of shipment. It relies on many factors, such as:
- Country of origin.
- Country of destination.
- The type of products (classification such as liquid, electronics, cosmetics, food, etc)
- The weight of products
- The size of products
- The price or value of products
The customs laws, duties, and taxes (charges) differ from one country to another, and it also depends on the type and size of items purchased.
As an international shopper, you might wonder why you have to pay extra for customs duty when you make an online purchase? There are many reasons why customs laws and taxes exist.
(1) Each country monitors custom laws and duties for importing products to control any illegal items entering the country.
(2) The monitoring system avoids a large number of imported goods to protect local production factories.
(3) The monitoring system protects taxation for local products and takes controls between products from authorized dealer import and parallel import.
When shopping online internationally, it is crucial to understand how the price of the goods purchased does not comprise duties and taxes. This also applies to the shipping costs, which means the price and shipping costs an online shopping paid has nothing to do with custom duties or taxes.
It is a fundamental international law that when the goods are transporting from one country to another, a tariff must be paid, and this tariff is known as customs duty or taxes.
When the transportation of goods involves an international shipment, the purchaser of the goods MUST pay duties and taxes. These duties and taxes are as per the discretion of the customs authority.
So here is the process of delivery/transportation of an international purchased package:
(1) Package arriving at the courier company from the sender.
(2) Courier company sends for export customs declaration.
(3) Package traveling from origin country (sender) to destination (receiver).
(4) Package arrived destination for import customs declaration/customs clearance.
(5) Package delivering to the receiver
Process(4) is where the customer might have to pay for customs duties.
When trying to recall the last time we made an overseas purchase through online shops, did we pay duties and taxes for the goods purchased? It may not be because usually countries will not charge for small gift packages ship internationally.
Hence, from now on, before making purchase products through online e-commerce shops, it is necessary to know the following aspects:
- The country of destination (receiver)
- The country of origin (sender)
- The local customs laws and authority (your country)
When the courier company asks you to pay requisite charges, it is not the additional charges. It is the actual customs duty for international packages that the courier company has paid while clearing goods through international borders.
What if you receive an international package as a gift? Do you need to pay customs duty for international packages? Obviously, yes. As every package needs to be cleared for shipment, customs duty must also be paid on gifts.