How do customs taxes and duties work?

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Why Taxes and Duties?

When you ship something to another country, your recipient may be asked to pay additional duties and taxes before the shipment is delivered. Governments tax shipments from other countries because they want to:

  1. Protect domestic companies from foreign competitors
  2. Control the flow of certain products
  3. Raise revenue through taxes

Duties and taxes on shipments are legal requirements that must be settled before your shipment can be delivered.

How to calculate the taxes you will receive?

You can use one of many online tax calculators such as this to estimate the taxes your recipient will need to pay.

The actual breakdown of the calculation is a percentage charge (defined by destination country and also dependent on the type of product you are shipping) on your shipment cost (this includes the declared value of your goods, and depending on the destination country, sometimes includes your insurance and shipping charges) once the shipping cost exceeds a minimum threshold (defined by destination country).

You may be tempted to under-declare on the value of your item, as it may help you reduce or even avoid taxes and duties. However, do note that you will bear the risks of such actions as it is illegal and may cause you much more if caught. Also, if your items are lost and you opted for insurance, you will only be able to claim up to the amount you declared.

Who pays for the taxes?

By default, orders are arranged for DDU (deliver duties unpaid). DDU means recipients will be contacted to pay for duties and taxes once the parcel arrives at the destination country. It also means the charges you pay us when submitting an order does not include the estimated taxes that will need to be paid at customs, as that charge is calculated and requested by customs upon your parcel’s arrival at the destination country, and the money will go directly to customs.

If you ship with SingPost, DDU is the only option they offer consumers. This might not be the choice you prefer, especially if you are gifting or if you prefer certainty when budgeting for your shipping order. With JustShip, you can opt for DDP (deliver duties paid) as of Oct 2021 when filling up your shipment form with us.

DDP shipments are more expensive upfront as shipping providers process the payment to customs on your behalf for an additional fee.

That being said, DDP fees are fixed and can be 3-4 times cheaper than DDU brokerage fees. Paying these additional fees upfront ensures that your shipment will clear customs and get delivered, and customs wouldn’t have to contact your recipient directly to collect additional fees.

DDP shipments will also reduce the chances of your recipients abandoning the shipment in customs, which would be worse for you as the shipment will be forcefully returned to you at the cost of your original shipping cost.

While we would recommend DDP to most customers, at the end of the day it depends on your own needs and preferences. At JustShip, you get to ship your parcel in the way you want, simply and affordably. Don’t hesitate, schedule a free pick-up and get your parcel shipped worldwide in 2-5 days!

November 1, 2021
shipping tax, duties and taxes for international shipping, international shipping tax

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