How do customs taxes and duties work?
Updated: Jan 29
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 the shipping cost of your shipment (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.
Can sender pay for taxes instead of recipient?
At JustShip, default orders are arranged for DDU (deliver duties unpaid). This 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 do 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 would like for the sender to pay for the taxes instead of the recipient, you can contact us directly through Whatsapp to request for DDP (deliver duties paid) in your order. We estimate the taxes and duties through an online tax calculator, and include that along with a handling fee (fee amount depends on the details of your order) into your bill.
There are pros and cons to DDP vs DDU.
DDP shipments are more expensive upfront as JustShip processes the payment to customs on your behalf, but for an additional fee. Some times, customs will also waive taxes and duties for DDU shipments if the parcel is shipped as a gift or for personal use. Unfortunately, this will not apply to DDP.
That being said, DDP fees are fixed and can be 3-4 times cheaper than DDU brokerage fees. Paying these additional fees upfront to us 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.