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CUSTOMS FEES
Customs fees are the taxes applied on products when they’re shipped across countries. Put simply, it’s the tax levied on the import of goods.
Why governments impose customs fees
Customs fees can be a result of an economic policy or a part of a geopolitical strategy. Here is why a government imposes customs fees:
Create revenue
For many governments, customs fees are an important source of revenue, and the government takes a cut on every import and a percentage of the trade revenue.
Protect local industries
Placing a customs duty on some products discourages importing those products, protecting national producers of the same product from global competition.
Punish an exporting nation
Customs fees are solely a geopolitical move sometimes. A country imposes fees against another country as a sanction, which stops the market for the exporting country’s national products.
Stabilize the market
Other times, penalizing products sold below market value is important for a government. It is also known as anti-dumping to stabilize market practices. These customs duties can prevent the selling of products that are below market value.
Situations where customs fees may arise
Two main factors decide whether or not you will have to pay customs fees: the country you are shipping to and the products you are shipping.
Import country
The specific customs fees international shippers should pay depend mainly on the country to which the products will be shipped. Every country has its own rules of customs and import duties. For example, the customs fees you owe when you ship to countries that have a free trade deal with your country will be below.
Who is responsible for paying customs duties: seller or customer?
In the ecommerce world, the customer pays the cost of customs fees from international shipping. Some countries have a high customs fee for imported products, so much that sometimes the fee is as much as the product itself. If you are looking to cover the cost of international shipping by yourself, then international shipping will not be a good idea.
Instead, you can state clearly on your website that customers are responsible for paying all customs fees and duties. Then you can factor these costs into the customer’s online shopping cart. If you do not take these steps, the customs costs will affect your revenue, affecting your bottom line.
What are DDU and DDP?
When shipping internationally, DDU and DDP are two terms that might be applicable to your business. DDU stands for Delivered Duty Unpaid. It implies that the customer is responsible for paying all customs fees to get the shipment. DDP, on the other hand, stands for Delivered Duty Paid. DDP means the merchant is responsible for handling the costs of the delivery, including customs duty and any other charges. All products sold on LensNationX store are DDU.
How are duties collected?
The importer declares the value of the products to customs in a manifest declaration. Then the customs office assesses the value of goods and calculates the required fees you should pay once the goods arrive at the border. If you do not deposit the payment, it can result in customs delays.