Thinking about buying and shipping products from China online? Any time a shipment comes from outside your home country, it must be entered and cleared through customs, and may be subject to duties and taxes before you can receive delivery. The process can be complex, which is why I write this post about issues related to customs from four aspects.
- what is customs clearance and customs duty
- How much tax do we have to pay
- How to pay the tax
- Tax avoidance strategies
1. We need to understand customs clearance and customs duties.
What is customs clearance?
In a layman’s term, it involves submission of documents for relevant customs procedures (payment of duty, customs examination, etc.) when the goods have reached the customs.
What is customs duty?
It is the tax imposed on goods when transported across international borders. there are export duty and import duty.For buying from China, our concern is only about the import duty.
2. How much tax do we have to pay?
The value for the purposes of charging Customs Duty is calculated on the price paid or payable for the goods plus the cost of transport (including postage), insurance and any loading or handling charges associated with the delivery of the goods into your country.Every country has its own set of duty rates and the customs officers will determine, impose and collect customs duties.
3. How to pay the tax?
Once we know the taxable amount and the duty rate, we can calculate the amount to be paid.Paying custom depends on from which courier company you are ordering,
If you are using premium shipping like DHL,TNT,FedEx then they will email you invoice of custom and their personal will collect money at your doorstep at the time of delivery.
If you choose free shipping method such as China Air mail,Singapore Air mail,Hong Kong Air mail etc then once your courier reaches your local post office,you will receive a call from post office and you will need to go there and pay.
4. How to avoid import taxes?
Please note that not all products will be taxed. While luck may play a role, there are certain strategies which we can use to avoid tax.
Try to avoid direct shipping. Choose transshipment instead.
Some taobao sellers provide the direct shipping option. In order to ensure a secured shipping, they will normally choose the well-established courier services such as DHL, UPS, etc. which will impose a duty fee.
For large quantity and weight, split them equally!
The reason for splitting is to reduce the parcel size to avoid drawing attention. Imagine if you are declaring a huge, heavy box of personal items, will the customs skip examining it? Secondly, it is to put your eggs in different baskets, so that even when you are taxed, you can minimize the loss.
Check the weight: it would be best to keep it within 30 lbs.
Then, check the size:
you know the volume of your items. For instance, imagine you have bought 2 pieces of down jackets. The weight would be within the standard, but it will still be taxed. Why? It’s because of the volume! Two pieces of down jackets will have a parcel size larger than that of other heavier items. The customs will definitely examine it.
Avoid buying heavy items
We all know that there are many different transportation routes used by the courier to ship different types of products at a different shipping rate. There are routes used for shipping valuable objects and there are routes used for bulky items. As a rule of thumb, we should avoid buying heavy items, not only because it will increase the shipping cost, but also it will affect the shipping speed. Heavy items tend to be held by the customs for examination, causing a delay and other inconveniences.
Try not to have all same items in one parcel
Try to have different types of items packed in the same parcel so that when you declare it, it will be a list of many different items. If the number of units of the same item is big, it might be examined by the customs.