You want to buy things from China, but you don’t want to be surprised by something bad at customs. Read this guide before you buy your goods, and you’ll be able to figure out how much they will really cost when you import them.
Import duties from China: the value of your merchandise
First of all, I’d like to point out that each country has its own customs duties. When we talk about regional economic blocks like the European Union, there are no import duties on goods that come from within the single market. However, there are import duties on goods that come from other countries, like China.
To figure out how much the import taxes from China will be, it’s important to know how much the goods are worth.
the price of the product itself, the cost of insurance,
what it costs to ship
how much the samples and molds cost
In the bill of lading, which is given out by the shipping company, the value of the goods is written down. This document is very important because it is used by the government to figure out how much import taxes to charge.
Customs clearance, stock and inspection fees
The aforementioned costs do not include additional expenses for customs clearance, stock, and inspection. These fees are difficult to predict because they vary widely.
The administrative fees levied by national authorities to facilitate the importation of goods are known as customs clearance costs.
The cost of warehousing refers to the time that your goods are stored in a customs warehouse awaiting pickup.
If your products are chosen for inspection (inspections are conducted at random or when there are specific doubts on le legality of the goods), you will be responsible for the fees the government asks for in exchange for the customs inspectors’ efforts.
Import duties from China: what are the additional fees?
Customs and other fees for importing goods vary widely between nations. For the European Union and the United States, respectively, I will provide two examples.
Value-added tax (VAT) must be added to the aforementioned expenses when importing goods into any European Union country. All goods, whether made domestically or imported from abroad, are subject to this tax. In some countries, like Italy, the VAT rate is as high as 22%, while in Germany the rate is only 19%.
It’s a different story if you want to bring Chinese goods into the United States, where you’ll have to pay taxes other than value-added tax.
the MPF, or “Merchandise Processing Fee,” which varies with the total cost of an import. Prices range from $2.50 to $9.50 if the total value of the items being shipped is less than $2500, and from $25 up to $485 if the total value is more than $2500.
the Harbor maintenance fee (HMF), equal to 0.125% of the value of the products, is levied exclusively on those that arrive by sea.
This specific tariff is based on the FOB price, which includes product prices, transportation costs, and export fees.
Import duties from China: how to calculate them?
The amount of import duties is determined as a percentage of the product’s declared value on the bill of lading. However, these figures vary by product and may be affected by anti-dumping levies.
In most cases, the supplier’s invoice will include a numerical code (HS) that will be used to determine the amount of tax due on the item.
See below for an example of how to calculate costs and import duties when shipping 500 neoprene clutch bags from China to Italy.
Unit price for clutch bags is €7,0434.
The sum of all clutch bags: €3521.74
Retail price for a single unit of your specialized packaging is €3,3913.
Total cost for individualized packaging is €1695,66
Complete Product Cost: €5217.40
Price of shipping: €1380
Taxes (at the rate of 6.7%): €442,03
Fees incurred for clearing customs: €417,52
Cost of shipping within Europe: €172.75
Sum subject to taxation: €7629.70
22% of VAT: €1678,53
What if I declare a lower value for the products?
There are legal consequences for lying, so it’s best to avoid it. Authorities at customs may not be able to inspect each and every package, but if they discover issues with yours, there could be extremely dire consequences. Furthermore, as technology advances, checks and controls are becoming ever more stringent.
It’s widely believed that undervaluing purchases made in Asia is common practice among consumers. However, you must exercise caution because, under international law, you, and not the Chinese supplier, are liable for any criminal penalties arising from the false declaration of the value of the goods in your country.
When you do not need to pay import duties from China?
We have previously mentioned that customs duties are not always a fixed percentage of the total cost of a shipment, depending on the items being purchased. Here are a few specific cases in point:
The percentage of people who own a digital camera is 0%.
Cameras with digital video recording: 3.1%
There are countless categories of goods, and their HS codes can all be found here. But be very cautious and accurate! Attempting to import digital video cameras while saying you’re importing digital still cameras could result in a customs hold because of fraud.
How to pay import duties
You can make your import tax payment in one of two ways:
Donate money straight to customs
Make a prepayment through your shipping company; they’ll ask for it right before they drop off the goods.
Can I deduct import duties from taxes?
Unfortunately, the answer to the question of whether or not import duties paid by your business can be deducted from your taxes is no.
However, while a VAT deduction is possible, import duties are not. So, if you are importing goods from China to sell in your home country or to use in your industrial chain production, you must take import duties into account and figure them into the cost per unit of goods.