How to calculate your import duties from China: a simple guide.
Do you want to buy products from China but you are afraid of getting unpleasant surprises at the customs? Read this guide before you purchase your products and you will be able to evaluate the real price of the goods you’re planning to import
Import duties from China: the value of your merchandise
Firstly I would like to highlight that every country has got different customs duties, when speaking about regional economy blocks like the European Union, import duties will not be applied to products inside the single market, however, there will be import duty fees for products that are imported from third-party countries, like China.
In order to calculate the import duties from China, it is very important to know the value of the products, which includes:
- the actual price of the product
- the insurance costs
- the shipping costs
- the price for the samples and for the molds
The value of the goods is declared in the bill of lading issued by the shipping company. This document is very important because it is used by national authorities to calculate the import duties.
Customs clearance, stock and inspection fees
You have to add to the above-listed charges also the fees for customs clearance, stock and inspection. These type of charges can vary and are very difficult to evaluate beforehand.
- Customs clearance costs are the bureaucratic fees that national authorities charge to allow the entry of imported products in the country.
- Warehousing costs are the charges for the renting of the space in the customs warehouse for your merchandise until it is picked up.
- Inspection costs must be paid only if you products are inspected (inspections are undertaken randomly or if there are specific doubts on le legality of the goods) and these are the charges that the authorities request for the work carried out by the customs inspectors.
Import duties from China: what are the additional fees?
Import duties and additional charges are very different from one country to another. I will give you two examples, one for the countries of the European Union and one for the United States.
When you are importing products in any country of the European Union, the Value-added tax (VAT) must be charged in addition to the costs previously described. This tax must be paid on all products, whether they are produced nationally or imported from a foreign country. The VAT percentage can be very different in different countries, in some countries like Italy it is 22%, while in Germany it is 19%.
If you would like to import products from China to the United States, the story is different, you would not be paying VAT but another type of taxes like:
- the Merchandise processing fee (MPF), which changes depending on the value of the imported goods. If the products’ value is less than $2500, the package can be charged $2, $6 or $9, while if the products’ value is higher than $2500 the fee amounts to 0.3464% of the value (from a minimum charge of $25 to a maximum of $485)
- the Harbor maintenance fee (HMF) which is only charged for the goods arriving by sea and it amounts to 0.125% of the value of the products.
These particular custom duties are calculated on the FOB price, which takes into account the costs of the products, the shipping charges and the fees for the exportation of the products.
Import duties from China: how to calculate them?
Import duties are calculated as a percentage to be added to the value of the product, as declared in the bill of lading. However, these percentages are different for each product and they can also be subject to anti-dumping duties.
More generally, the taxation of a product is calculated based on a numerical code (HS) specified in the invoice issued by the supplier.
Below you can see an example of the calculation of costs and import duties from China to Italy: the calculation was done for 500 neoprene clutch bags.
- Clutch bag unit price: € 7,0434
- Clutch bags total price: €3521,74
- Customized packaging unit price: €3,3913
- Total price for customized packaging: €1695,66
- Total products cost: €5217,40
- Shipping costs: €1380
- Duties (6,7% for this specific item): €442,03
- Customs clearance cost: €417,52
- Local shipping cost: €172,75
- Taxable amount: €7629,70
- 22% of VAT: €1678,53
- Total: €9308,23
What if I declare a lower value for the products?
Making false statements is a crime and, therefore, it is not recommended to undertake this type of activity. Customs authorities may not be able to check thoroughly every single package, however, if they found problems with yours, the consequences can be really serious, moreover, with the evolution of technology, checks and controls are becoming stricter every day.
Many think that those who purchase products from Asia declare a lower value, that doing so is common practice. However, you must be careful, because according to International Law, the false declaration of the value of the goods in your country is your criminal responsibility and not of the Chinese supplier.
When you do not need to pay import duties from China?
As we have mentioned before, custom duties change depending on the products purchased and sometimes they can be 0%. Some concrete examples could be:
- Digital camera: 0%
- Digital video camera: 3,1%
There are just so many types of products, you can find their HS code in this box. Nevertheless, you must be very careful and get it right! If you declare that you are importing digital cameras while you are actually importing digital video cameras, the authorities could block your products at customs for attempted fraud.
How to pay import duties
There are two ways in which you could pay your import taxes:
- Pay directly the customs agency
- Pay via your shipping company, which will pay beforehand and will request the settlement before the final delivery of the products.
Can I deduct import duties from taxes?
If you are wondering whether import duties paid by your company can be deducted from your taxes, unfortunately, the answer is no.
While it is the case for VAT, import duties cannot be deducted. Therefore, if you are importing products from China to resell them in your home country, or to use them in your industrial chain production, import duties have got to be considered and calculated as part of the cost per unit of the goods.
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We will help you to buy wholesale products from China, even in private label, we will look after all the shipping logistics and we will guarantee the accuracy of the documents, and most importantly: your quotation will be inclusive of all the charges for the importation.
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