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All You Need to Know About US Import Tax and Duties

Business · 3 Mins Read

All You Need to Know About US Import Tax and Duties

There is no running away from paying import tax and duty on goods when shipping goods into the USA. Both retail consumers and business entities are liable to fulfil such import tariffs levied by the US government on imported goods’ value, including freight and insurance. The US import duties and taxes may vary  by country depending on the country’s trade relationship with the US. 

To ensure the smooth delivery of your goods, you have to be compliant with the US customs tariff and duty requirements. Here are four important factors to keep in mind when importing goods into the US:

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Which goods are subject to duties and taxes when importing into the US?

Generally, goods with a value greater than US$800 are subject to duties and taxes in the US.  However, this US import tax threshold only applies to certain goods. There are exclusions that can be imported duty-free and are not liable for customs tariff.

For example, personal effects like clothing, jewellery and cameras are not liable for custom tax and import duty if they are more than one year old. Household items such as furniture and tools of the trade may be imported duty-free if they’ve been used abroad for more than a year or are not intended for any other person or for sale.

E-commerce purchases that are mailed or shipped to the US are granted duty-free entry if they are less than US$1,600 and from an insular possession (IP) country. The same applies to purchases that are less than US$800, and from a Caribbean Basin Initiative (CBI) country or Andean country.

How much are the US import tax and duties?

The amount of import tax and duties to be paid depends on the country that the goods are imported from. Duty tax rates are between 0 to 37.5% with the typical rate being 5.63%. A flat rate of 3% applies to e-commerce purchases that are in excess of the US import tax threshold limits.

Countries with free, reduced or increased custom duty rates 

US authorities do offer varying rates of import taxes by country or with accordance to trade agreements:

  • Preferential rates are given to the 20 countries that have Free Trade Agreements (FTA)

  • Free or reduced rates to certain developing countries under the Generalised System of Preferences (GSP)

  • No duty for many products from the Caribbean and Andean countries

  • No duty for many products from certain sub-Saharan African countries under the African Growth and Opportunity Act

  • Free or reduced rates for goods manufactured or produced in Canada or Mexico under The North American Free Trade Agreement (NAFTA)

  • Increased duty on certain products of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the Ukraine

If you need to calculate how much US import tariff you need to pay when importing from Malaysia and the rest of the world, use this import duties and taxes calculator.

On top of duty, are there any additional taxes or fees required to import into the US? 

Apart from duty tax, other taxes like the Federal Excise Tax, user fees, Merchandise Processing Fee (MPF) and Harbour Maintenance Fee (HMF) may be imposed on goods being imported into the US by the Customs and Border Protection (CBP).

How to pay US import taxes and duties?

Duty tax can be paid only in US currency using US personal cheque or government cheque in the exact amount and made payable to US Customs and Border Protection. An identification document such as a passport or US driver's licence must be presented at the time of payment. Alternatively, some locations allow payment via credit cards.

If you have entrusted your international e-commerce shipments to a logistics service provider in Malaysia, your provider will typically pay the customs authority on your behalf for any outstanding duties and taxes due on the goods. This is to minimise the transit time of your shipments. You will then be issued with a Duty Invoice that must be repaid in full before your goods are released to you. 

For further information on customs duties and taxes, please refer here.

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