Understanding US import tax: Simplifying duties, fees, and compliance

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In today's interconnected world, businesses are no longer confined to the limitations of their local or national territories. They have the world at their fingertips, presenting boundless opportunities for expansion and growth. Shipping overseas has become a strategic move to diversify consumer bases across different regions, amplify profitability, and carve out a unique space in the international arena. 

A prime market of choice for many businesses is the United States (US). With its substantial size and robust economic strength, the US represents a fertile ground for businesses aiming to establish a strong international footprint

However, the journey to successful expansion in the US market is not without its intricacies. One of the critical aspects businesses must navigate is the US import system. If you are looking to ship goods into the US, it's imperative to understand the nuances of US import tax, duties, and compliance requirements.

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Decoding the US import tax and duty system

The US government levies the US import tax on the value of imported goods, inclusive of freight and insurance costs. It's important to note that import duties and taxes can vary depending on the country, as trade relationships between the US and each nation differ.

In order to guarantee a seamless delivery of your goods when shipping from Singapore to the US, compliance with US customs tariff and duty requirements is paramount. Let's explore some key factors to keep in mind when importing goods into the US.

1. Identify goods subject to US import tax and duties

As a general rule, goods valued over US$800 are subject to duties and taxes in the US. However, there are some allowances. Some goods can be imported duty-free, and are not subject to US customs tariffs.

For instance, personal effects like clothing, jewellery, and cameras are exempt from customs tax and import duty if they are more than one year old. Likewise, household items such as furniture and tools can be imported duty-free if used abroad for over a year or aren't intended for resale.

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

2. Estimate US import tax and duties

The actual amount of import tax and duties to be paid varies based on the country from which the goods are imported. US customs import duty rates can range between 0 to 37.5%, with a typical rate of 5.63%. E-commerce purchases that exceed the US import tax threshold limits are subject to a flat rate of 3%.

3. Understand variable customs duty rates

The US authorities offer varying rates of import taxes depending on the country or trade agreements:

  • Free Trade Agreements (FTA): Preferential rates are offered to the 20 countries, Singapore included, under FTA with the US.
  • Generalised System of Preferences (GSP): Free or reduced rates are given to certain developing countries.
  • Caribbean and Andean countries: Many products from these countries are duty-free.
  • African Growth and Opportunity Act: Many products from specific sub-Saharan African countries are duty-free.
  • The North American Free Trade Agreement (NAFTA): Free or reduced rates apply to goods manufactured or produced in Canada or Mexico.
  • For certain products from a list of European and Ukrainian countries, there is an increased duty.

To calculate the US customs tariff payable when importing from Singapore, you can use an online import duties and taxes calculator.

4. Factoring in additional import fees and taxes

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

5. Making payments for US import taxes and duties

Paying US customs import taxes and duties can be done in several ways. The most straightforward method is through a logistics service provider, who can facilitate the payment on your behalf. Alternatively, importers can also pay these fees directly to the CBP. It's important to note that estimated duties must be paid to allow entry of your exports to the US.

Overall, understanding US import tax and related duties can seem complex, but with thorough research and the assistance of a logistics provider like DHL Express, the process can be simplified significantly. 

On your request, DHL can handle the clearance of your shipment at the destination, along with managing any applicable import duties, taxes, and regulatory charges. These costs are then conveniently invoiced to your designated DHL account at the destination. Find out more by creating a DHL Express business account today.