Decoding Duties and Tariffs: What You Need to Know
What’s a tariff?
The term “tariff” is usually used when discussing governments or economies. A tariff is a tax on a class of goods imported from another country. This is a form of protectionism in which the government raises taxes on imports to encourage domestic consumption, protect domestic markets, or generate revenue for the government.
What’s a duty?
When talking about rates or amounts, the term “duty” is generally used. A duty is a tax levied by governments on imported and exported goods. The calculation of duties is dependent on the declared value of the commodities within the shipment. Commodity-classification codes are applied to determine the amount of duty required.
Duties are applied by U.S. Customs at the time of initial entry and vary depending on the classification code, value, country of manufacture and associated freight charges for the commodities involved.
How do I pay duties and taxes on international shipments?
Payment of duties and/or taxes is often the responsibility of the receiver. To help expedite delivery, DHL will contact the receiver on behalf of Customs to arrange for payment, which can be made easily via a link sent to them by DHL.
What’s the difference between dutiable and non-dutiable shipments?
Each country establishes its own standards as to whether a shipped item is considered a document (non-dutiable) or non-document (dutiable). In most cases, documents that do not have any commercial value are non-dutiable. However, documents with commercial value are dutiable.
Both tariffs and duties are indirect taxes
Indirect taxation occurs when the purchaser pays both the price of the item and the additional tax. Both duties and tariffs are forms of indirect taxation, meaning the tax is applied to the good, not the individual or business. The consumer, or end-user, bears the cost of these taxes because the seller or manufacturer passes the tax burden on to the end consumer through higher prices or fees.
