A guide to import taxes in the US

Indonesia, one of America’s main trading partners amongst others in the Asean region, has been working hard to improve its economy and business environment in recent years. Even though Indonesia shipped US$228.2 billion worth of goods around the globe in 2021, the amount of its exports that go into US markets is incomparable when you count the individual markets alone.

At a significant amount of US$25.7 billion, 11.2% of Indonesia's exports go to the US, and the US remains Indonesia’s second trading partner. Aside from the motivation for trade for economic growth, Indonesia also benefits from such trade and competitive growth as the US contributes a huge surplus for trade to Indonesia's economy as well, at USD$14.4 billion, according to statistics provided by World’s Top Exports.

If you handle an international e-commerce business in Indonesia, here is everything you need to know about US import tax if you’re planning on venturing and shipping from Indonesia to the US.

1. What are import duties and taxes?

Whenever goods cross international borders into the US, businesses will need to pay customs duty. They can be defined as a type of tariff or tax that is imposed on goods to protect the country. For instance, by implementing taxes, the US authorities are better able to control the flow of goods entering the country, as well as restrict or prohibit certain types of goods entering or leaving the country. In doing so, they help secure protection for the country’s residents, jobs and even the environment.

2. How to calculate US import duty rates?

The amount of import duty rates to be paid is often determined by the total purchase value of your goods paid in the US. However, in the US, the authorities make use of the Harmonised Tariff System (HTS) to determine how much taxes and duties you will have to pay. The HTS categorises the types of goods entering the country and provides duty rates for nearly every existing good, you can visit an interactive database belonging to the US International Trade Commission-Tariff, to derive an estimated duty of your product.

3. How to pay for US customs duty?

Before you make payment, ensure that your customs invoice is prepared and includes all the relevant information about your goods. For instance, you may want to include crucial details such as the price, value and quantity of your goods, along with the name of your business and agreement conditions between you and your buyer.

Once your invoice is good to go, it is time to pay your customs duties in the US. There are a few payment methods for you to choose from. For one, you may visit a local US bank, write a personal check with the exact amount to be made and deposit it to the US Customs and Border. For an alternative option, you can also issue a money order or government or traveller’s check if the amount of duty to be paid is more than US$50.

When making payment, it is also advisable that all amounts written are in US currency only and that you should present all relevant documents. These could include your personal identification, which may include your passport or US driver’s licence. Additionally, the Customs and Border Protection (CBP) does not accept cheques from second-party endorsements and hence you should always make payment in person to avoid any delays or payment rebounds.

How to get a duty refund?

There might be occasions where you overpay your customs duties or import tax. The CBP offers businesses the opportunity to get a refund whenever such incidents occur. To do so, you can sign up for a refund with the Automated Clearing House (ACH) and provide relevant details such as your full name and bank accounts. However, bear in mind that for goods that have been destroyed or exported, a refund for these items will not be accepted.