Custom Fees

What are customs fees?

Customs fees are taxes charged when products are shipped across countries. They're usually paid when goods are imported into a country.

Customs fees in ecommerce

Selling internationally can grow your customer base, but it also brings shipping costs and taxes. Customers receiving cross-border packages might need to pay customs fees before they can get their order. As a store owner, it's important to explain this clearly at checkout, so buyers aren't surprised later.

Why do governments charge customs fees?

Governments charge customs fees for a few reasons:

To raise revenue
Customs fees are a way for governments to collect income from imports.
To protect local businesses
Import taxes can make foreign goods more expensive, encouraging people to buy local products instead.
For political reasons
Sometimes, a country adds extra fees to punish another country. This can limit that country’s exports.
To prevent dumping
If foreign companies sell goods below market value, customs fees can raise the price and protect local markets.

When customs fees apply?

Two main factors affect whether customs fees are charged:

Destination country
Each country has different rules and rates. Some have trade agreements that reduce or remove fees.
Type of product
Some products have higher taxes than others. Countries use a global system called the Harmonized Tariff Schedule (HTS) to classify goods and apply rates.

How are customs fees calculated?

Different countries use different methods:

Per-product rate
Each product has its own tax rate based on its category.
Percentage of value
You pay a fixed percentage of the product's declared value. For example, if the order is worth $350 and the rate is 10%, the fee is $35.
Per-pound rate
Some countries charge based on the weight of the shipment.

Who pays customs fees: you or your customer?

Usually, the customer pays. Some countries charge high customs fees, sometimes as much as the product itself. If you cover these costs yourself, it could cut into your profits.

It’s best to make your policy clear. Tell customers at checkout that they’re responsible for any customs fees. Some stores include a rough estimate in the cart, so customers know what to expect.

What are DDU and DDP?

DDU (Delivered Duty Unpaid) means the customer pays the customs fees.
DDP (Delivered Duty Paid) means you, the seller, cover all customs-related charges.

How are duties collected?

When goods arrive at the border, the importer declares their value. Customs then calculates the fees. If no one pays, the package might be delayed or held until the duty is paid.

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