17 Jul Tax instructions and guidelines for the US, UK and NZ when importing from China
Tax instructions and guidelines for the US, UK, and NZ when importing from China
When you are importing goods to the USA, tariffs are imposed on the products and are payable by the importer. Ref: Wikipedia. The import tax is also known as custom duties. Those tariffs vary by country of origin and the imported product. Some products may be exempted from the import tax, while other products are restricted. If a business or importer does not comply with the customs rules, the product can be seized, and criminal penalties are imposed on all involved parties. In the United States, the customs rules are enforced by the United States Customs and Border Protection (“CBP”)
Importing goods from China
Since September 2018, the import tax from China to the USA has risen from 10% to 25%. For some products, the import tax might even be higher. Since the trade talks have stalled, importer from China must prepare for a new normal.
All companies, including non-US companies, are affected by those tariffs. They are considered as a foreign importer. In 2020 some taxes may go up once again!
Unfortunately, the solution to the trade debacle is not easy. Most companies are incapable of shifting their production or their suppliers to other Asian countries. Generally, outside China, the infrastructure or the supply change for most categories merely is non-existent. That leaves you with only one optionö
= Passing on the higher tax to your customer or
How much is customs duty in the USA
Until recently, the United States applied a Customs tariff that was among the lowest in the world: 3% on average. However, with increased tariffs on Chinese goods, as of May 2019, the US has the highest tariff rate (25%) among all developed nations. Ref: NY Times, May 15, 2019.
What is the rate of import duty in the UK
Import duties from China to the UK include fees levied by the Customs Department. It is important to note that when buying goods outside the EU or UK, customs duties and taxes must be paid to the customs department. Remember to take these two fees into account when ordering products outside the EU or UK. To calculate these charges, the customs department needs the HS codes.
What are the HS codes?
For import duties from China to the UK or EU, an HS code must be included on the invoice. This 6 to 10-digit code must be correct on international commercial invoices to avoid delays in your import. The HS codes are used by the customs department to classify your tariff.
Do I pay VAT? (Valued Added Tax)
Besides the custom duties, you must also pay the VAT. Private individuals often make the mistake of forgetting to calculate this expense. It is important to note that VAT is calculated on the total cost of the goods and shipping costs. You pay VAT on the total cost of the imported goods into the UK or any other EU country from outside the UK.
How much import duty do I pay from China to the UK?
The amount of duty depends on the value and nature of the imported goods. As described in the HS codes, each product type has a different percentage. You can ask the freight agent or access various online tariff forms, which are listed on the following UK website. The HS codes are often referred to as tariff codes.
If you use a China Sourcing Agent like for example, me, you will receive the quotation for your product as CIF Manchester (if in the UK) or for instance, CIF Vienna (if in Austria). CIF stands for contract, insurance, and freight. This is commonly used for pricing and includes the cost of shipping and insurance of your product. When dealing with China, prices are quoted in US dollars by the manufacturer. Convert this to your local currency and use the UK or HS tariff codes above for your country when calculating your tariff.
How much is import duty in NZ
The New Zealand Customs Tariff follows the Harmonised Tariff Schedule. The basis of assessment for customs clearance is the value of the goods excluding transport and insurance costs (FOB value). Thus, New Zealand deviates from the common CIF (cost, freight, and insurance) rule in favor of importers in its calculation of customs duties. For most tariff headings, a duty rate of 0 or 5 % applies, while for other products, the specific percentage is based on weight or volume. For beer and spirits, import duties depend on the alcohol content. No customs duties are levied if the total amount payable is less than NZD 60 (approx. USD 67), or the value of the goods does not exceed NZD 220. Information on the special customs tariffs can be found on the New Zealand Customs Service homepage.
There are also bilateral duty-free agreements with many countries, or customs concessions can be applied for/granted for selected goods (no domestic production, humanitarian supplies, etc.). An overview of the numerous Free Trade Agreements can be found on the homepage of the Ministry of Foreign Affairs and Trade. Granted customs concessions can be found on the New Zealand Customs Service website.
Special rules regarding customs and GST (see below) apply to online sales to New Zealand end-users.
Other import duties
In addition to customs duty, the so-called Goods and Service Tax (GST) of 15% may be applicable as import sales tax. This fee is based on the value of the goods, including transport and insurance, which have been cleared through customs. The tax debtor is the importer. Besides, there are further fees such as the ‘Import Entry Transaction Fee’ (approx. NZD 29/USD 19) or ‘Biosecurity System Entry Levy’ (approx. NZD 23/USD 15).
How is the tax calculated on imports
Several factors play a role in the calculation of the duty, including the value of the goods, the current customs rate and duty rate, and the method of transportation for your China Import.
The exact calculation of the customs duty is as follows:
= Value of Goods (USD) + Sea Freight (USD)
= Current customs rate x duty rate in %
Besides, the customs office levies import sales tax on every import. This fee corresponds to the sales tax (value-added tax). As a private person, this must be paid in full; companies have the option of claiming the import turnover tax as input tax.
The import turnover tax is calculated as follows:
Value of goods + sea freight + customs duties + domestic transport costs x 19 % import turnover tax.
Like in the EU, value-added tax (VAT) is levied in China not only on the sale of products but also on imports. In contrast to the standard VAT, however, this is a consumer tax in the sense of customs law. The customs administration levies the import VAT, and the debtor can be a company or a private person. For companies, the import turnover tax is deductible as input tax from the turnover tax debt, provided that the object was acquired for the company.
The import turnover tax is based on the customs value. Several costs must be added to the customs value to calculate the correct taxable base— for example, the transport costs from the EC border to the (first) domestic destination.
If the company further processes imported goods, the import VAT incurred can be deducted from the VAT.
Do I have to pay an import tax from the USA
Whenever you are importing from the USA, an import tax applies. Those fees are calculated from the customs rate and the import sales tax. The customs rate is calculated as a percentage of the purchase price and the shipping costs. How high the percentage is depending on the customs table. The percentage differentiates according to products, but also according to countries of origin.
The customs authorities refer to these values as indications. The percentage used for the calculation depends on the nature of the goods. Furthermore, the TARIC commodity code can help determine the rate of duty.
(The TARIC Code is defined as a tariff code intended for the classification of goods at customs. Its ultimate purpose is the declaration of products, the calculation of duties, and the recording of statistics).
Does the USA have import tax
The assessment basis for the customs duty, the customs value, is determined in the USA using the same methods as in the EU. However, unlike the EU, the US does not include international transport and insurance costs in the customs value.
US customs does not have an individual customs value declaration with which the importer queries all customs value-relevant fields. Therefore, US customs places importance on the content of invoices, which should contain all the necessary information relevant to customs valuation to arrive at a correct estimate of the goods.
Import duties (“Customs Duties and User Fees”)
In addition to possible import duty, the USA does not levy any import sales tax because its system of sales and use tax is only applied at the level of sales to end customers. However, certain products may be subject to special excise duties on imports.
Each US import gives rise to a “merchandising processing fee” of 0.3464% on the customs value as a customs clearance fee. For imports via seaports, an additional “Harbour Maintenance Fee” of 0.125% on the customs value is incurred.
Goods worth more than USD 2,500 always require a formal customs declaration in electronic or paper form at the responsible customs office (“Port of Entry”).
Do I have to pay an import tax from China
When importing goods from China, customs duties and import sales tax may apply. Generally, products up to approx. 25 USD is tax-free. Every dollar more is above the exemption limit.
Shipping costs count to the value of goods
Shipping costs are always added to the value of the goods. In other terms, whatever the total amount of the products plus shipping, minus 25 USD, is the amount on which tax is applied.
The import sales tax
With a value of goods from 25 USD to approx. 175 USD no specific duty is levied; only the import sales tax according to the VAT of 19%, in exceptional cases only 7%, are due.
Who pays the import duty
While the import tax may vary from item to item, the import duty is always paid by the importer. This fee is calculated, including the shipping costs.
What are import fees
Import fees are the payment paid for any imports to the USA. The amount of import fees is the responsibility of the importer. The import fees are always based on the laws of the country into which the products are being shipped. Country customs authorities then can calculate the correct import duties and taxes owed by the importer and based on the total value of the imported goods.
Does import tax include shipping
The import tax to the USA is calculated on the entire value of the imported goods, including the shipping payments.
Is there an import tax from China to the UK
All importers are required to pay UK duty plus VAT unless the goods are eligible for duty-free. For instance, if you pay your supplier £4000 for your products, £600 for the shipping with a 3.5% UK duty rating, then the duty fee will be 3.5% of 4000, which is £140.
How much are customs fees from China to the USA
Depending on the imported goods, the custom import fees vary between 10 % and 25 %. This percentage includes the shipping fees, which add to the value of the goods. For more detailed facts, please talk to your China Sourcing Agent. He will give you the most updated and accurate price for the customs fees of your imports!
While the article above does give you some general information about import taxes and custom fees in a few of the significant import countries from China, there is certainly more to know about. With the different tariffs on different goods, it can easily get quite confusing for the layperson. Particular regarding the USA – China trading agreements. Those agreements could change on a daily base.
I strongly suggest that you get in touch with an expert like myself, who can steer you through the maze of levies and fees. As an expert in this field, I know all the ins and outs of the trade. If you commission someone like me, you will save money, time, and, most likely, many sleepless nights in the long term.