Customs duties and import taxes are assessed by the customs authority in the destination country. These fees are calculated using a combination of factors that vary depending on the product, its origin, and local regulations. Here's how these charges are determined in detail:

The declared value is the price paid for the item, as stated on the shipping documentation provided by the seller. This value is critical because most customs authorities use it as the base for calculating duties and taxes. Shipping fees and insurance costs may also be included in the valuation in some countries.

Each product type falls into a specific category under the Harmonized System (HS) of tariff codes. These codes are standardized internationally but may have country-specific variations that affect the duty rate.

For example:

The country where the product was manufactured plays a significant role in determining import duties. Some countries have free trade agreements (FTAs) or preferential trade agreements with one another, reducing or exempting certain goods from duties. For example:

Goods from a country within the European Union may be exempt from duties when shipped to another EU member state.

Under the USMCA agreement, some goods traded between the U.S., Canada, and Mexico are duty-free. The seller must indicate the country of origin accurately on the shipping documentation. Drip uses USPS for orders shipping outside and within the country; the origin is always visible and clear

Import Taxes (VAT/GST)

Beyond duties, many countries impose taxes such as Value-Added Tax (VAT) or Goods and Services Tax (GST). These taxes are usually calculated as a percentage of:

The VAT/GST rate varies by country. For instance: The VAT rate in the European Union ranges from 17% to 27%, depending on the member state.

Canada applies a GST rate of 5%, which may include additional provincial taxes.

Exemptions and Thresholds

Some countries allow exemptions for low-value shipments. For example:

In the U.S., the de minimis threshold is $800, meaning shipments valued at $800 or less are exempt from duties and taxes. In the EU, most imports valued under €22 were previously exempt from VAT, though recent changes have eliminated this exemption for transparency.

Some shipments may incur extra charges, such as:

Understanding how customs duties and import taxes are determined can help you plan for additional costs and avoid surprises when shopping internationally.

Always consult your country’s customs authority for the most accurate and updated information.