Many importers purchase from China every year, because China is a huge manufacturing market with good quality and cheap goods. It is important for importers to know import duty & customs tax in advance. Sometimes expensive taxes and duties will make importers lose business opportunities.
Customs tariff depend on the products you import and the country you are from. Every country has different foreign trade policies. China does not charge export taxes on most products, except for a few resource products, such as copper, non-ferrous metal ore and so on. If you want to import products from China into the United States, then the United States will charge import tax on your products.
This article mainly explains the customs duty imposed by importing countries on Chinese products.
1. What import taxes should be paid when importing from China
Import taxes are more than one, in addition to customs duty, different countries will also collect other types of taxes. For example, in addition to customs tariffs, there are also MPF and HMF taxes on imports to US. European countries should also have VAT (value-added tax); There are also super complicated GST (Goods and Services Tax) when importing to India.
Let me give you an example.
If you import products from China into the United States, you may have to pay to the US
- Customs Duty
Customs duty is the major part of import tax that an importer has to pay to US customs. The United States requires that any goods worth more than $800 be subject to certain tariffs when entering the United States, whether you are an individual or a company.
- Harbor Maintenance Fee (HMF)
HMF is another fee for imports into the US, charging 0.125% of the value of the item. It is only collected on sea freight, not on air freight.
- Merchandising Processing Fee (MPF)
MPF is a kind of user fee. Almost all imported goods are subject to this charge. For informal entry, MPF is a fixed fee. The price can be $2.00, $6.00 or $9.00 per shipment. For full entry MPF, 0.34% of the declared value of the goods is charged, ranging from $27.2 to $528.33.
That is, $528.33 is the maximum you will have to pay, even if 0.34% of the value of your goods is greater than $528.33. Again, $27.20 is the minimum.
- Additional Custom Duty Rate
Because of trade tensions between the United States and China, the United States has imposed additional customs tariffs on some China imports. This is a big hit for American importers, with additional duty of 25 percent or 7.5 percent. So if you are going to import products that are subject to additional tariffs, it is not recommended to import from China.
- Federal Excise Tax
If you’re importing tobacco, alcohol, there’s a federal excise tax.
2. How is the Customs duty calculated
2.1 Check the HS code of your product
2.1.1 What is the HS Code
Before looking up the customs tax rate, you should first determine your product’s HS code.
First we need to know some basic knowledge about HS code (harmonization system)
HS codes are administered by the World Customs Organization. This is a standardized international method for classifying products traded globally. Each HS code represents a product category. The first six digits of the HS code are the same in all countries. And each country can modify its HS code by adding another two or four digits, without changing the first six digits. The United States uses HTS code.
The HS code can be divided into four parts: chapter, heading, Subheading, and additional numbers. Take HS code 640312.0000 as an example.
2.1.2 How to check the HS Code?
If you only have your product name and want to know its HS code, there are three easy ways to get the code.
- HS code query tool. You can do a quick online HS code search with the HS Code Lookup tool by entering a product keyword (such as socks) and selecting the category associated with your product. This way, you get the first six bits of HS code.
- By checking the first six HS codes, you can check the exact customs codes corresponding to different countries.
- Check with the freight forwarder or customs broker. They can help importers and exporters to complete customs clearance smoothly. If you still can’t find the exact HS code of the product after using the tool, you can ask the freight forwarder or customs broker for help.
Freight forwarders can help you solve all shipping problems such as cargo transportation, customs clearance and so on. It is a good choice in the process of cargo import and export.
2.2 Check custom tax rate
- Find the latest duty rate information by HS code on the country’s international trade website.
- Check duty rates with widgets and calculate taxes
- Call your local CBP port and contact a customs broker or CBP expert for very specific import duty information on specific products.
2.3 Calculation custom duty
Custom duty = tariff value * tariff rate / Import quantity * tariff rate
2.4 Widgets to help calculate customs duty
Calculating your own customs duty is a very complicated process. We can use a tariff calculator to help us calculate customs duty roughly. The operation is very simple, you just need to enter the country of export, country of import, HS code or product description.
You can search for HS codes using Freightos, which is also a free import tariff calculator. Simply enter the importing country, the exporting country, the product description or HS code, and the shipment value in US dollars and you will get the estimated customs duty.
Product classification is crucial in customs duty calculation. You may be paying less or more tax than you actually owe due to incorrect classification. Avalara automatically provides HS codes so you can assess customs duty rate more accurately. But it doesn’t directly help you calculate customs tax like Freightos and Simply Duty do.
It is a quick tool to help you calculate customs tariffs from China to other countries. Enter country of destination, country of origin, production description, HS code and product value and you will receive customs tax. If you also enter shipping costs and insurance costs, it will help you calculate the total landed costs. But note that it does not include additional tariffs
If you want to use Goodada to calculate customs duty from China to other countries, you should fill in the required information, as shown in the picture below, and wait for the customs broker to contact you.
3. What are the common ways to avoid or reduce import duties?
Whether purchasing in large or small quantities, import taxes are still a big burden for some people and they will find as many ways as possible to avoid or reduce taxes in their business transactions. Here are some of the most common ways we’ve seen it.
3.1. Common cases of non-payment of customs duties
There are several cases where import duties are not required. They are:
3.1.1 Personal immunity. According to CBP, there are exemptions or personal exemptions, which are the total value of goods that you can bring back to the importing country without paying duties. In the United States, an individual’s daily allowance is $800, but there are limits on the number of alcoholic beverages, cigarettes, cigars and other tobacco products.
3.1.2 Samples. Samples are another exception, as your samples are for your own evaluation only and will not be resold for commercial purposes. You can ask your supplier to provide a sample for a nominal value of $1 and mark “no commercial value sample” on the sample invoice.
3.1.3 Dropshipping. In Dropshipping, there is no import duty because the goods are delivered directly to the customer from a third party (manufacturer or wholesaler) via ePacket or China Post packet. However, the seller must pay income tax and sales tax.
3.2. Common ways to reduce import tariffs
While some people prefer to use the following methods to reduce the import tax, we do not recommend this because of the risks involved.
3.2.1 Reduce the value of products on commercial invoices. For most goods, tariffs are based on the value of the product. According to the agreement with the importer, some suppliers will help reduce the value of the product to help the buyer reduce the tariff.
However, if the United States customs finds that the declared value is lower than the actual value and deliberately reduced, customs will impose punitive duties or, worse, the goods may be destroyed or returned to the port of loading.
3.2.2 Ship the goods in batches. Each country has a certain tax-free amount for individuals, and goods can be transported in batches according to this amount. But be careful before using this method, it may incur high shipping costs. If you are found by customs as a tax deduction, you will still have to pay customs duties on all goods.
3.2.3 Through intermediate trade or re-export trade. Under the pressure of the 25% tariff policy on Chinese imports, some people considered transiting in a third country, and then exporting to the their countries with the third country instead of China as the country of origin to avoid the increase in import duties. But there are still many risks and high transition costs in the process.
4. Frequently Asked Questions
4.1 Whether it is necessary to pay export tax to China
No, China does not levy export taxes on most goods. In addition to nonferrous metal ore, copper, such resource products.
4.2 Who pays the import duty? Consignee or seller?
A country imposes the tariff on imported goods. The registered importer is liable for duty. That is to say, the consignee of the goods is responsible for the duties.
4.3 What is FOB price and EXW price? Do we need to pay taxes?
The FOB price includes all the costs of the products in China. You need to be responsible for a series of costs such as sea freight and import taxes
EXW price refers to the ex-factory price of the China suppliers, which can be sent to a warehouse in China
CFR price includes all costs of shipping products to ports in other countries.
No matter which kind of quotation, import taxes and fees need to be borne by the importer. Some freight forwarders or customs brokers can help you pay import taxes and customs clearance procedures, are very convenient.
It‘s your time
Feel free to leave a comment below if you have any questions or would like to know more about import duty of import from China.
In the past 16 years, Union Chance has service 5000+ customers, and gave them some very valuable advice if they need. If you want to import products from China or need help sourcing, please feel free to contact us.
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