Customs, Duties, and Taxes

When you bring your goods into the country, you need to pay the government their portion in the form of duties and/or taxes.

Fortunately, neither of these are all that expensive. Duties range from 0-8% normally. Unfortunately, determining how much you owe and actually paying the duties is a bit trickier. Every product imaginable is assigned a classification code by the government called a Harmonized Tariff Code. You can view the US Customs Tariff schedule here. Canada has a similar schedule as well (view the Canadian Customs Classifications here), along with most other countries.

Figuring out how your item is classified is your first task. The Tariff Schedule is intimidating at first but it is logically organized once you familiarize yourself with it. If you’re importing something simple like “Boat Anchors” it’s quite easy to figure out what this code is. It becomes trickier when your item is a bit more ambiguous. For example, one of the products my company imports is a Rope & Chain combination attachment for boat anchors. Should this item be classified as rope or should it be classified as Chain? (there is no “Rope and Chain” classification) I’m sure there are rules on describing it, but lord if I know, and that’s where the “Customs Broker” comes in handy.

A customs broker is someone who will basically arrange to have the duties on your goods paid to the government and cleared into your country (and they can help you classify your goods too). This is something you can theoretically do yourself, but it’s a lot like doing your taxes- you can do them on your own, but the paperwork is so intimidating and foreign it’s often worthwhile to get an accountant to do it. Normally they charge somewhere around a $50-100 base fee, and then around $25 for every ‘line’ (which basically means $25 for every separate category of product you’re importing).  Very few people do their own customs brokerage who import on a regular basis.

Your customs broker is going to want a few things from you, the most important being the ‘Commercial Invoice’ which basically is a receipt showing how much you paid for the goods you’re importing.  Ask for this from your supplier. Your customs broker will be able to guide you through everything- another reason why you should definitely work with a customs broker!

Once you’ve paid your duties and also paid the freight companies their fees, your goods are yours to pick up.


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