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When goods are imported into into any country around the world, the exporter will usually have to pay import duties.  If you overlook the impact of import and export duties and other taxes you could be left with a huge unexpected bill which wipes out any profits, so it pays to be informed about duties and how they apply to your goods and the territories into which you are exporting them.

 

Who pays?

That depends of what terms you have negotiated with your customer or supplier.  Usually the importer of record is responsible for the payment of duties and taxes, unless where the invoice specifies that a third party should be billed.

The amount of duty depends on the on the type of product that you’re exporting and the declared value of the goods which includes the cost of shipping.

Most if the world operates under The Harmonized Tariff System (HTS) for import and export duties which provides duty rates for virtually every item that exists, but as you might imagine finding exactly the right commodity code (or HS Code) for your product is far from straightforward.  Having said that UKTI are helpful and very often they can confirm the correct HS code for you if you are uncertain.

The importer will also have to pay VAT at the appropriate rate on the total value of the goods, that includes the cost of the goods themselves, plus shipping plus Duty.  At least if you re VAT registered you can claim back any VAT that you pay when importing goods (for your business) to the UK.

Different countries have different duty rates which they apply to the sale goods.  The USA for example have relatively low tariff rates on imports compared to the UK where import taxes are relatively high.

While the UK remains part of the EU Free Trade Zone goods traded between EU nations are not subject to excise duty or VAT, but following the Brexit vote it is likely that exporters will need to take a greater interest in the rates of import and export duties payable on their internationally traded goods.

Very often the shipping agent will pay the duty and VAT which is due directly to Customs on behalf of the importer, but they will charge a fee over and above the costs involved for providing this service.

Our advice is to talk to the experts at UKTI as well as your shipping agent and make sure that you don’t fall foul of export duties.