What are Export Charges?

Export charges are actually the fees that you pay in addition to the shipping cost, to export a package internationally.  What is considered an export charge from the US is actually an import charge to the country that receives the package.

An Export charge can show up as;

  • Duty
  • VAT
  • GST
  • and other more uncommon charges.  

What are the Most Common Export/Import Charges?

A Duty, or in other words a tariff, is a payment that is levied on the import, export, manufacture, or sale of goods.  When exporting an item internationally, a duty is calculated based on product value, item category, country of origin, and where it is being shipped.  Duties may not be the only charge to be concerned about when exporting your products.  Another charge is called a tax or in many cases, a VAT which stands for (Value Added Tax).  

Value Added Tax (VAT) is a type of consumption tax that is placed on a product whenever a value is added at a stage of production and at final sale.  VAT is most often used in the European Union.  The amount of the VAT that the user pays is based on the cost of the product, less any of the costs of materials used in the product that have already been taxed.

When exporting products to Canada, another charge that may be added is called a Goods and Services Tax (GST).  A GST is a Canadian VAT levied on most goods and services sold for domestic consumption. The tax is levied in order to provide revenue for the federal government. The Goods and Services Tax is paid by consumers, but it is levied and remitted to the government by businesses.

How to Calculate Duty and Tax

There are generally two methods for calculating duty, tax, or other export charges: Cost, Insurance, Freight (CIF) and Free on Board (FOB).  Most countries use the CIF method although some exceptions may apply.  Value Added Taxes in many case are applied to the CIF or FOB plus duty value.

  • Cost, Insurance, Freight –  A pricing term indicating that the cost of goods, insurance, and freight are included in the quoted price. Duty is calculated by adding all costs together. See below for an example.
  • Free on Board –  A pricing term indicating that the cost of the goods, including all transportation and insurance costs from the manufacturer to the port of departure, as well as the costs of loading the vessel, are included in the quoted price. It should be noted that the term FOB applies only to shipments via sea or inland waterway transport. For the purpose of calculating duties and taxes for international shipments, the term FOB generally applies to the commercial invoice value and does not include the cost of shipping and insurance.

There are a lot of confusing added costs to international shipping, so on top of theVerse we offer several free online calculators, so you can get clear estimates for your VAT, CIF, FOB, or any other crazy abbreviations.

View Our Free Shipping Calculators

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