Complete Beginners Guide to Customs and Taxes When Importing Products from China
So you’ve been curious about getting started importing products from China but don’t know where to start? Well, you’ve come to the right place. Today we’ll be going over everything from you need to know when it comes to customs and taxes when importing goods from China.
Customs and Taxes for EU and US Imports from China
Every country has its own import duties, so we’ll briefly go over what every importer must know regarding duties, customs valuation, and other taxes. Let’s start with the European Union.
With the European Union being a single market, all countries within the EU face the same import duty rates. So an importer will only pay customs one time for products coming in from China. For example, if you’re importing hats from China to Spain, your customers in France or Germany wouldn’t pay any additional customs fees.
So, what are the import duties for products coming from China to the EU?
Import duty rates depend on the product being imported. Products that are not manufactured in Europe, i.e. electronics, usually have lower import duties and are sometimes as low as 0%. On the flip side, products that are seen as part of an import industry, i.e. shoes, face higher duty fees. The duty rate for importing shoes is 12%.
Here’s a shortlist of other commonly imported products and their duty rates in the EU:
- Tablet computers: 0%
- LED lights: 4.7%
- Tee Shirts: 12%
- Watches: 4.5%
- Electric Bicycles: 6%
- Solar Panels: 0%
VAT – Value Added Tax
The VAT varies among member states, with certain products facing a reduced VAT rate. The value-added tax rate is placed on top of the customs value and import duty. VAT applied to imported products is treated as VAT paid on purchases made within the European Union which means that the added VAT could be offset by VAT made on sales.
The customs value in Europe is based on the Cost Insurance Freight price of imported products. The customs value is based on the product price, tooling costs, logistics and shipping co costs, product development costs and insurance. The customs value doesn’t include fees paid to sourcing agents, shipping costs i in the importer’s country, or port fees/customs clearance fees.
Import duties apply to all imports to the United States from China with a customs value of $200 or more. Just like in the EU, certain imports are taxed more than others – especially agricultural and food products. Let’s go over the different taxes and fees that United States importers face when ordering products from China.
What are the duties for products imported from China to the US?
Here’s a shortlist of commonly imported products to the US and their duty rates:
- Tee-Shirts: 16.5%
- Tablet Computers: 0%
- Electric Bicycles: 0%
- Watches: 9.8% + $1.53 per unit
- LED Lights: 3.9%
- Solar Panels: 0%
Also, it’s important to note that these rates don’t take the additional 10-25% tariff into consideration.
As of May 2019, tariffs placed on $200 B goods has increased from 10% to 25%. An additional tariff of 10% on the remaining $300B level goods has been put into effect as of September 1st. As a rule of thumb, additional tariffs will apply to nearly all goods being imported from China.
Merchandise Processing Fee (MPF)
All goods imported to the US face the Merchandise Processing Fee which is based on the order value and is divided into the following categories:
- Goods imported with a value of less than $2500: $2, $6, or $9 per shipment.
- Goods imported with a value of more than $2500: .3464% of the value of the goods.
- The minimum MPF is $25 with the maximum being $485
Harbor Maintenance Fee (HMF)
Imports by sea are subject to a harbor maintenance fee, which is currently .125% of the cargo value. This fee was created in the late 1980s as a way for importers to help with the maintenance costs of container ports in the United States. With the fee being so low, thankfully the HMF won’t affect your bottom line too much
Additional Taxes and Fees
At the moment, the United States doesn’t have a value-added tax but instead, has a Federal excise tax that’s applied to certain goods such as alcohol and tobacco.
For the time being, the Federal excise tax doesn’t apply to consumer goods imported from China.
The customs value, along with the MPF and HMF fees are based on the Free on Board (FOB) value of the goods being imported, including the product cost, transportation cost (to loading port in China), and export clearance from China. Most suppliers in China will quote products based on FOB terms.
While we’ve briefly covered import fees and taxes on products from China being imported to the EU and the US, there are many more costs and things to consider when importing products to China. If you’re interested in getting started importing products from China, don’t hesitate to contact us today!