What is Understanding Duty Rate and Tariff when Importing? You finally have decided on the products that you want to sell. You also have found where you can buy it and how. It was overseas and through importing! You need to Understand Duty Rate and Tariff when Importing you found it way cheaper than buying local. However, don’t get too excited yet. Your obligations don’t stop with your purchase with the suppliers and its shipping fee.
In importing products, there is duties and tariff. Depending on your imports, this has monetary value that may affect your business’ financial aspects. Usually, the reason why those products are budget-wise is that the suppliers don’t want to shoulder these taxes. In this article, I will equip you with the knowledge about it so you’ll be prepared.
Duty and Tariff
Here’s a fact, each kind of goods has a different legal responsibility if you import it from one custom to another. We are talking about government taxes. These imposed taxes are called Duty and Tariff. Basically, Tariff is the tax of importing goods for protective and revenue purposes. Duty, on the other hand, are collected income from Tariff taxes. Now, these taxes are on your shoulder. Otherwise, you’ll talk with your suppliers abroad.
Rate when Importing
So… how much Tariff or Duty you need to pay when importing products? Okay let’s be clear with this. Aside from Tariff and Duty, there are also MPF and HMF. Those two aren’t taxes but fees to be exact. Altogether, it will be the extra amount that you need to pay when importing. Now let’s check each to find out the rates:
- Duty – The first rule with it is if the total amount of your importing goods is less than $800 USD, Duty is FREE. This is expected. Especially if you are thinking about bringing over a huge number of imported goods. If it’s over the said amount, then you need to find out the product’s HTS (Harmonized Tariff Schedule) code to estimate the rate. You can do that by searching it on Google, ask your supplier, ask a freighter forwarder, or go straight to the website of ITC (International Trade Commission) who handles HTS codes.
- Tariff – The Tariff rate also varies with the type of product. To find out– you need to locate the HTS code of the product and use the code on this link (https://ustr.gov/issue-areas/enforcement/section-301-investigations/search).
- Merchandise Processing Fee (MPF) – This fee applies to both air and ocean shipments. The rate is 0.0.3464% of the total price of imported goods. Minimum $26.22 and Maximum of $508.70. Meaning if your goods are only $26.22, then MPF is still $26.22.
- Harbor Maintenance Fee (HMF) – This fee only applies to ocean shipment. The rate is 0.125% of the total price of imported goods.
For keeping your books accurate, avoid unexpected expenses, and to help you decide whether you will buy and import certain products, it’s best to calculate these fees. Aside from that, it will also help you set the right price when you sell your imported goods.