Duties and Taxes
While the sender is required to submit accurate and complete documentationaccompanying a shipment, the receiver is generally the one responsible forany duties and taxes related to the package, and you should expect these tobe charged upon delivery. There are some exceptions to this rule, which youcan learn more about inShipping 208. In general, the importing process works as shown:
If you need to determine the costs associated with a given shipment,Shipping 203is a good place to start, as it covers some of the main fees and taxes alongwith the best ways to estimate them. As the importer, you'll also need to considerbrokerage and the associated fees, which we'll explain below.
Brokerage
It's the receiver's job to assign a broker, but this is often much simplerthan it sounds. The vast majority of the time, your shipments can be clearedby the carrier's broker, making things easier for you and removing one stepfrom the importing process. Your carrier should make this process as simpleas possible, but it's still helpful to have an understanding of howbrokerage works.
Power of Attorney
Power of attorney is another important aspect of importing. In order to havea broker clear your packages on your behalf, you have to sign a documentassigning them power of attorney. Your carrier will typically provide thisform as part of the shipping process, and it's involved with a highpercentage of international shipments.
You can sign over power of attorney either on a one-time basis or as part ofan ongoing arrangement.
De Minimis Value
The de minimis value represents the minimum value a product must have inorder for duties and taxes to be applied. Currently, the de minimis value is$20 in Canada, $300 in Mexico, and $800 in the US. If your shipment is belowthe applicable figure, no formal customs procedures are required and noduties or taxes are required.
Brokerage Fees
Depending on your country and shipping volume, brokerage fees can add upover time. UsingUPS, for example, to import a product worth between $1250 and $2500 to the US, leadsto a charge of $40.50 according to the chart below. If you're regularly importingvaluable shipments, this can be a significant expense, which may lead you tolook for a new broker.
If, however, you can't find a firm suitable to your business's needs, youcan self-clear your items through customs, which is outlined below or selecta different broker.
Selecting a Broker
If brokerage fees are a significant concern for your business, you caneasily find a number of different brokers to help you with your imports.Each one will have different pricing structures but from what we've seen,going with a non-carrier broker can significantly bring down your brokeragefees. They can often provide more personalized service and clear items thatrequire special attention such as Temporary Goods. Remember, when lookingfor a broker, you want to find brokers that are located at the destinationcountry of your shipments. For example, if you are importing a lot ofpackages into Canada, you'll want to find a Canadian Customs Broker. Thesame applies to the United States and other countries.
Self-Clearing
If you'd rather not be responsible for brokerage fees, you do have theoption of self-clearing rather than using a broker. This typically involvesgoing to the location of first import and clearing the items yourself, so itmay or may not be worth it depending on the cost of brokerage and yourproximity to a customs office.
Self-clearing can be an intimidating task, as professional brokers haveextensive experience with the customs process and related forms. We'll tryto guide you through the details here.
How to Self-clear
Before you can start self-clearing your shipment, you must first advise theshipping company (ie. FedEx, UPS, DHL) that you want to self-clear theshipment. Once your shipment arrives to the carrier's warehouse within yourcountry, you can make your way to the local customs office and start theself-clearing process. You'll need to grab the following documents prior toheading down. You can find a list of Canadian Border Services officeshere .
- Copy of the Shipping label, waybill, or manifest: These documents areimportant because they customs needs to know which packages to release.You can get any of these documents from the shipper.
- The commercial invoice, and possibly a proof of payment, is necessary forcustoms to determine how much to charge you in duties and taxes.
You'll need to take both of these forms to the customs office nearest thefacility at which your products are being stored, where you'll pay anyassociated duties and taxes. You may be required to show a valid form of ID.
Once you've gotten your manifest stamped at the customs office, you can takeit to the carrier and present it in order to retrieve your package.
When Not to Self-clear
While self-clearing can be a great way to reduce costs, there are somesituations in which it's likely easier to allow a professional to handleyour brokerage. If you're importing cargo, or if you don't have a customsoffice nearby, the inconvenience of having to navigate those issues on yourown likely isn't worth the money you'll save.
Registering to Self-clear
If you're self-clearing goods for a business, you'll need to register yourbusiness for import with the Canada Revenue Agency (CRA). CRA makes thisprocess super easy but it does take 24hrs for it to take into effect. Startthis process by calling them at 800-959-5525.
Importer of Record
The Importer of Record is the person or business responsible for paying theduties and taxes on an imported shipment. It's typically the personreceiving the goods but the Importer or Records can be assigned to someoneelse when indicating the "Sold To" party.
Regardless of whether you choose to self-clear or hire a broker, theImporter or Records is responsible for any duties and taxes applicable tothe goods for up to six years after the year of the import. The CanadaBorder Services Agency therefore advises keeping all records pertaining tothe import for six years-this includes price paid, quantities received,vendor, country of origin, product, and any other relevant information.
Summary
In the vast majority of situations, your best option should be having yourcarrier's broker clear your shipment, as they have the knowledge andexpertise to make sure everything goes smoothly at little cost to you.
However, if you'd rather take on that responsibility, you do have theoption. If this is something you're interested in, we recommend doingindependent research to learn the ins and outs of international shipping(starting with the learning center here at Secureship).
Next up is Shipping 208, which covers the Incoterms that describe different arrangements forimport and export.
