Growing your business internationally is a great way to obtain more customers, but it also means dealing with the complexities of international shipping, including duties and taxes.
Customers who receive international deliveries may have to pay additional duties and taxes before receiving their packages, so make sure you are upfront about cost and time estimates.
Governments apply tax on shipments from other countries because they want to:
Protect domestic companies from foreign competitors
Control the flow of certain products
Raise revenue through taxes
Taxes and duties on international orders are implemented by governments around the world as a result of economic policy, or as part of a larger political strategy.
The main reasons include:
Import duties are a vital source of revenue for many governments who take a cut on every import and therefore receive a percentage of trade revenue.
Protect national industries from global competition
Placing import duties on certain products discourages importation of these products, which shields national producers from global competition.
Punish the exporting country
At times import duties are a geopolitical move: one country levies duties against another country as an economic sanction.
Penalise selling products below market value
Import duties are sometimes used to stabilise market prices. These import duties can prevent the spread of products which are sold below market value