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International Duties and Taxes

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

 

Why Do Governments Impose Taxes On International Orders?


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: 

Generate revenue

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
 

More information

Read Next Chapter: Types Of International Duties And Taxes

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Read Next Chapter: Types Of International Duties And Taxes

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