When you ship goods across international borders, one of the first things you need to work out is what duties and taxes you might expect to be faced with. Whether or not you choose to pass these costs on to your customers, it is important to understand what factors are involved in calculating duties and taxes, and how much you might be charged.
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This article covers the Harmonized System (HS) codes, the landed cost guarantee, and how duties and taxes are calculated when you ship with Smart Routing International. For more information about Smart Routing International, see the About SRI article. For more information about incoterms, see the Understanding incoterms article. For more information about shipping orders internationally with Shippit, see the About international shipping article.
Harmonised System (HS) codes
The Harmonised System (HS) is a globally standardised numerical system used to classify traded products. It functions as a common language for goods, enabling customs authorities, businesses, and governments around the world to identify and describe products consistently.
Australia uses HS codes with 2 extra digits to classify goods that are being exported from Australia. These are called Australian Harmonised Export Commodity Classification (AHECC) codes.
The primary purpose of HS codes is to streamline customs processes, assess duties and taxes, collect trade statistics, and implement trade policies. HS codes can also be used for:
Internal taxes and regulations
Monitoring controlled goods
Rules of origin determination
Freight tariffs and transport statistics
Economic research and analysis
It's important that you select the correct HS code for your shipments. Make sure you are declaring the correct HS code to avoid additional fees, or border seizures.
Landed cost guarantee
Working out what duties and taxes need to be paid can be a complicated process. To make this simpler and to prevent surprises, you can take advantage of Shippit's landed cost guarantee. The landed cost guarantee ensures that the cost you pay for exporting goods is the final amount, and includes all duties, taxes, and fees.
Shippit integrates with a number of partners that allow us to provide a complete breakdown of duties, taxes, and fees that make up a total landed cost, including the sum of duties, taxes, and additional fees from customs, brokers, or the shipping carrier. Landed cost simplifies an otherwise complex method for calculating duties and taxes on international imports, and ensures no additional charges.
If you want to take advantage of the Shippit landed cost guarantee, you must provide an accurate HS code.
Calculating duties and taxes
For orders booked through Smart Routing International, duties and taxes are calculated based on the product description and HS codes of the items you're shipping. For orders on our partnered rates, we integrate with Zonos to calculate duties and taxes, and the calculations include reduced rates, simplified rates, and the impact of de minimis values.
Providing HS codes can increase the accuracy of the calculation, and is required if you want to get a full landed cost calculation.
For more information on how to add your tax identifiers in Shippit, see our DDP and DDU article.