Customs & Taxes When Importing from China: A Complete Guide
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Importing from China involves a variety of different taxes. The taxes that apply, and how these are calculated, vary depending on which country the products are imported to.
At a glance, taxation and international trade might seem very complicated. That’s why we’ve decided to make life easier for you importers out there.
In this article, we explain the basics of Custom Duties, VAT, Anti-Dumping and other taxes that apply when importing from China to Europe, USA and Australia.
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European Union
The European Union is not a country, but a single market. This means that all EU member states have the same customs duty rates on products imported from non-EU countries. An importer only pays customs once, for products imported from China.
Custom duties are not added to products sold within the European Union. Thus, your Spanish and German customers won’t need to pay customs on products that have already entered EU territory.
That being said, the customs duty rates vary between different products. Products that are not manufactured in the EU (e.g. consumer electronics) tend to have lower customs duty rates – sometimes as low as 0%.
On the other hand, the opposite is often true for products that are considered part of an important industry in the EU.
Shoes, for example, have a customs duty of 12%. Below follows a list of common products and their respective duty rate in the EU:
- Wristwatches: 4.5% (Min: €0.30, Max: €0.80)
- Tablet PC: 0%
- Solar Panels: 0%
- T Shirts: 12%
- Electric Bikes: 6%
- LED Bulb Lights: 4.7%
- Peanuts: 12.8%
Need help in finding the right customs duty rate for your product? When you order a Starter Package, right here on Chinaimportal.com, we confirm the customs duty rate and additional taxes, in your country. Click here to find out more.
Value Added Tax (VAT)
Value Added Tax (VAT) is compulsory in all EU states. Different member states have different VAT rates. Certain products, such as food and books, often have a reduced VAT rate.
However, the standard VAT rate applies to most consumer and industrial products imported from China. Click here for a list of VAT rates in all EU member states.
The VAT is added on top of the customs value, plus the duty (that is also based on the customs value). However, VAT added on imported products are treated as VAT paid on purchases made within the EU (including purchases from other EU states).
This means that the VAT added on the imports, may also be offset against VAT added on sales.
Customs Value
Practically, the EU customs value is based on the CIF (Cost Insurance Freight) price of the imported goods.
Below follows a slightly more detailed specification of which costs the customs value includes:
- Product price
- Tooling costs (e.g., injection molds)
- Shipping and logistics costs (to Port of Destination)
- Product Development Costs (e.g. product samples)
- Insurance
The customs value is not including the following costs:
- Commission and fees paid for purchasing agents (e.g. sourcing agents)
- Transportation costs generated in the importer’s country (e.g. transportation from the port to the final place of delivery)
- Costs generated in the Port of Destination (e.g. port fees and customs clearance fees)
Customs authorities are not making rough estimates. Instead, the declared value shall be clearly stated on the Bill of Lading – a document that is either issued by your supplier or freight forwarder.
This requires your supplier to declare the correct value. Otherwise, you’ll end up paying the wrong amount.
United States
Customs duties are charged on all imports with a customs value of US$200 or above. As in the case of the EU, certain imports are taxed more than others – especially food and agricultural products.
Below follows a list of products and their respective duty rate in the United States:
- Wristwatches: 9.8% + US$1.53 per unit
- Tablet PC: 0%
- Solar Panels: 0%
- T Shirts: 16.5%
- Electric Bikes: 0%
- LED Bulb Lights: 3.9%
- Peanuts: 131.8%
Additional taxes
So far, the United States don’t have a VAT. Instead, a so called Federal excise tax is charged on certain imports, such as tobacco and alcohol.
For the time being, the Federal excise taxes don’t apply to consumer products imported from China.
Merchandise Processing Fee (MPF)
All imports to the USA are subject to the Merchandise Processing Fee. The MFP is based on the order value, and is divided into two categories:
- Imports of goods valued less than US$2500: US$2, US$6, or US$9 per shipment
- Imports of goods valued more than US$2500: 0.3464% of the goods value
- (Minimum MPF: US$25, Maximum MPF: US$485)
The MPF is in general a rather negligible expense when importing from China. Click here to read more about the Merchandise Processing Fee.
Harbor Maintenance Fee (HMF)
HMF is collected on imports transported by sea. It was created in the late 80s and intended to require importers share the maintenance costs of container terminals in the United States.
However, it the HMF won’t make much of an impact on your bottom line – the current HMF rate is only 0.125% of the cargo value.
Customs value
Custom duties, MPF and HMF fees are calculated based on the FOB (Free on Board) value of the imported goods. This includes the following:
- Product cost
- Transportation cost (to Port of Loading in China)
- Export clearance (China)
Most Chinese suppliers quote products based on FOB terms. Click here to read more about Incoterms when importing from China.
Canada
The tax situation in Canada is perhaps the most complex of the major English speaking markets. For Canadian importers, there are three different sales taxes to keep track of, in addition to import duties:
- Goods and Services Tax (GST)
- Harmonized Sales Tax (HST)
- Provincial sales tax (PST)
One, or a combination of two, sales taxes apply in all states. However, no state has all three taxes:
Alberta
- GST: Yes
- HST: No
- PST: No
- Total rate: 5% (Lowest)
Ontario
- GST: No
- HST: Yes
- PST: No
- Total rate: 8%
Prince Edward Island
- GST: Yes
- HST: No
- PST: Yes
- Total rate: 15% (Highest)
The taxes are charged based on the location of the company, rather than the entry point of the goods.
Australia
Australian importers enjoy slightly lower duty rates, compared to their counterparts in the United States and the European Union.
Probably because Australia is a smaller market – with fewer critical industries to protect from outside competition. Below follows a list of products and their respective duty rate in Australia:
- Wristwatches: 0%
- Tablet PC: 0%
- Solar Panels: 0%
- T Shirts: 10%
- Electric Bikes: 5%
- LED Bulb Lights: 5%
- Peanuts: 5%
Minimum thresholds
Australians also enjoy a very generous minimum threshold, when importing from China. Imports of products valued up to AU$1000 are exempt from custom duties, GST and Import Processing Charge.
That’s not enough to reach the MOQ requirement of most suppliers, but it can certainly save a few dollars when buying product samples from Chinese suppliers.
Goods and Services Tax (GST)
GST is added on of the Customs Value of the imported items, transportation and insurance – plus the customs duty. Currently at 10%, the GST applies to most products imported from China to Australia.
Import Processing Charge
Imported goods valued more than AU$1000 are subject to an Import Processing Charge. The amount depends on three factors:
- Mode of transportation (Sea or Air Freight)
- Type of import declaration (Electronic or Documentary Import Declaration)
- Customs Value (Goods valued between AU$1,000 to 10,000, and goods valued more than AU$10,000)
The fee is charged for each import declaration. This means that you pay the Import Processing Charge each time you receive a shipment from China.
Luckily, the charge is usually in the range of AU$40 – 50. Click here to read more about the Import Processing Charge.
Customs value
Custom duties, GST and Import Processing Charges are based on the goods FOB (Free on Board) value. This includes the following:
- Product cost
- Transportation cost (to Port of Loading in China)
- Export clearance (China)
Anti-Dumping Duties
The Chinese government has provided (and still is) certain industries and/or domestic manufacturers with subsidies.
Essentially, this means that the relevant Chinese manufacturers are allowed to sell products below the market price. Good old price dumping.
These practices are not much liked by the EU and US – which often react with Anti-Dumping Duty measures. Sometimes the Anti-Dumping Duties target entire industries, sometimes they target individual manufacturers.
An Anti-Dumping Duty shall be taken seriously, since these are often in the range of 40 – 60% (as a comparison, the average duty rate is around 5% in most western countries).
If you would end up importing products that are under Anti-Dumping, you probably won’t be notified until the cargo arrives in the Port of Destination.
After all, the Chinese manufacturer is not liable for taxation outside of China.
Thus, it’s critical that you research whether an Anti-Dumping Duty measures are imposed on your product and/or supplier, before you place an order.
Anti-Dumping Duties are currently imposed on a wide range of product and industries, read more about open cases in the European Union, United States and Australia in the links below:
Declared Value
Customs duties and taxes are percentages calculated based on the Customs Value.
The customs value is based on the declared value, which in turn shall be stated on Commercial Invoice – a document issued by the supplier.
It’s critical that the correct value is declared on the Commercial Invoice, or you might end up paying the wrong amount.
It’s always the importer’s responsibility to ensure that the correct declared value is stated on the Commercial Invoice. This responsibility cannot be shifted to the Chinese supplier.
HS Codes
The customs duty is not entirely based on the declared value – it also varies between different products. However, customs officers are busy people.
They don’t have time to open every single carton and classify the items on their own. Instead, an HS code specifies the type of product/s.
HS Codes (Harmonized Commodity Description and Coding System) are part of an international classification system that makes this process quite simple.
Yet, it’s up to you to ensure that the correct HS Code is specified on the Commercial Invoice. Otherwise, you’ll end up paying a custom duty rate based on the wrong product.
“Are custom duties refunded?”
No, unlike VAT, customs duties cannot be offset. Therefore the customs duty shall be considered as part of the product cost – and not a temporary outlay.
Sometimes the duty rate is so low it barely makes a difference. However, in other cases the duty rate makes up a substantial part of the procurement cost.
Payment of customs and taxes
There are various ways to pay the customs duties and related taxes, when importing from China. In fact, you can even pay them directly to your Chinese supplier. Below we list the most common cases:
Option #1: Pay customs duties & taxes to the shipping company
This option is probably the most simple. Your cargo arrives at the Port of Destination and the customs authorities adds customs and taxes (e.g. VAT) based on the declared value and the HS code. This amount is then invoiced to you by your shipping company (e.g. FedEx or DHL.)
In some cases, you are required to pay the customs and tax invoice before the goods are delivered. However, you might get better payment terms if you’re an account holder of the freight company in question.
This service doesn’t come free of charge.
The shipping company usually charges somewhere between US$40 – 80 for managing the customs declaration.
Option #2: Apply for customs credit from your local customs authorities
Customs authorities offer customs credit to importers. Basically, a customs credit allows you to first get your cargo to your warehouse and pay customs and taxes at a later date.
The transaction is then made directly to a bank account operated by the Customs Authority, instead of paying the freight company (as detailed in Option #1).
Option #3: Purchase DDP (Delivery Duty Paid) directly from your supplier
DDP is an incoterm that, on top of shipping and port fees, includes custom duties. The customs duty is included in the price you pay your supplier.
However, additional taxes such as VAT and GST, is in general not included due to cross-border taxation issues. Instead, these taxes are paid upon arrival in the Port of Destination.
“Do we need to pay custom duties or other taxes in China?”
No, foreign companies and individuals are not tax subjects in China. Besides, any costs generated in China shall be included in the FOB (Free on Board) price.
However, if you purchase products on Ex Work terms (EXW) from your Chinese supplier, no shipping and exporting related costs are included.
This means that you’ll need to pay for transportation from the supplier’s facility to the Port of Loading in China – AND pay for exporting clearance documents.
While this is not a tax, it’s still a cost you cannot avoid when buying from China.
In general, we recommend small to medium sized importers to purchase products at FOB terms, rather than EXW terms.
“Will the Trump administration impose anti dumping measures on all imported goods form China?”
It is unlikely that the Trump administration will implement the 35% import duty measures that has been previously reported. However, some duty rates may be increased slightly.
It is also possible that the Trump administration will create more incentives, such as tax breaks, for big businesses that bring back production to the United States.
This is, however, more likely to affect multinational companies, rather than small businesses that rely on contract manufacturers. Many products have historically only been manufactured in China.
“Who is responsible for paying import duties and other taxes when a product is dropshipped from China?”
The importer is by definition the company or individual specified as the receiver of the goods. When dropshipping products from China, the parcel is sent directly from the wholesaler to the customer – without ever being imported by the seller.
Hence, the customer is therefore defined as the Importer, and may therefore need to pay import duties and other taxes, such as VAT or GST.
Got questions about customs and taxes when importing from China? Write your question in the commenting section below!
Do you need help with shipping and customs?
We know how hard it is to understand the shipping and customs process, especially if you have never imported from Asia before. To help startups get a grip on the process, and avoid scams and overcharging shipping agents – we created the Starter Package:
a. Tutorials, Video Walkthroughs and Task Lists that guide you step-by-step through the entire shipping and customs process
b. Import duties, taxes and calculation examples for the US, Europe, Australia & more
c. Licenses, permits and how to obtain the required documents for the US, Europe, Australia & more
In addition, you can also book quality inspections, lab testing and shipping directly from the platform. Click here to learn more.
Great blog post as always!
Thank you so much Fredrik!
Thanks! We’ve already received a lot of positive feedback on this article.
hi i have just bought 3 x samsung s7 edge phones and now the sender in china says we have to pay customs tax is this correct???
i enclose a copy …..
I’m really sorry to tell you,just now we have check with agent.
They said the package was detain at the customs due to the Beijing customs restrictly checking ,all package been opened and checked one by one,
finally they found that the brand products in the package, they require you pay $ 398.00 as tax,it’s just an accident.
please arrange $ 398.00 within 72 hours, then we can talk with custom guy and go ahead the shipping, thank you
So your goods need be paid a custom Brand charges and then would be sent to you successfully!
All the customer should pay for the tax,not only you!
You need pay face to face by cash in the customs office and i know that it is unconvenient for you come to China!
You pay the custom Brand charges to our bank account,
and after you pay, we withdraw your money and then we send your money to the customs as the custom Brand charges for your order !
without tax they won’t release the package ,hope your understanding.
please help me
Hi Jason,
This is a fraud. You will not receive any phones, and you should not send more money to this scammer.
Yes, if you import goods in Europe, then European VAT will apply to the products. It’s is critical to point here that a new VAT Directive also applies to B2C sales of digital services in the EU. That means that all digital services sold to consumers in the EU will be vatable. VAT on digital services will now be applicable based on where the end consumer is based. Post-2015, it is all about the location of the consumer and not the supplier.
Hello Marie,
Interesting information. But I assume it’s up to the EU based buyer to declare the foreign purchase and pay VAT? I don’t see how this could be enforced on foreign businesses, by the EU.
Fredrik, I heard that Chinese suppliers avoid their VAT by hiding it from importer who finds out later that he cannot export goods due to lack of tax documentation.
Hmm, that sounds like something that can happen when buying according to Exworks terms. EXW includes nothing but the products, thus export clearance (probably the documents you are referring to) and delivery to port of loading in China is not included.
At a minimum, order according to Free on Board (FOB) terms. You save nothing by ordering according to EXW terms.
Fredrik, I read about this Value Added Tax (VAT) issue on “PassageMaker China” website.
Also, did you happen or know someone who did find himself in a situation where supplier charged inflated FOB price? Do you know the average FOB pricing in China? What if supplier is in China but has to transport goods to another city for whatever reasons which only adds to FOB price? Should I ask supplier where is port of destination?
Hello Boris,
First of all, most suppliers must transport goods to a port city on the coast. Of course this transportation costs money, but leaving the goods in the suppliers city is not saving any money.
FOB usually adds US$150 to US$500 on top of the EXW price, depending on volume and weight.
I want to buy some dog balls from China. Can anyone help me. The total cost is USD498, bu do i have to pay any other costs like import and vat?
You are right. Better play it safe in order to not end up in situation where supplier offers EXW only and when I try to get his export documents for clearance he refuses to supply them in case he tries to hide something from government etc.
Can you tell me what incoterm there is in a scenario where I get FOB from supplier and then hire freight forwarder to take consignment from FOB to port of destination or terminal or ultimate destination? Are CIF/CF, DAT and DAP incoterms still apply here?
Yes, you can apply any incoterm “on top” of FOB. However, if you already have a freight forwarder taking care of your cargo, I’d advise you to request a DAP or DAT shipment.
Thanks! DAT means delivery at customs terminal?
Customs duty across various countries is a major issue for me because i have an import export business and i need to updated on every countries policies to be able to adjust with my clients. Thanks for sharing all the customs details regarding business from china.
Hi Fredrik,
so if I am about to import a tablet pc form the US to Sweden there shall be no Duty tax, nor VAT?
just the Merchandise Processing Fee?
No, the MPF is only paid on imports into the US. Not on exports from the US.
Hello Pablo,
Duties and VAT apply to imports from all non-EU states, including the United States.
Your article states the tariff duty is calculated on “product cost”. Exactly what is included in product cost? Does this include the manufacturing costs of the product, shipping, labels, etc? Does it also include the cost of making a mold, that stays in China? If so, why is the mold cost included and how is this handled on car manufacturing where the mold cost is spread over thousands of cars? What if any other costs are included?
Thank you.
You might want to add Canada. Packages under $20 are not charged duty!
Thanks for the wonderful content. i just have one question.
I live in USA. I like to import from China. How is the “Export Clearance Cost” calculated in China? How much is it?
Hi Fredrik,
You mention 0% on solar panels for import into the USA. Does this also apply for the equipment you need to convert the solar power into the grid?
You will need a grid tie inverter to supply the solar power into the 110V grid……
So is the 0% for solar panels or for “solar panel equipment”…..?
Great article.
I am relatively new to import and export business, and plan to manufacture electrical goods (control panel) in China and sell our products globally.
Initially, I like to import from China to USA (my headquarter) and then export to other countries, primarily in middle east.
What are all the taxes/duties I have to pay? Remember, the good will only be sold outside USA initially.
Thanks.
Hi,
I would like to purchase shoes and clothing for my store from Ali-Express, most purchases will be approximately $500.00 or less; possibly three times a year. How do I calculate the fees and taxes I will be required to pay.
I’m bringing two used barcode scanners to China. They will remain in China. Each used barcode scanner was $295.00 in 2013 in US Dollars. 1. Do I need to fill out any forms and are there any taxes? 2. I’m bringing 6 new grounded universal adaptor plugs. Do I need to fill out any forms and are there taxes? Total value $42.48 US dollars.
I’m looking forward to importing some jewelries from China to Nepal. Would you please be kind enough to let me know about the charges other than item cost and shipping charge?
I am importing 100 thumb drives values at $4.00 each and shipping about $50. How can I find out what the import taxes will be.
Hi Stan,
You can check out http://www.dutycalculator.com/
Hi,
I am from Bulgaria and I’m planning to visit Dusseldorf Messe next week. I have a company, registered in Bulgaria. My question is: If I buy a Chinese machine at the exhibition where am I supposed to pay customs duties and VAT – in Germany (before the transportation of the machine to Bulgaria) or in Bulgaria when I deliver the machine to Bulgaria?
Hi,
If the machine is already in Germany, it means that it’s already imported into the EU. Hence, it would be like buying any machine in Germany.
You will pay German VAT in that case. However, if the machine is still in China (and yet to be shipped to the EU), you can have it delivered directly to Bulgaria instead.
So if i buy LED Lights from China, send them money but they are in stock in California? Is there legal ramification that could fall on my lap?
Hi Steve,
Yes, that could complicate things. If I get this right, the supplier want you to pay them to an account in China, while the products are already imported to the US and ready for delivery in California?
Marina ,
Hi.
I would like to import Brown beans from china to Germany . how much one is paying VAT and tax in Germany ?
When we are buying goods on FOB basis from our supplier in China, Then to whom the carrier will charges the Import Processing Charges & Service charges on POD?
Hi Skumar,
From you. FOB will only get the goods to the port of loading, in China. You must still arrange shipping from there to POD.
Great info, thanks!
When a dropshipper buys from Aliexpress, will the dropshipper pay for custom duties/tax, or will the customer who eventually receives the product, get the invoice to pay for custom duties. (that would be a terrible surprise…)
If I am dropshipping a $ 500 product to The Netherlands, my customer will get an additional $ 100 invoice for custom duties/tax? How do dropshippers deal with this situation?
Hi Peter,
We just wrote an article on this topic. The truth is that there is, as far as I know, no way to “solve” this situation… if you dropship from China.
I hope you are doing well, i am interested to buy 300 watches, which costs 10.000 dollar, in china aliexpress and to bring it,in germany, how much should i pay custom duty? taxes? thanks.
Hi Ardi,
Which country are you based in?
HI- I am receiving 1000 USD in furniture in Chicago? how much tax will I pay?
I am wanting to import watches from alibaba costing 2$ / pieces. Total 10 pieces and shipping charges supplier told me is 25$ . So total I have to pay 42$ to them. How much other cost will be lavi on me like custom duty and all?
So I bought some toys action figures from Chinese sellers on eBay. I live in Canada. What can I expect?? I’m really worried. Thank you
What are you worried about?
Hi, I was also a victim of scam. I asked a quotation from alibaba and received an email saying they are alibaba gold supplier. I paid for the price of the fitness tracker but then told me that the goods were detained at custom and required me to pay 50% electronic tax. Do you have any idea how can I go after those culprits? I sent them a tital of $980.
Hi fellows, please help me out.
I ordered some products from China and shipping by air was so expensive that I went ahead and chose shipping by sea.
I purchased goods through Ali Baba and thought the manufacturer was supposed to take care of all the shipping things, however, just like 20 min ago my supplier contacted me and asked me to provide them “some data” in order for the container to pass the customs in the USA.. I started asking questions like “what kind of data?” “who do I contact?” and etc. Supplier kinda got upset and asked me if that was my first time doing shipping by sea, which it is the first time.
Supplier just recommended me to pay a company like DHL to do the customs for me, however, I would like to find out myself, what info they require? what do I do when my goods arrive to the port of Miami, what are the steps to pay taxes, get my goods, what documents do I need?
etc.
Please someone who knows anything about it, give me some wise advises.
Thank you,
Hi Timur,
Which Incoterm did you order the shipping according to?
recently I purchased some goods from china total value of 1800 dollars of concrete cutting machine,
I found an online service to help me in getting the goods to me in california
so far I was charged 198 dollars for initial filing etc
and now another 175 for getting the merchandise to me including the taxes
are these charges regular and customary ?
That depends on the incoterm. Did you order according to CIF terms?
Informative article for people who want to know more information about import.
I paid for items in alibaba online store for shoes and jewelries. But what got was different from what I saw online. Most of the items where all fake. So how should go about it to get money back because the items don’t worth the value of money I paid for it
Hi,
I suggest you read this post: http://www.chinaimportal.com/blog/report-trade-disputes-ip-violations-alibaba/
Hi – this is a GREAT informational blog, thank you. Am going to speak to my business partner tomorrow about buying the startup pack. I have just started importing from china direct to Amazon FBA. MY first inventory arrived a week ago and is selling well…my question is this : Our goods were shipped DDP from Supplier/Manufacturer direct to Amazon warehouse in UK. Should I ‘assume’ that the Customs Duties will have been paid? Is there any record of this? Also, when/where is the VAT paid? (Supplier obviously had my Ltd Company details so is this recorded somewhere and i should expect an invoice from Customs & Revenue at some point?
My goods cleared customs, and are on the shelve sin amazon..but we have not paid a penny in Customs Duty or VAT. Our shipping quote from our supplier was
(Ignore the last 2 lines – forgot to delete them :))
Hi Dave!
1. Yes, DDP includes import duties. They should be able to provide some sort of receipt to prove that it’s paid though.
2. No, you should let your freight forwarder manage the VAT payment, and then let them bill you for it. the HMRC will not bill you. IF they did not bill you, you can still file a VAT declaration by yourself, assuming you are VAT registered.
But, ask for an import duty receipt first, as you paid DDP.
This is also covered in the Shipping & Customs Module in the Starter Package
Hi! Great post, I was wondering more about the anti-dumping tariffs. I want to import thermal receipt paper from China and I was reading the reviews about the 2 Chinese companies that got hit with the 115% ad valorem tax.
What kind of duty would I be looking at?
Are these suppliers in the same industry?
I am looking order 100k USD worth of computer servers from Malaysia or China. is there any duty besides import VAT due? Thx for any clarity.
That depends on the country where you are based.
I want to import a computer from China to the Netherlands. The cost is 1249.99 USD, would I pay taxes?
Hi Daniel,
Yes, you will need to pay import duties and VAT. Not sure if it makes sense to import a single computer.. probably cheaper to buy it at home