Understand

Guide: AvaTax Cross-Border (Customs Duty and Import Tax)

Understand the components of customs duties and import taxes for cross-border transactions.

Customs duty and import tax represent the 2 types of charges that make up the import/export taxes and tariffs (for example, landed costs) associated with a cross-border sales transaction.

Customs duty (tariff)

• Customs duty is a direct tax imposed by Avalara for Government on goods from other countries​.
• Countries lower customs duties for customs unions, like the EU, or free-trade agreements, such as NAFTA.
• The government imposes a customs duty on imports only.
• Harmonized System codes derives the customs duty amount.
  • The total purchased value of one or more articles determines the amount.
  • When deriving the amount, for some jurisdictions, NetWeight and Volume are necessary.

Import tax (VAT/GST)

• VAT/GST is a consumption tax imposed on customers.​
• VAT/GST is typically a percentage of the selling price and customs duty.
• VAT/GST is imposed on both imports and intracountry sales of goods​.
• The Avalara tax code derives the VAT/GST amount from Harmonized System codes.

Notice

Customs duties and import taxes often reach 30% or more of the purchase price. It’s important for cross-border sellers to understand these costs clearly.