by Michelle Mondonedo
All the terms you need to know to handle duties and taxes like a boss!
CIF: “Cost Insurance and Freight”. An Incoterm that’s only applicable to sea freight. The seller is responsible for paying the costs and freight necessary to bring the goods to the destination port, in addition to buying insurance against the risk of loss or damage of the goods.
Customs broker: A customs broker’s job is to fully understand customs duties, rules, and regulations, and will know the processes and paperwork needed to ensure your shipments clear customs at both the country of origin and the destination country. Learn more.
Commercial invoice: A required document in international shipping that describes the items in the shipment and their value. Commercial couriers and customs brokers refer to this document to process and clear your package through customs. Learn more.
DDP: Deliver Duty Paid. The sender is responsible for paying the duties. In eCommerce many sellers include these duties at checkout and directly collect payment from the customer.
DDU: Deliver Duty Unpaid. The receiver of the shipment is responsible for paying the duties. They will get contacted directly by customs, and the package won’t get delivered until the charges are settled.
De minimis value: The tax threshold, or the amount where a person begins paying taxes on an item.
FOB: Free On Board. Applicable to sea freight, the seller is responsible for getting product on the ship and clearing the product for export. The buyer is then responsible for insuring the shipment and handling the importation process, including paying for any import duties.
GST: Goods & Services Tax. This tax is charged in stages, then reimbursed to everyone except the end buyer. It’s different from VAT in that it’s a flat-rate percentage of the total transaction, instead of a percentage of value added.
Import duty: A tax imposed by a government on goods from other countries. This increased price on imported goods is meant to make these products less "desirable" so buyers are encouraged to support the domestic market. Learn more.
Incoterms: “International Commercial Terms”. These terms clearly lay out what the buyer and seller is responsible for when handling, transporting, and delivering goods. Learn more.
VAT: Value Added Tax that is charged to consumers when they buy any good or service. Learn more.