Duty & Tax Information for Recipients and Shippers
We’ll help you understand the world of tax and tariffs.
We’ll help you understand the world of tax and tariffs.
Duty & Tax Resources
You may not be expecting to pay duties and taxes, or you may have questions about the customs clearance process for your shipment, so here's some information and a few FAQs to help you.
Understand Duties and Taxes
When shipping goods internationally, it is important to consider the effects of duties, taxes, and other clearance charges (in addition to the transportation cost) when determining a shipment's total cost (landed cost). Depending on the shipment content and the destination country, clearance charges could significantly impact the total shipment cost. Being able to calculate and communicate the landed cost up-front can save both the shipper and the recipient valuable time, money, and effort.
Duties and taxes are imposed to generate revenue and protect local industry; almost all shipments crossing international borders are subject to duty and tax assessment by the importing country's government. Customs officials assess duties and taxes based on information provided on the air waybill, the commercial invoice, and other relevant documents. In some countries, duties and taxes must be paid before the goods are released from customs. A shipment's duty and tax amount is based on the following:
- Product value
- Trade agreements
- Country of manufacture
- Description and end use of the product
- The product's Harmonized System (HS) code
- Country-specific regulations
Goods and Services Tax (GST)/Value-Added Tax (VAT)
Many countries have a general consumption tax which is assessed on the value added to goods and services. In some countries such as Canada, Singapore, Australia, and New Zealand, this tax is known as the goods and services tax or GST.
The Canadian sales taxes are the Provincial Sales Tax (PST), the Quebec Sales Tax (QST), the Goods and Services Tax (GST), and the Harmonized Sales Tax (HST) which is a combination of the PST and the GST in some provinces.
To see Canada-specific tax rates by province, please click here.
For European Union (EU) countries, this tax is known as a Value-Added tax (VAT). Businesses that are VAT-registered and fully taxable do not bear the final costs of VAT because it is a tax on consumer expenditure.
To see EU-specific VAT rates, please visit the European Commission (EC) Taxation and Customs Union website.
Determine Duties and Taxes
The most common valuation method is the ‘transaction value method’. This basically means that the value of the goods on the Commercial Invoice must equal the value that the purchaser has paid for the goods. For example, if a Canadian purchaser bought a computer from a U.S. vendor for USD$2000 then the vendor must indicate that value on the Commercial Invoice, even if the vendor’s cost to purchase was only USD$1000.
Proper valuation of all items in a shipment will help prevent clearance delays, rejections or seizure by customs, or monetary penalties under the CBSA’s Administrative Monetary Penalty System (AMPS) program.
For the methods of valuation, please refer to the Customs D13 Series Memoranda. D13-3-1 provides an overview of the various valuation methods.
Declared Value for Customs and Duties and Taxes
Customs officials use a shipment's declared value (the value the shipper declares on the goods being shipped), along with the description of the goods, to determine duties and taxes. It is important to ensure that the declared value claimed is accurate. Inaccurate declared value is one of the most prevalent reasons for duty and tax disputes. A shipment's declared value represents the selling price or fair market value of the contents of the shipment, even if not sold. This value is identified on the FedEx Express® International Air Waybill and the FedEx Express® Expanded Service International Air Waybill as the "Total Value for Customs," and it must be consistent with the value shown on the Commercial Invoice.
One of the most common reasons for customs delays is an inaccurate or vague shipment description. A consistent and detailed description of the shipment contents on all documents will help reduce customs delays.
A good description must answer the following questions:
- What is it?
- How many are there?
- What is it made from?
- What is the intended use?
Avoid abbreviations. "Cxl cbl" might mean "coaxial cable" inside your organization. However, for a customs official, especially one halfway around the world, it will have little meaning.
Be specific. "Metal parts for hydraulic valves" is better than "machine tools." Also, use generic names in addition to trade names.
Many countries allow gifts to enter duty-free if the value of the gift is less than a certain amount and if the gift being shipped is not considered to be a regulated/prohibited commodity. Any gift valued greater than the stated value may be subject to import duties and taxes.
Here are a couple of examples:
- The United States: No duties and taxes are assessed if the value of the goods is equal to or less than USD$100
- Canada: No duties and taxes are assessed if the value of the gift is less than CAD$60.
To qualify as a gift, the shipment must meet the following requirements:
- The shipping documentation must be clearly marked "GIFT" and include a detailed description of the commodity.
- The total value of the shipment must not exceed the values listed in the above examples.
- In some countries, the shipment must be sent person to person — with no company involvement or indication of involvement on the shipping documentation.
For additional information, please click here Important Tips for Shipping Gifts
Many countries allow tax relief (either duties and tax exemption upon entry or a refund after exportation) for items that are temporarily imported or exported, as long as certain conditions are met and procedures are followed. For instance, items are often temporarily imported or exported for:
- Re-export after resale
- Repair or replacement of damaged goods
The customs clearance services included as part of FedEx® international services are meant to facilitate the import of goods intended for consumption in that country. Therefore, they do not include some special procedures that might be needed to meet governmental requirements for duties and tax relief at the time of export or import.
Pay Duties and Taxes
FedEx Advancement Fee
Duties, taxes and other charges might be due when importing a shipment. FedEx may advance these fees as assessed by Customs on behalf of the payor. A fee will be based on the advanced amount.
When completing the FedEx Express® International Air Waybill or FedEx Express® Expanded Service International Air Waybill, you can select the shipper, the recipient or a third party as the party responsible for payment of any duties and taxes. If no party is selected on the air waybill, the recipient will default as the responsible party.
Non-FedEx Account Holders
Prepayment of duties and taxes before release to the recipient may be required if the recipient does not have a valid FedEx account number or a FedEx account in good standing. Shipments will be held at the destination station until payment arrangements are made..
Please note: As per the contract of carriage with FedEx®, the shipper is ultimately liable for any duties and taxes assessed on the shipment. If the recipient refuses the package, or the recipient or third party FedEx account holder refuses to pay for duties and taxes, the original shipper will be billed for duties and taxes.
Frequently Asked Questions (FAQs)
All shipments that are imported into Canada are subject to duties and taxes assessment by the Canada Border Services Agency (CBSA). The duty rate varies depending on the type of product and the country where it was manufactured. The amount of duties and taxes for an item primarily depends on the item's value in Canadian dollars and the purpose for the shipment such as a gift. In addition to the duty, tax may also apply (e.g., GST, PST, QST, and HST).
Goods purchased online and shipped to you from outside your country of residence are subject to duties and taxes. If you are making an online purchase, please clarify with the sender who is responsible for the payment of any duties and taxes as they may not be included in the purchase price.
For eligible gifts imported into Canada it is CAD$60 or less, per gift, even if a single gift has more than one recipient (e.g., gift to a family). Each gift in the shipment must be clearly identified as one gift. If the gift is worth more than CAD$60, the amount over CAD$60 is subject to duties and taxes (e.g., if a relative sends you a gift worth CAD$200, you must pay any applicable duty plus the GST, PST, QST, and HST on CAD$140).
The ROD fee applies to recipients with no FedEx Express account number or poor payment history. This fee is collected from the recipient at the time of delivery, in addition to any duties and taxes that may be applicable. If the item is duty-free and tax-exempt, then this fee will not be charged. For more information on this fee, please visit fedex.ca/ancillary.
The Advancement fee applies when a duty/tax invoice is issued by FedEx Express. FedEx Express pays the duties and taxes owed to the Canada Border Services Agency on your behalf and charges the Advancement Fee for this service. The fee is based on the total amount of the duties and taxes advanced, and will be billed to the party designated to pay the duties and taxes. For more information on this fee, please visit fedex.ca/ancillary.
If you are the recipient or designated party for payment of duties and taxes and do not have a FedEx account, or your FedEx account has a poor payment history, then the following options are available to you.
- Pre-pay by credit card: Call FedEx Customer Service at 1.800.GoFedEx 1.800.463.3339 with your tracking number.
- Pay by cash, cheque or credit card at the time of delivery.
If a shipper or third-party is responsible for the payment of duties and taxes, but does not have a FedEx account, or has a FedEx account with poor payment history, then the shipment will be held at the FedEx destination station until payment arrangements are made.
There are several reasons why the rate of duty and amount could vary, such as:
- The value of the shipment.
- The country of manufacture.
- The description of the goods on the air waybill or customs documents.
Below are some examples when the NAFTA rate of duty would not be applicable on a shipment from the U.S.
- The item was not manufactured in a NAFTA country (i.e., Canada, Mexico, and the U.S.).
- A valid NAFTA Certificate of Origin was not provided for a commercial shipment valued at CAD$2500 or greater.
- A signed statement was not provided on the commercial invoice for a commercial shipment valued at less than CAD$2500.
Agency Agreement for Canadian Importers
Special procedures and documentation are often necessary to properly process a shipment that is to be imported temporarily. The procedures vary depending upon a number of factors including:
- The origin and destination of the shipment
- The classification of goods
- The value of goods
- The purpose/end use of the goods (e.g., tradeshow material)
Please note, the two most common errors concerning temporary shipments are:
- Failing to indicate on the shipping documentation that the shipment is a temporary import.
- Failing to properly document and re-export or destroy the articles. When this happens, the bond or security deposit is forfeited and the importer bears the duty and tax expense.
If a shipment has been transported to Canada via FedEx Express and it is identified as a temporary import shipment prior to customs release, FedEx Express will contact the importer advising them of the clearance options.
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