Commonly included are the price paid for the goods; packing and container costs (if part of the sale); certain commissions; some royalties and license fees when they are a condition of sale; the value of “assists” (goods/services supplied free or at reduced cost by the buyer).
Commonly excluded are domestic taxes at import (VAT or customs duties themselves), post-importation costs, interest, and many after-importation costs. Exact inclusions/exclusions are set by national law and international agreements.
Customs valuation is the method used to determine the monetary value on which ad valorem duties and many import taxes are calculated.
Most countries follow a hierarchy of methods that prioritise the transaction value (the price actually paid or payable for the goods) with limited, specified adjustments (e.g., certain royalties, assists, packing, and transport to the port of import).
When the transaction value cannot be used, alternative methods (identical/similar goods, deductive, computed value) are applied.
The HS is the international product classification system used by customs authorities worldwide. Every traded product is assigned an HS heading (six-digit international standard) that helps determine duty rates, trade statistics, and regulatory requirements.
Accurate HS classification is the first step to determining customs duty, identifying restrictions, and meeting paperwork obligations.
Tariffs are border taxes specifically tied to cross-border movement of goods (import duties, export duties).
VAT/GST is a consumption tax applied to the value of goods and services and often charged on imports at the point they enter the domestic market; VAT can usually be reclaimed by VAT-registered businesses.
Sales tax is similar to VAT but often administered differently. In short, tariffs are trade-policy charges; VAT/GST and sales taxes are consumption taxes.
Sanctions prohibit or restrict trade with certain countries, entities, or individuals.
Examples:
Russia: Sanctions on tech, aerospace, and luxury goods post-2022.
Iran: Broad export bans.
North Korea: Near-total embargo.
Key lists to screen against:
OFAC (U.S.): Specially Designated Nationals (SDN) List
EU Consolidated List
UK OFSI List
Consequences of violation:
Fines
Criminal charges
Loss of export privileges
It is advised to use automated screening tools, such as the iDPS tool by iCustoms, before every shipment.
Transfer pricing is the price set when related companies in different countries trade with each other. For example, if a U.S. parent company sells goods to its subsidiary in Germany, the price charged is the transfer price.
Customs pays close attention to these prices to make sure companies don’t undervalue goods to avoid paying duties.
Example: If a U.S. company sells headphones worth $100 to its Dutch subsidiary for just $10, customs can step in, revalue the shipment at $100, and charge duty on the real market price.
Not legally required for small shipments, but highly recommended because:
Brokers know HS code nuances.
They handle declaration forms
They resolve holds and inspections quickly.
Brokers or businesses can use AI-assisted tools, such as iCustoms iCalculator, to ensure accurate duty and tax calculations.
Yes, you can get a refund on import duties in the UK, but only in certain cases:
Overpaid duty/VAT: Claim via form C285 or adjust your VAT return (if VAT-registered).
Rejected/withdrawn imports: Use C&E1179 or relevant process (within 90 days–1 year).
Returned goods/relief schemes: Claim with C285 + documents.
Time limits: up to 3 years (most cases). Refunds usually take 4–8 weeks.
A VAT deferral account allows UK businesses to delay paying import VAT until their next VAT return, improving cash flow. Instead of paying £2,000 VAT at the border, you report it on your VAT return and settle it a few months later.
To get a VAT deferral account in the UK:
Eligibility: Your business must have a UK EORI number.
Apply Online: Use HMRC’s online service for a duty deferment account.
Set Up Payment: Arrange a Direct Debit for monthly payments.
Use Approval Number: Once approved, include it on import declarations to defer VAT and customs duties.
VAT/GST: In the UK, exports are zero-rated for VAT, provided you keep proof of export. Globally, most countries follow the destination principle—exports are tax-free in the origin country but taxed on import in the destination.
Customs Duties & Import Taxes: Paid by the importer, not the exporter. Amount depends on product code, value, origin, and trade agreements.
Excise Duties: Certain goods (alcohol, tobacco, fuel) may carry excise taxes in either the exporting or importing country.
Corporate Tax: Export profits are still subject to normal domestic business taxes (e.g., UK Corporation Tax).
Personal items can be exempt from import duties if they are for personal use, used rather than new, and fall within the duty-free allowances set by the destination country.
Most countries allow travellers to bring in a limited value of goods duty-free (often covering clothing, toiletries, or personal electronics).
New or high-value items above the allowance, as well as restricted goods like alcohol, tobacco, or luxury items, may still attract duties and taxes. Always check the specific customs rules of the country you are entering.
Yes, you almost always need to declare exports by submitting an export declaration to your country’s customs authorities to provide essential information about the goods, transport, and financial details, though exemptions may apply in some cases.
Failure to file complete and accurate declarations within the prescribed timeframes can result in penalties, delays, or seizure of your goods.
An export license is an official government authorisation that allows a business or individual to ship specific goods or technology to another country. It’s typically required for items that are sensitive, high-value, or strategically important, such as weapons, dual-use technologies, chemicals, pharmaceuticals, cultural artefacts, or restricted raw materials.
Whether you need one depends on:
The type of goods you’re exporting (some are controlled by law).
The destination country (exports to sanctioned or high-risk regions often require approval).
The end use and end user (certain industries or organisations may be restricted).
Without the proper license, exports can be delayed, seized, or result in fines and penalties.
An Incoterm (short for International Commercial Terms) is a globally recognised rule published by the International Chamber of Commerce (ICC) that defines the responsibilities of buyers and sellers in international trade.
It clarifies:
Who arranges and pays for transport, insurance, and customs duties
Where the risk transfers from the seller to the buyer during shipment
Who handles export and import formalities
Examples include EXW (Ex Works), FOB (Free On Board), and DDP (Delivered Duty Paid).
Under DDP (Delivered Duty Paid), the seller bears all the costs and responsibilities of delivering goods to the buyer’s location, including:
Import duties, VAT/GST, and other local taxes in the buyer’s country
Customs clearance and paperwork at both export and import points
Freight, insurance, and delivery charges until the goods reach the agreed destination
The buyer’s role is minimal; they only need to receive the goods. While this term offers convenience for buyers, it can be risky for sellers, as they must be familiar with the customs regulations, duties, and taxes of the importing country and may face unexpected costs or delays.
FTAs eliminate or reduce tariffs between member countries. Examples:
USMCA: U.S., Canada, Mexico – 0% duty on most goods.
RCEP: 15 Asia-Pacific countries – covers 30% of global trade.
AfCFTA: African Continental FTA.
Benefit: A U.S. exporter of medical devices to Canada pays 0% duty under USMCA vs. 5.5% otherwise.
Seasonal tariffs are duties that change depending on the time of year. For example, if a country grows strawberries in the summer, it may impose higher tariffs on imported strawberries during that season so domestic growers aren’t undercut by cheaper imports.
But once the harvest ends, the tariff may drop so that consumers can still access strawberries year-round. Seasonal tariffs are common in the agricultural sector, but they can also apply to other seasonal goods like textiles or holiday products.
Ad valorem duties are percentage-based, meaning they’re calculated as a portion of the product’s customs value. For instance, if a product is valued at $1,000 and the ad valorem rate is 10%, you’ll pay $100 in duties.
Specific duties, on the other hand, are fixed charges based on quantity, weight, or volume. For example, $2 per kilogram of imported cheese.
Some countries even use a compound duty (a combination of both).
Ad valorem duties are fairer when prices fluctuate, while specific duties are easier to administer but can disproportionately affect cheaper goods.
A tariff rate quota is a system where a country allows a certain quantity of a product to be imported at a lower duty rate. Once that quota is used up, any additional imports are charged a much higher tariff.
For example, the EU might allow 50,000 tons of sugar at 5% duty, but after that, extra imports could face a 40% tariff. TRQs are designed to balance domestic supply with international trade, ensuring consumers get affordable access while still giving protection to local industries.