Import taxes

Import taxes are taxes placed on international purchases but do not necessarily match domestic taxes. Import taxes can vary by country, region, HS code, and de minimis value. Every country has a unique country-level tax rate. Some countries have a general consumption tax, typically referred to as value-added tax (VAT) and occasionally as goods and services tax (GST). The way these taxes are calculated varies by country.

Calculate import taxes 

Zonos Landed Cost's tax calculation effectively applies tax formulas according to the desired import country regulations and tax de minimis.

To learn more about import taxes, read our total landed cost guide.

As shown in the landed cost object below, the tax rates are returned in an array with a type specifying which product or service the tax is applied to.

{
  "id": "ldct_1Ce6vt2eZvKYlo2CrgzPqxaz",
  "amount_subtotal": {
    "duties": 0.0,
    "fees": 48.75,
    "taxes": 32.5
  },
  "taxes": [
    {
      "amount": 30.0,
      "description": "VAT",
      "formula": "10%",
      "item_id": "294395",
      "note": null,
      "type": "item"
    },
    {
      "amount": 2.5,
      "description": "VAT",
      "formula": "10%",
      "item_id": null,
      "note": null,
      "type": "shipping"
    }
  ]
}

Note: See a visual breakdown of taxes on your quotes inside Zonos Dashboard.

Calculation requirements 

To receive a landed cost calculation with tax and duty rates, a frequently used six-digit harmonized system (HS) code is required. You can input your own in your account setup; otherwise, a default HS code will be used.

Reminder: The HS code determines eligibility for a reduced tax on qualified goods.

De minimis tax 

The import tax de minimis qualification is returned in the LANDED COST OBJECT. If "threshold": "below" is returned, there is no tax on the import.

Some goods (e.g., wine) may not be eligible for de minimis consideration. If the good is ineligible, the note field will put out a response of null.

{
  "id": "ldct_1Ce6vt2eZvKYlo2CrgzPqxaz",
  "amount_subtotal": {
    "duties": 0,
    "fees": 0,
    "taxes": 0
  },
  "de_minimis": [
    {
      "formula": "Less than 22 EUR",
      "method": "cifd",
      "note": null,
      "threshold": "below",
      "type": "tax"
    }
  ]
}

Checkout, Quoter, and Hello inform the shopper when their order is under the tax de minimis.

Correctly calculating import tax based on the de minimis value can have a significant impact on ecommerce conversion because it’s possible that the import will not incur duties or taxes due to the de minimis threshold, resulting in a lower landed cost and higher conversion rate.

If you want to learn more about de minimis values, read our de minimis values guide.

How import taxes are calculated 

The most common valuation method for taxes is “cost insurance freight” (CIF), where taxes are applied to the value of the item, insurance, freight, duty, and fees.

Some countries may only apply taxes to the item and duty, offering a simpler tax calculation; others have their own formula for calculating the import’s taxable value. For example, Brazil uses the gross amount plus taxes, then charges their tax (ICMS) on that value. What appears to be an 18% tax into Brazil usually calculates out closer to 22% when compared to the valuation method in other countries. See different valuation methods below.

The method inside the de_minimis array will provide the Incoterm used for the tax calculation. For example, VAT is typically applied to CIF. These methods and their corresponding Incoterms result in a grand total that includes the taxes to be applied.

Import taxes on items for resale 

Oftentimes, resale items will not have a regional tax rate applied if the commercial invoice specifies that the item is for resale. This is common for an exporter selling to another business (business-to-business, or B2B). If the goods are later resold in the destination country and the importer is registered to pay taxes to their respective local government agency, the goods may not have the tax applied at the time of import. Common examples of this are businesses that import into Canada and Australia.

By default, all Zonos Landed Cost calculations are assumed to be not for resale (NFR). If your business needs a landed cost calculation without certain taxes applied, you can pass for_resale in the sale_type attribute in the landed cost request. This will return only the taxes that are applicable on an order for resale.

{
  "id": "ldct_1Ce6vt2eZvKYlo2CrgzPqxaz",
  "amount_subtotal": {
    "duties": 0,
    "fees": 21.0,
    "taxes": 3.75
  },
  "taxes": [
    {
      "amount": 3.75,
      "description": "(GST) Goods and Services Tax",
      "formula": "5%",
      "item_id": "294395",
      "note": null,
      "type": "item"
    }
  ]
}

When using Checkout, Quoter, or Hello, a custom configuration will be required if you want to exclude tax calculations from the landed cost for resale items.

Reach out to Zonos to get a quote to enable landed cost calculations on orders for resale.

Import tax thresholds 

Certain laws, like Australia GST on low-value imported goods, can impact a tax calculation even when it falls under a de minimis value. The new Australian law does not change the de minimis value of 1,000 AUD; however, the law shifts the responsibility of GST collection and remittance to the seller vs. the receiver, even if they are located outside of Australia. This law is based on turnover, which requires the U.S. retailer to register for GST and remit if their annual sales turnover exceeds 75,000 AUD.

When the retailer adds their registered GST number to their Zonos account, Zonos will measure and notify retailers of thresholds as well as automatically calculate the 10% GST in Australia on shipments under the de minimis tax rate. New Zealand has enacted a similar law.

In this case, the landed cost object will look slightly different because the item is under the tax de minimis but is still taxable. They may look like they conflict, but both are actually true.

{
  "id": "ldct_1Ce6vt2eZvKYlo2CrgzPqxaz",
  "amount_subtotal": {
    "duties": 0,
    "fees": 0,
    "taxes": 15.0
  },
  "de_minimis": [
    {
      "formula": "Less than 1000 AUD",
      "method": "cif",
      "note": null,
      "threshold": "below",
      "type": "tax"
    }
  ],
  "taxes": [
    {
      "amount": 10.0,
      "description": "(GST) Goods and Services Tax",
      "formula": "10%",
      "item_id": "294395",
      "note": null,
      "type": "item"
    },
    {
      "amount": 5.0,
      "description": "(GST) Goods and Services Tax",
      "formula": "10%",
      "item_id": "635235",
      "note": null,
      "type": "item"
    }
  ]
}

Other tax rates 

Some countries apply other taxes or fees, e.g., the MPI biosecurity system entry levy in New Zealand or the Compensation Cess/Social Welfare Surcharge in India.

Tax quotes are broken out by their tax type and allow for a detailed summary of the tax.