Prepayment of Import Duties

Updated 28 August 2018.
Knowledge base document on prepayment of import duties, for sellers and buyers.

Prepayment of Import Duties to Commercial Service Providers

A number of large online sales giants are now offering services to include the prepayment of import duties and taxes for international sales between seller and buyer.

An example of such a service states "Customs services and international tracking provided". Here, the two services appear as if they are connected, but they aren't, or at least, they should not be.

Under the terms of such a service, the service provider automatically adds the buyer country's import duties and taxes to the seller's product price. The seller then collects the product price. The service provider collects the import duties and pays these duties when the products arrive in the buyer's country.

Our opinion is to ignore this service, for both sellers and buyers. Here's why:

The commercial service provider's calculation of these duties and taxes will always be an estimate. The nature of commercial estimation is rather to overestimate than underestimate, so the buyer may be paying more import duties than needed. Additionally the estimate includes an unnamed, unspecified service fee. Lastly, shipments may very well pass through customs without payment of any import duties at all, and if the duties are already paid to a commercial service provider, two questions arise. First, why was the buyer forced to pay it? Second, what happened to it? Winner takes all.

The fact remains that for small packages it is very easy to simply pay the official import duties bill upon arrival (if there is a bill), and most probably, much more economical.

There may also be a cultural aspect to this. The US, where these services are generally applied, is a large country where retail Buyers are less familiar with the concept and handling of import duties. Applying this insight, American Sellers more readily avail of these services - for their international sales - while their international Buyers are much more apt to be in a position to properly deal with import duties than their US domestic counterparts. Prepaid import duties would rather discourage than encourage the non-US international retail Buyer.

So, we'd suggest US Sellers to stay away from these services, which might well be just another money-making profit center for large online giants - without increasing your sales. If you're unsure, here's our recommendation: conduct an online test.

To make your own estimate of import duties, have a look at our guide for calculating customs import duties and taxes.

Disclaimer: The above is a professional opinion. Your opinion may differ and that's fine, too. If you are uncertain, do look into the issue in more detail. Consult your favorite delivery agent (postal service, courier, other forwarder) or your friendly local customs /tariff office.