If you're an Amazon seller, you might wonder why you need to pay a duty fee when you ship things from your home. After all, duty is charged on the number of goods that arrive in the possession of customs authorities. But in some countries, including Canada, the United States, and the United Kingdom, duty is levied for shipping services provided by third parties rather than on the service itself. These third-party shippers pay duty when they ship an order rmade by a customer.
In other words, if you provide a package delivery service through a third-party company or individual and that company wants to sell products via your company's website without charging them a commission or markup, they'll have to pay a sum called "delivery duty." These charges are usually based on how many miles the package costs plus 5% for handling and inspecting it. If you operate as an importer or exporter with no brick-and-mortar presence in any country, this also applies to you.
As the name suggests, delivery duty is charged for the service fee paid by the recipient when the goods are delivered. Typically, this fee is equal to the cost of delivering the package to its destination. For example, if you deliver a package that weighs 100 pounds to the United States and the total price of the delivery and the duty is $30, you will pay $3 for the service fee and $29 for the delivery. But if the package costs $100 to deliver, you only pay $2 for the service.
As you might’ve gathered from the name, the price of delivery duty ranges from zero to 100 percent of the total cost of the shipment. The rates are set by the government of the country where the shipper is registered to operate as a third-party shipper. The table below lists the approximate cost of delivery duty in various countries around the world.
If you operate as an importer or exporter with no brick-and-mortar presence in any country, this also applies to you. Some countries require that the goods must be imported or exported through a registered warehouse, which costs money to store goods and creates a cost to store them.
If you don’t charge for storage and handling, then you don’t have any additional costs to pay. But in other countries, where you’re required to collect customs as soon as the goods reach your destination, you have to pay a specific fee when you ship through a third-party shipper. To avoid paying any additional fees, it’s best to arrange for your goods to be stored at a customs warehouse that’s not connected to your own facility.
Delivery duty is usually calculated according to the “actual delivery” method. This means that the amount charged is based on the distance the package must travel to reach its destination. For example, if you have to deliver a package to a city of 100,000 people, you would charge that city $100 for the privilege of delivering the package. In most cases, the payment deadline is 30 days after the goods are shipped. But in some cases, the payment deadline is 90 days after the goods are shipped.
Delivery duty alone is not a good reason to collect a customer’s money. In some cases, the customer may also be charged a “handling” fee when you deliver the goods. For example, if you have to deliver a package that weighs 100 pounds to a city of 100,000 people, you might have to pay $3 to the city government for each delivery.
If you’re an importer or exporter with no brick-and-mortar presence in any country, this applies to you. In this case, you don’t have to pay any duties when you ship goods through a registered warehouse. You only have to pay the duty when you ship the goods directly to the customer.