I’m a UK based company and I’m looking for some advise.
We design our own range of jumpers that we get produced in china and shipped into the UK by sea.
We now have a customer in the USA that wants to stock our products and we are thinking of shipping the garments direct from China to the USA.
Because we are not registered in the USA for vat/taxes we would need our customer to pay for any import duty and taxes.
How do we find out these costs or estimate them so that we can inform our customer of the full price of our garments once they arrive with them.
Please message me with any advise or experience.
Hi there Mark,
Shipping directly from China to the USA certainly makes sense. If you supply your customer in the USA with the appropriate harmonised commodity codes and their subsequent values they should be able to approximate the value of any import duties and taxes.
The US have a website like we do in the UK for checking import VAT/duty rates which like we do here in the UK and so it might be worth asking them if there is a source they currently use to help with this though this is the one that I would use: http://madb.europa.eu/madb/datasetPreviewFormATpubli.htm?datacat_id=AT&from=publi
Be careful that packaging, labelling, documentary requirements (such as ISF filing) amongst others are likely to differ from the UK’s. The MADB website also provides a lot of information on what is required for relevant countries, but seeking out your customer’s local knowledge and previous experience is a must to help avoid anything they might have had problems with in the past.
If you need any help with the logistical side of things, we work directly with a couple of agents in China and would be happy to take a look at this with you as you go forward.
Triangular invoicing makes sense- a lot of people do it.
I would question though whether you feel obliged to quote a delivered price?
Most people would quote FOB China. The customer would perhaps even be used to comparing your FOB price against somebody else’s. They would have a feel of the duty rates already perhaps. They might know the cost of a container from China is somewhere in the region of $700.
But if you want to quote them a delivered price then you need a quote from a few freight forwarders as the costs & documentation at the shipping port and the costs & documentation in delivering in USA will all need to be quoted for, to be certain.
Firstly VAT does not exist in the USA in the same way as it does in Europe. In fact the only taxes charged by US Customs will be the Duty, Merchandise Processing Fee (0.3464%) and if moved by ocean freight a Harbor Maintenance fee (0.125%). The duty rate will be determined by the specific details of your product. You can search duty rates on the US customs website https://hts.usitc.gov/ or I can help if you can give me specific product details. Please note that each shipment that is imported will have a fee for Customs Clearance, ISF and Single Entry Bond.
So know you know what is involved in terms of the taxes, it is absolutely possible for you to register with US Customs as a foreign importer of record. Very simple process and would allow for you to pay the Duties and Taxes. Once set up you can even avoid single entry Bond fees by commencing with a continuous annual bond, something the US Government prefer and certainly helps with the import process.
If you would like further assistance with this Mark please let me know. We can provide US Customs support, transport from China to the USA and bill you in the UK, hide your factory details from your US Customer and provide you with full visibility tools along with other services that you may benefit from.