All You Need to Know About US Import Tax and Duties

As a leading force in the global economy, the United States employs an open economic system, supported by a relatively straightforward cross-border trade terms.

While the United States continues to make sustained efforts to maintain its favorable trade environment, challenges related to importing documentation and duty charges persist.

That's why we put together this guide to provide you with a comprehensive overview of United States import duties

Types of Duties and Taxes

There are 4 types of duties and taxes imposed on imported goods into the US:

1. Customs Duties
2. Excise Tax
3. Merchandise Processing Fee (MPF)
4.  Harbour Maintenance Fee (HMF) 

Each of them serves a different purpose and not all apply to your shipment.

Customs Duties

This is a duty implemented by the U.S. Customs and Border on imported goods that are valued above USD 800 (approximately MYR 3,720).

The enforcement of this duty hinges on the nature and value of the imports to determine both the applicable duty on the goods and the type of clearance process they undergo: 

Any imports that are above USD 800 will have to go through a conventional clearance at the customs; whereas eCommerce purchases that value between USD 800 and USD 2,500 (MYR3,720 to MYR 11,625, approximately) could enjoy a simplified clearance which involve minimal intervention from customs. 

The import tariffs vary between 0% and 37.5 %, with 5.63% being the average. E-commerce purchases exceeding USD 2,500 will have a flat tariff rate of 3%. 

Textiles are the only exception. Duty will be incurred for goods in this category valued above USD 250.

Excise Tax

Excise tax is a Federal duties enforced by Customs and Border Protection (CBP) on excise goods such as liquors and tobacco products. It is collected by the Internal Revenue Service.

Merchandise Processing Fee (MPF)

The Customs and Border Protection (CBP) levies Merchandise Processing Fee (MPF) on imported goods based on the type of entry into the United States. 

Samples are declared differently than other imported goods.

If you run your own store or are a re-seller on an e-marketplace like eBay, you can order samples at a low or $0 value, by declaring the samples at a nominal value of USD 1 and marking them as “samples of no commercial value” on the invoice.

This is due to the fact that there won't be any earnings from this order. Hence, it has no significant commercial value.

Harbour Maintenance Fee (HMF)

HMF is a type of levy imposed by The Customs and Border Protection (CBP) on imported goods transported via sea ship. 

It amounts to 0.125% of the imported cargo's commercial value.

Since this is a levy charged on sea freight, HMF is exempted from all imported air freight.

Calculating Customs Duty

You can calculate customs duty easily with 2 pieces of information:

1. HTS code of your goods

2. The import duty rate of the goods

First, identify the Harmonized Tariff Schedule (HTS) code of your goods.

The US uses a 10-digit HTS code, which is an extended form of the international HS (Harmonized System) codes. To determine the HTS code of your goods, you can check it on the Harmonized Tariff Schedule.

After identifying the accurate HTS code, use it to cross-reference the relevant duty rates on the same US official site. 

Next, multiply the value of your goods by the duty rates and you will get the customs duty for your shipment.

For example, you are importing 2000 umbrellas, each valued at USD 10, into the US.

This is how the duty rate calculation goes: 

USD 20,000 x 6.5% = USD 1300

The total value of goods and import duty would be:

USD 20,000 + USD 1300 = USD 21,300

USD 21,300 is the approximate amount you will pay for the goods and customs duty.

Duties Threshold and Exemption

The duties threshold for goods imported from Malaysia into the United States is USD 800 (roughly MYR 3,716). 

This means that goods above this de minimis value of USD 800 are subject to duties and taxes, while most goods under this value have duties exempt. 

However, eCommerce purchases adhere to a different threshold. With MYR 2,500 being the limit, duties and taxes are exempted for eCommerce purchases valued below this amount.

Additionally, the same exemption rule applies to the following categories for personal effects that are more than one year old:

1. Clothing
2. Jewelry 
   
3. Cameras
4. Household items, including furniture and trade tools

Besides the duty regulations established by the customs of the country, free trade agreements (FTAs) are another factor that influences the duties imposed on a shipment.

However, as there is no FTA between Malaysia and the United States, all goods imported into the country will follow the basic duty rules of the country, as shared above.

Duties and Taxes Payment Method

If your imported shipment is subject to duty, U.S. Customs will contact you or your designated courier with details about the total duty incurred and the due date for payment.

Alternatively, you can obtain a copy of the shipping invoice from your supplier before the delivery.

There are 3 ways to pay for import duties and taxes in the United States.

1. Mail to Customs and Border Protection (CBP)

You can prepare a check or money order, issued by a US bank, based on the duty amount and mail it directly to CBP.

2. Visit CBP Outlets for Payment

The second option is to visit designated CBP locations and make payment at the outlet.

However, it's important to note that, CBP outlet only accept: 

1. Cash (US Dollar)

2. Check or money order from a US bank

3. Credit card (only available at certain locations or ports of entry)

3. Pay via Automated Clearinghouse (ACH) System

This is an electronic payment solution by CBP. To make payment through this, you will need an ACH account. 

The system allows you to make payment transaction via ACH debit or credit:

1. ACH Debit: The company authorizes U.S. CBP to electronically withdraw funds from their designated bank account.

2. ACH Credit: The payer transmits statement processing payments directly from its bank to the CBP account.

In summary, the regulations and charges of United States import duties and taxes are relatively straightforward as compared to other countries. Nonetheless, customs rules undergo occasional updates, and their intricacies can still impede deliveries, especially for irregular shippers.

The most efficient way to handle this is through a certified logistics service provider. With a robust network spanning over 220 countries and more than 50 years of customs experience, DHL Express delivers and assists with over 100,000 packages clearing customs every day.

At the request of our account customers, we manage customs clearance, handle paperwork and licenses, and provide advice on import restrictions for them.

Save yourself the trouble, open a DHL account.

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