Planning to sell to an international audience? Welcome to a world of excessive customs and tax clearance! Customs may sound like a long-drawn process, but everything is possible if you prepare yourself. Awareness about various aspects of these tax clearances is what you need to overcome these small hurdles.
This blog provides a guide to understanding ‘De minimis values,’ an important aspect of international shipping. These values vary from country to country. Read on to find out the De minimis value for each country!
What are De minimis Values?
These are the maximum values to which no import duties/taxes can be collected from the sellers. Therefore, goods valued below these specified values can enter that country duty-free.
For example, In 2016, the USA changed its De minimis value from $200 to $800, giving a major boost to sellers worldwide looking to export to the USA.
In August 2018, Mexico changed its De minimis threshold from $50 to $100 under the revised trade agreement with the U.S.
Here’s an overview of De Minimis thresholds in key markets:
| Country | De Minimis Value | Notes |
|---|---|---|
| USA | $800 | Effective since 2016. |
| Canada | CAD $150 | Updated in 2020 under USMCA. |
| European Union | €150 | VAT applies to all goods; duty-free up to €150. |
| Australia | AUD $1,000 | One of the highest thresholds globally. |
| China | CNY 500 | Applicable for personal shipments. |
| Mexico | $100 | Updated under the USMCA agreement. |
How are De Minimis Values a Boon?
De Minimis values bring a lot of benefits for sellers trading internationally. These values can significantly impact pricing, profitability, and customer satisfaction. Here’s how:
- Lower Shipping Costs: When selling internationally, you can avoid additional duties and taxes by ensuring your shipments fall within the De Minimis threshold.
- Better Pricing Strategies: Businesses get the opportunity to offer more competitive pricing and be able to attract a larger international audience with reduced customs costs due to De Minimis values.
- Faster Deliveries: Duty-free shipments tend to move through customs more quickly, improving delivery timelines and customer experience.
- Enhanced Marketing: Highlighting “duty-free” or “no hidden fees” in your marketing can become a unique selling point (USP) for your business, that makes you stand out and also builds more trust with your global customers.
Additional Information
As mentioned, the US recently changed its De minimis value from $200 to $800, but this does not mean all products are exempt from duties.
According to a recent report, the US has brought out a change in its policies and revoked the duty-free concessions on the import of at least 50 Indian products from 1 Nov 2018. These products are majorly a part of the handloom and agriculture sector.
A few of those products include:
- Dyed, plain weave certified hand-loomed fabrics of cotton, containing 85 percent or more cotton by weight.
- Plain weave approved hand-loomed fabrics of cotton, providing 85 percent or more cotton by weight,
- Hand-loomed carpet, and other textile floor coverings.
- Base metal clad with gold mixed link necklaces and neck chains.
- Keyboard musical instruments, like harmoniums (instruments with free metal reeds).
This information can help you avoid any confusion and plan your shipments in a much better manner.
Thus, awareness and preparedness can lead to intelligent decision-making, decreased losses and better performance of your eCommerce business!
Tips to Leverage De Minimis Values
Try using the following strategies to make the most of De Minimis values:
- Optimise Product Bundling: Ensure your shipments are below the De Minimis value to maximise savings each time you ship internationally.
- Stay Updated and Well-Informed: You must regularly check updates on customs policies in your target markets to stay abreast with the latest developments. It helps you comply with international shipping regulations of each country and speed up the customs clearance process. That way, you would also know which products to avoid shipping to certain countries where they’re prohibited and, thus, not falter or get fined.
- Use Technology: Take advantage of shipping platforms like Shiprocket to efficiently calculate duties and manage international logistics. Advanced technologies, like real-time tracking, automated workflows, and AI recommendations, can help you stay ahead of the market and ease international operations.
- Communicate Clearly: Be transparent with your customers about potential duties for purchases that exceed the De Minimis threshold. Informing them upfront helps set clear expectations, prevents misunderstandings, and fosters trust, ultimately encouraging customer loyalty.
The Bigger Picture: Trends in De Minimis Policies
As global eCommerce expands, several countries raise their De Minimis thresholds to achieve a middle ground between smooth international trade and revenue generation.
For example, some countries are considering harmonising thresholds within trade blocs to make cross-border trading easier. Sustainability also plays a role in customs policies by encouraging reductions in packaging waste and promoting eco-friendly shipping methods.
Notable Recent Policy Changes
Staying updated on global trade policies is crucial, as they are constantly evolving. For instance:
- USA: Although the $800 threshold remains intact, some product categories may charge additional tariffs. So, you should keep an eye on these exceptions.
- European Union: VAT changes introduced by the EU in 2021 now apply to all goods, even those below €150, impacting sellers targeting EU countries.
- India: New trade agreements and policies may alter the treatment of specific product categories. So, keep checking for updates to avoid any unpleasant surprises.
Conclusion
De Minimis values are important for any business wishing to expand internationally. Staying aware of potential changes in cost and lead time and effectively scheduling your shipments can help you save money, please your customers, and get ahead of your competitors internationally.
With evolving trade policies, companies need to be agile and aware of the changing market scenario to glide through customs clearance effectively. If you think of the right strategies and tools, then De Minimis values can become a huge advantage for your eCommerce operations.
So, are you prepared to level up your global shipping with ease? Start planning smarter shipments with Shiprocket today!
