Additional tasks for collecting duties and import taxes at checkout
After you enable collecting duties and import taxes at checkout, you need to print delivered duty paid (DDP) shipping labels to indicate that duties and import taxes have already been paid by the customer. Depending on your store, you might need to update some of your store's information, prepare for flash sales, or develop policies on refunds. Review the following tasks before you ship internationally.
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Purchase and use DDP shipping labels
After you start charging duties and import taxes at checkout, you need to purchase and use DDP shipping labels instead of standard shipping labels for your international orders. If you charge duties at checkout, but use a standard shipping label, then your customer is still charged duties and import taxes at delivery. In this case, your customer pays for the duties and import taxes twice.
When duties are collected on an international order, a Duties line item is included in that order’s details. Verify that duties and import taxes have been collected on each international order before you purchase a DDP label. If you ship an order with $0 duties, then you can use DDP shipping labels to ensure that your customers aren't liable for any additional charges. If there was an error at checkout, then duties and import taxes might not have been collected, and you should use a standard shipping label for that order.
After you recieve your first invoice from a carrier, compare the charges at checkout with customs that were charged at the shipping destination to verify that duties and import taxes are being charged correctly. Repeat this process periodically. If you notice considerable differences between the duties and import tax that are charged at checkout and the amount charged by customs authorities, then review your setup to ensure that your duties and import taxes are calculated as accurately as possible.
Create commercial invoices
Every international order requires a commercial invoice. You can fill out digital commercial invoices provided by the carrier on the carrier’s website. Depending on the order, you need to create the commercial invoice in either of the following ways:
- If the order has paid duties and import taxes, then mark the terms of delivery on the commercial invoice as DDP to indicate that duties and import taxes have been paid.
- If the order does not have paid duties and import taxes, then mark the terms of delivery on the commercial invoice as DDU or DAP to indicate that duties and import taxes have not yet been paid.
To reduce discrepancies between the duties and import tax that you charge to a customer and the amount that is charged by customs agencies, ensure that you use accurate information on your commercial invoice. When you create your invoice, verify that the following are the same on both the commercial invoice and in the order in your Shopify admin:
- HS code
- Country or region of origin
- Price after discounts
- Collected duties and import tax
- Your local tax registration number if you're collecting low-value goods tax
Update your shipping policy and notifications
After you enable charging duties and import taxes at checkout, update your shipping policy and your notification templates so that your customers are aware of your policies and charges for international sales.
Update your shipping policy in your Shopify admin by going to Settings > Policies.
If you use the default Order confirmation and Order refund email templates, then your emails are automatically updated to include a Duties line item and you don't need to make any changes. If you have customized your Order confirmation and Order refund email templates, then you can add code to your notification templates to add a Duties line.
Prepare for flash sales
If you run flash sales, then consider disabling the collection of duties and import taxes at checkout until your sale is complete. If you decide to collect duties and import taxes at checkout during your sale, then review your sale products to verify that they have HS codes, country or region of origin, and product category specified. Verifying that you have these fields filled out on your sale products helps to estimate duties and import tax costs.
It's up to you how you want to handle refunds for duties and import taxes. If you decide to offer refunds for duties and import taxes, consider the following:
- If you refund an order that hasn’t been fulfilled yet, then you can refund the duties and import taxes to the customer.
- If you refund an order that has already been fulfilled, then you can refund the duties and import taxes to the customer. However, any funds that you have used to purchase DDP labels aren't returned to you by the carrier.
When you refund an order that has paid import tax, you can decide whether to refund the tax separately from other customs fees. You might want to withhold import tax refunds if the funds that you've remitted aren't recoverable from the customs agency and you don't want to assume that cost on your customer's behalf.
Remember that refunding the order in full is the only way to prevent a customer from disputing an order with their payment provider.