Understanding Duties and Taxes

Who Pays for Duties and Taxes?

Who Pays: Duties, taxes, and fees are typically paid by either the shipper or the receiver.   

Terms of Sale: Determine who is responsible for these charges as part of your sales agreement.  

Understanding Incoterms In international shipments, Incoterms (short for International Commercial Terms) define who is responsible for the costs, risks and activities associated with transporting goods from the sender to the recipient. 

DDP (Delivery Duty Paid): The seller assumes full responsibility for delivery, including customs clearance, duties and taxes. The seller pays all import-related charges. 

DAP (Delivered At Place): the seller is responsible for transporting the goods to the buyer's location, covering all costs and risks until arrival.  The buyer takes care of import customs clearance and pays duties and taxes. 

DTP (Duties and Taxes Paid): a hybrid model where the seller pays duties and taxes, but the structure can vary. The seller pays, but may require a power of attorney (POA) and VAT registration depending on the destination. 

PDDP (Postal Delivery Duties Paid): a model in which duties are managed by the postal operator to avoid additional costs for the recipient (for USA destination only).