Why does Shopify calculate zero duties for international orders?

Pix1
Visitor
2 0 0

Hi folks!

 

I'm having a bit of an issue where Shopify calculates Duties and Tax on an order and the duties is coming out as nil.

 

My products all use the same Commodity (HS) code so in theory all international orders should have duties.

 

On those orders that come out with nil duties, when the shipment arrives in the destination country, the customer is then billed by the courier for the duties even though on their order at the point of placing it showed nil duties to pay.

 

Has anyone else come across this issue? I've contacted both Shopify support and our courier and the responses are as follows:

 

Shopify: their coding screens the product description and determines whether the product is subject to duties or not based on picking up on key words that they have decided on and overriding the commodity (HS) code. They have also said there is no way to disable this feature and solely use the commodity code as the screening process is in their base code.

 

Courier: they determine whether a product carries duties based solely on the products commodity code. End of. 

 

If anyone has had this problem, I'd be grateful to hear how you've dealt with it and if you have had any solutions.

 

Thanks!

Replies 2 (2)

Rostislav
Shopify Partner
190 12 29

Hi Pix,

This issue requires extensive reply and I might not have all informaation needed for that. But let me try. You most probabaly use Advanced shopify plan with enabled duties function. 

1. If you deliver to EU and  have IOSS special scheme enabled (for orders below 150 EUR) , you will have no duties calculted , since it falls under simplified customs procedure and no customs duties are collected.

Other destination countries have diffrent rules and , a country specific  threshold for "no-duties" may vary which is also may be taken into account by Shopify and your shipping agent differently.

2. I do not know the lenght of HS code that you assign,  but usually you would need more then 6 digits for standard import customs procedures (for most of countries it is up to 10-12 digits). And in case then  you have only 6 digits in your Shopify store the courier will "reconsider" the HS code assignement to extend the code for required length and as such may entirely reassign the code (starting with first digits which have the most important effect on the duties determination)  landing your product in a different group. the problem here is that you cannot properly assign the codes for all destinations in the world . Digits 1-6 are determined by World  customs organisation and are universal , further digits are national and will differ for different countries 😞 . In shopify you have no place holder for different numbers to different destinations. 

3. Apart of HS codes ,the country of merchnsdise origin also has determining effect on the customs duties calcaulations (same products coming from diffrent countries would render different customd duties - it is determined by bilatereal and multilateral customs duties agreements and protective actions). So if you left out the country of origin from the merchandise description, your shipping agent may determine the duties on the worst case sceneario (apply  ERGO OMNES rule or the highest possible duty rate for this product , depending on the situation )  and you may get slapped with 25 percent duties rate instead of 0 rate.

 

So my basic advice for you would be :

1. Assign the country of origin in your Shopify store 

2. Assign HS codes in accordance with rules of the destination where you supply the most 

 

and hope for the best 🙂

 

If you need help with deliveries to EU/UK  and/or IOSS special scheme registration,  check our site  www.eaproject.com 

 

 

 

    

www.easproject.com - the best EU and UK VAT compliance solution.
Pix1
Visitor
2 0 0

Hi Rotislav,

 

Firstly, thank you for your very detailed reply. 

 

I have actually booked in with a colleague of yours via the website for tomorrow to discuss our international sales solutions tomorrow which I hope will be able to solve our issues at the moment.

 

In the meantime, I will be sure to try your suggestion and hope it helps in some way and keep an eye on the outcome of these changes.

 

Many Thanks!