Customers paying outrageous duties and taxes

Shopify Discussion
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Hey friends. We have a warehouse in the US, shipping our company’s branded clothing worldwide. Our Canadian customers are reporting astronomically high duties and taxes being charged when their orders arrive.

Does anyone have any advice on how to set things up differently so our customers aren’t getting hit with these ridiculous fees at the door? We’re on the Shopify annual plan, and it looks like we’d have to upgrade to be able to collect duties and taxes at checkout – but we’re too small to justify an upgrade to the more expensive plan.

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Generally, the de minimus is under $20CAD to be free of taxes or duties. With CUSMA (Canada-US-Mexico Agreement), the de minimus is under $40CAD, tax and duty free. Over $40 and up to $150CAD, tax only. The products do not have to have been manufactured within the US or MX for this, but they do have to have been entered into commerce there. (transshipment doesn’t count)

Depending on your customers’ Province, they will also have different tax rates, some are quite high. Canada’s Border Agency is full of information for both you and your customers. I’ve attached links for you.

Info on CUSMA: https://www.cbsa-asfc.gc.ca/publications/cn-ad/cn20-18-eng.html

Taxes: https://www.cbsa-asfc.gc.ca/import/postal-postale/dtytx-drttx-eng.html

Duty and Tax Estimator: https://www.cbsa-asfc.gc.ca/travel-voyage/dte-acl/est-cal-eng.html

(the estimator applies tax even when under the threshold, not sure why)

Depending on what shipping carrier you use, they may be being charged brokerage fees. It’s also important that the customs forms are filled out accurately and valued in CAD, otherwise border agencies take random guesses at item values. They also charge luxury duties, if you’re dealing in that kind of apparel.

I hope this helps.

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Hello @KimMottiv ,

Good day! Gina from flareAI app helping Shopify merchants get $7Million+ in sales from Google Search, on autopilot.

To help customers avoid unexpected duties and taxes when they receive their orders from your Shopify store, you can take the following steps.

→ To ensure informed decisions from customers before placing orders, it is essential to incorporate all relevant details about your products, including their origin and manufacturing information. Additionally, transparently state whether the products are subject to any duties or taxes upon importation.

→ Clearly explain the potential customs duties and taxes that customers might incur based on their shipping destination in a dedicated section on your website. This proactive approach manages customer expectations and minimizes unexpected surprises.

→ During the checkout process, utilize Shopify’s built-in tax calculation system or a dependable tax app to calculate and display applicable taxes. This way, customers will be aware of the total cost, inclusive of taxes, prior to finalizing their purchase.

→ Partner with shipping carriers that offer duties prepaid options. By paying duties and taxes upfront, customers will be fully aware of the total cost at the time of purchase, avoiding any surprises later on.

→ Enhance the checkout process by integrating a duty calculator that enables customers to estimate potential duties and taxes based on their shipping destination before placing an order.

→ For different regions served, consider offering localized pricing that incorporates taxes and duties. This simplifies the purchasing process for customers, as they see the final price without any additional costs.

→ Ensure your website provides comprehensive shipping and tax policies, including information on duties, taxes, and any potential additional fees. This information should be easily accessible to customers before making a purchase.

→ Offer reliable customer support to promptly address any inquiries or concerns related to customs duties and taxes. Enable customers to easily reach out to your support team for assistance.

→ Regularly review customer feedback and experiences regarding duties and taxes. If any confusion or issues are identified, make the necessary adjustments to your communication or processes accordingly.

I trust this will be of benefit to you.

Gina