De Minimis Value
De Minimis Value - Express Shipment Exemptions
You may avoid paying duties when shipping to a particular country if the value of your shipment does not exceed the De Minimis value.
De Minimis Value as the threshold is known, varies from country to country. Items imported into the United States are subject to duty when the value is over USD 800. In Australia, duty and taxes kick in after the first USD 1,000. In Canada, it’s USD 20; in some other countries, it’s USD 5. In Europe the average is about USD 190, however, it may vary considerably from country to country. Worldwide, 56 percent of individuals surveyed said they would buy more if the duties were reduced or eliminated. That opinion is shared by 80 percent of consumers surveyed in Latin America. Knowing which value applies to which country can help you estimate the landed cost—the full cost the customer will pay—and you can communicate this price to the buyer.
What the Customer Usually Pays
- Cost of the goods, including your profit margin
- A handling charge added by you at your discretion
- Duty, if applicable
- Sales tax as set by the country where the buyer lives
- The cost of return freight unless you agree to cover or pay a portion of it
Many items can be received duty-free if the goods meet the rules of origin under free trade agreements. Bilateral and multilateral efforts are underway to lower duty rates further among countries that don’t have free trade agreements.
Other barriers involve rules and regulations. They too have improved, but more work needs to be done. Country Commercial Guide for a country (export.gov/ccg), chapter 5 on Customs Regulations and Standards may include information on how to comply with the regulations.
A potential barrier is that a buyer has never heard of your company or your product, and may hesitate to make a purchase. A couple of studies report that 42 to 50 percent of buyers surveyed said reputation, trustworthiness, and ability to verify such attributes play a role in purchasing decisions. A consumer would weigh such factors in evaluating whether to make purchases from the website of a small company based in, for example, the United States.
This concern must be balanced in the mind of the buyer with the desire to acquire an unusual item or one seen as a good buy. Clearly, the latter wins out in many cases. Also, your company could be helped by the high esteem in which U.S. products and companies are held by foreign buyers. Buyer wariness, at least until perceptions change through experience, may require that your strategy involve more than one selling channel.