If you are new to cross-border shipping, customs clearance may seem daunting, with several aspects to look at. One of these customs regulations to look out for is the country’s import duties and taxes, along with a value threshold known as the de minimis rate.
This topic guide will help you understand what de minimis means in cross-border shipping by expanding on the following:
What is de minimis
In cross-border shipping, “de minimis” refers to the valuation ceiling for goods below which no duty or tax is charged and clearance procedures, including data requirements, are minimal. In the context of trade facilitation, the de minimis value applies to shipments so small in value that tax or duty need not be imposed on them.
De minimis thresholds may vary by country and are subject to change occasionally.
Why and how countries implement de minimis
The de minimis rule varies in every country, depending on the openness of the country’s economy to trade. Generally, countries can take the following three stances when it comes to openness of trade and following changes to de minimis rules:
1. Protectionist
A protectionist measure would be to lower the de minimis threshold to make cross-border online purchases less attractive and to defend domestic businesses and jobs.
2. Competitive
Countries holding a competitive approach and so increase de minimis levels seek to open domestic and cross-border lanes to consumers by maintaining threshold levels.
3. Stationary
Stationary de minimis levels are the more common of the three in this list and can be further divided into mature or immature e-commerce/tax relationships. Here, the former would recognise the impact of cross-border trade on their populace. At the same time, the latter stems from the unprecedented growth of online retail and the inability of countries to adapt their import tax systems accordingly.
In a recent policy statement, the ICC Commission on Customs and Trade Facilitation has recommended a preferred de minimis value of US$1000 and no less than US$200 with regular reviews considering inflation and exchange rate fluctuations. Herein, the ICC strongly believes that establishing this global de minimis baseline would generate economic benefits, boost the global economy, and positively impact job creation. Notably, this policy statement affirms that it is a challenge to harmonise such de minimis values between countries as it requires the effort of multiple parties, including the World Trade Organisation, the World Customs Organisation, and the Organisation for Economic Co-operation and Development.
Importance of knowing de minimis rates
As a logistics service provider, there are two key advantages of knowing de minimis rates:
If your shipment satisfies the de minimis requirement, you can proceed with shipping without incurring any charges. Do note that VAT may still be applicable for some countries.
Awareness of the de minimis rates also ensures smooth shipping transactions since the shipment will not face any issues clearing customs.
Table of de minimis rates across selected countries
The table below summarises the de minimis values across the 17 lanes Luwjistik operates within:
Country | De Minimis |
Australia | ≤ AUD 1,000 |
Brunei | ≤ BND 400 |
Cambodia | ≤ KHR 204,000 |
Europe | ≤ EUR 137 |
Hongkong | - |
Indonesia | ≤ USD 3 |
Malaysia | ≤ MYR 500 |
New Zealand | ≤ NZD 1,000 |
Philippines | ≤ PHP 10,000 |
Saudi Arabia | ≤ SAR 1,000 |
Singapore | ≤ SGD 400 |
South Korea | ≤ KRW 196,000 |
Taiwan | ≤ TWD 2,000 |
Thailand | ≤ THB 1,500 |
United Kingdom | ≤ GBP 135 |
United States | ≤ USD 800 |
Vietnam | ≤ VND 1,000,000 |
Notes
All undocumented shipments in Indonesia will be subject to duty and tax charges.
What happens when my shipment exceeds the de minimis threshold?
Generally, if your shipment's value, shipping fees, and insurance costs exceed the de minimis rates, then you'll need to pay for import duties subject to each country's customs regulations. Here, the shipment's value, shipping fees, and insurance costs refer to CIF (Cost, Insurance, and Freight), an international commerce term that only applies to goods shipped via a waterway or ocean. The CIF value represents a seller's charges to cover the costs, insurance, and freight of a buyer's order while the cargo is in transit.
How Luwjistik helps
Going through customs smoothly ensures there will be no shipment delays. And given the variability of de minimis rates, it would be useful to engage with a logistics service provider who can assist in the customs clearance process. One such way Luwjistik ensures your shipment passes through customs smoothly is through our Node calculator.
Node calculator
Our advanced node calculator provides itemised costs of shipments at every stage of the supply chain. After inputting the goods value, weight and dimension, and item category, it will automatically calculate the estimated rate and duty and tax charges based on the lane and regulations of the destination country, offering better cost visibility and predictability.
If your shipment is below the de minimis value, the duty and tax charges on the node calculator will show a net zero. The calculation of the duty and tax is based on the CIF value.