With globalization, the huge growth of ecommerce during the past years and an ever competing market has made selling and shipping products and services to customers in other countries has become each time more accessible and important to small, medium and large companies world-wide; in fact, according to a research made by Visa, 87% out of 1000 C-level executives consider that expanding their online sales to new markets is their companies biggest growth opportunity.
However shipping your products internationally isn’t just about hiring a courier, labelling the package and leaving it at a post office; there are other aspects involved that should be taken into account in this process, such as local regulations of the countries you’re shipping to and their custom duties – so that you can ensure not only that the product leaves your inventory but also that it manages to arrive to your customer without any obstacles or headaches on his side.
All regions around the globe regardless of how liberal or protectionist they are, have norms and regulations of what products (and services) can cross into their borders, either to protect their local economies (giving advantage to local goods), raise income for the local government or to protect customers from products that might not be within to the countries regulations.
The Latin American market is not the exception, in spite of being the 2nd fastest growing market for ecommerce, according to America’s Market Intelligence, those who export and sale their products in the region should pay attention on how customs and duties work in the Latin American market as these might influence the purchasing decision when a customer buys from international retailers.
This article intends to provide the readers with a general idea of how these customs act in the main countries of the region and which are the entities in charge of deciding what might enter or not through their respective borders – additional research or even assessment is also encouraged to have a better understanding of the region.
Considered one the 10th largest ecommerce markets in the world, Brazil also stands as one of the most rigorous markets in the region when it comes to customs and duties. Once shipped, products would first be received by the Federal Customs Service to see what taxes would be applicable for the products entry into the country and also analyzed by the ANVISA (Agência Nacional de Vigilância Sanitária) who’d in parallel would determine if the product can is permitted or not.
Usually (as it’s not a rule) the Federal Customs Service would allow entry free of taxes for products whose CIF (cost, insurance and freight) sums less than 50 USD in total and that weight less than 30 Kg – however their decision might be subject to their agents’ considerations and if taxed, duties would correspond to 60% of the shipments value.
As for the ANVISA, products like medicine, cosmetics, biological material, food and other consumption items are subject to their sanitary control according to DHL.
Due to its proximity with the US and Canada, huge economies and trade partners, Mexico is opened for business with other countries and this reflects on more flexible conditions when shipping internationally to this country as well for Mexicans who buy goods from abroad.
According to UPS, due to the USMCA (trade agreement between MX, CA and the US), the Mexican government would allow international shipments to Mexico to be free of taxes and duties when the shipment value is under 50 USD – which also seems to apply to shipments coming from China. Then for products valued between 50 USD and 1K USD should be taxed with 16% over the shipments value (not charged any duties at customs) and finally those shipments whose values over 1 K USD would be subject to the government agents considerations and would require additional documentations for the importer.
Products shipped to Mexico should also comply with the NOM (Normas Oficiales Mexicanas) who’d regulate the entry of certain products into the Mexican territory, such as products or services that might constitute a health or safety risk for the population, animals or the environment in general.
As for Colombia, the scenario seems similar to it’s neighbor Latin American countries. According to the Decree 390 of 2016 from Colombia’s Trade Ministry, packages shipped from the US would have a differentiated customs and taxation for Express Deliveries; where products whose FOB value is less or equal than 200 USD will be able to enter the country without the need of paying duties and the VAT (Value added tax), those whose FOB value is between 200 to 2000 this amount would need to pay a 16% VAT and a 10% CIF (Cost and Insurance) tax, and packages whose value is higher than 2000 USD would pay taxes and duties according to their HS Code.
For products coming from other countries, such as China, Europe or even other Latin American countries different taxation and duties would apply; According to PWC Tax Summaries, generally the VAT rate for the importation of goods is 19%, and the customs duties range between 0% and 20%. However, in some cases, they may be higher, depending on HTS Code of the product.
All products shipped to Colombia subject to taxes would be reviewed by the DIAN (Dirección de Impuestos y Aduanas Nacionales) and in some cases also by the INVIMA (Instituto Nacional de Vigilancia de Medicamentos y Alimentos) when products being shipped categorize as food, medical equipment, medicines and other related products.
Customs and taxes for international retail sales in this country are explained in the Chilean government official customs website, where articles whose value is less than 30 USD and correspond to occasional purchases not intended for trade are free of taxes and duties. Products whose value is more than 30 USD would pay a 6% duty tax over the CIF value of the merchandise plus a 19% VAT of the product and duty tax combined.
Some products have a regulated entry into the country and those related to falsified products, toxic or illegal substances, and some foodstuff or medications might not be allowed entry into the country.
Latin American countries have a similar perception when it comes to regulations, customs and taxes – however we strongly believe that understanding the peculiarities and the context of the country you’re selling to is the best way to succeed in it – so before expanding to a new market or region make sure you understand things not only from the sellers side but also from the customers point of view.
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