Realizing the Benefit from Low Value Duty Free De Minimis Threshold

Benefit from Low Value Duty Free De Minimis Threshold

The duty fee de minimis threshold* refers to a minimum value or amount of goods below which no customs duties collection. Higher de minimis levels facilitate import of low-value consignments. If the value of the shipment is below the de minimis threshold, it can be clear without incurring customs duties. The benefit from a low value duty free de minimis threshold is critical for e-commerce orders.

Alternative terms to the “de minimis” include:

  • De minimus level (spell check keeps changing to this spelling?)
  • Duty free threshold
  • Low value threshold

In this post we will all the above terms interchangeably.

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History of de minimis values

Historically, determination of the de minimis level is the point at which import customs does incur higher processing costs than it collects in duties. A latin term that means “about minimal things.” It now among the most important issues amongst trading partners.

The USA is the world leader with an $800 de minimis value. Australia and New Zealand have similarly high low value thresholds.

de minimis vs duty chart

De Minimis: A Vital Duty Exemption or loophole?

The De Minimis duty exemption is a fact in most countries. The primary benefit is to consumers. Countries with high duty free thresholds open up the global market place. Individuals benefit from lower prices and greater choice. Businesses benefit from low cost access to global suppliers.

But, other businesses complain about unequal treatment. Domestic retailers cite a higher tax and regulatory burden. Human rights groups note that risk targeting is adequate for low value shipments. Read more about section 321 loophole.

The International Chamber of Commerce (ICC) defines the processing of low-value as low-risk shipments. The ICC considers that higher de minimis values will result in economic benefits. A "refocusing public revenue collection on more efficient revenue sources." The net benefit from greater import processing efficiencies.


Variations of duty free thresholds

Duty free and tax free de minimis

The USA $800 duty free threshold is both duty free and tax free. The US does not have a federal value add tax. However, larger e-commerce platforms comply with local tax regulations.

Duty free de minimis but with sales tax

Duty free but not tax free. All Imports to countries with a national sales tax are subject to a value add tax (VAT, GST etc). Notable examples include Australia and New Zealand.

Different de minimus levels from where goods ship from

Some countries, such as Canada, have different de minimis levels if goods ship from US or Mexico. This concession is part of the USMCA free trade agreement. Goods that ship within North America have a higher benefit from low value duty free de minimis threshold.

International Resources regarding declaring a value for customs (PDF)

A Higher de minimis to European Union?

There are high level discussions concerning e-commerce imports to Europe. Some proposals raising the import duty de minimis exemption from EUR 150. Others propose to remove the de minimis all together.

The de minimis threshold is currently EUR 150. A level much lower than the US 800 threshold). Research is underway assessing the role of the EU de minimis threshold. The impact on customs processes, international trade, businesses, and consumers are considerations.

chart showing optimal de minimis level

Let's take a look at the brief history of Section 321

The U.S. duty-free policy allows goods under USD 800 to import without duty. Section 321, 19 USC 1321 is the part of the trade act. It allows for the duty-free admission. Consignments importing by one person on one day, not exceeding USD 800.

Remove de minimis level? A good thing?

The removal of de minimis thresholds is also under discussion. The impact on complexity would add costs. Domestic retailers often express being at a disadvantage to direct e-commerce imports. However, removal of a duty free threshold could hamper international trade and economic growth.

De minimis for Duty Free but not tax Free

The de minimis level discussion mostly are around duty. Generally, federal tax regiments (VAT and GST) apply for all imports. Read more about IOSS to Europe and VAT payment to the UK.

The UK, Europe, Australia and New Zealand mandate online marketplaces collect taxes at checkout. Sales tax to the USA is also a consideration.

Benefit of having a higher de minimus

De minimis regimes enable items direct to consumers at a low cost. This expedites border processes and keep trade costs low.

Increase of trade frictions are particularly relevant with regard to low value thresholds . Cross-border trade between countries has been an important driver of development and global growth.

info mail

Globally, de minimis thresholds is stable recently. Some countries have continue and reform their low-value goods customs regime. The choose to keep or increase their de minimis threshold. De minimis leaders include the United States, Australia, New Zealand, and Canada.

  • The USA increase of de minimis to USD 800 in 2016. A result of lobbying by express carriers and e-commerce platforms. It was a game change that few understood at the time. It has streamline administrative processes. The result has been exponential growth with millions of low value clearances per day. Verify Section 321 requirements.
  • Australia keeping at AUD1,000 threshold for duty. Reform in 2018 reform mandates collection of GST from overseas retailers. It and lowers the administrative burden. Shipments to New Zealand benefit from a similar model
  • The UK maintains their de minimis of UKL 135. VAT collection is necessary prior to import of goods.
  • Most Asian exporting countries do not have high de minimis levels.
  • Canada has a simpler classification. Shipments under CAD 500 can benefit from a simpler Generic Harmonize System. The de minimis of CAD 20 remains low for goods that ship from overseas.

Useful Video: Declaring a Value for Shipping

Download accompanying PDF

What is Intrinsic value?

The value is an important element to e-commerce imports. The “intrinsic value” refers to the price of the goods themselves when sold for export. It excludes transport and insurance costs, unless they are inclusive in the price. If price includes shipping and insurance it must show individually on the invoice. For goods of a non-commercial nature, the price which for payment for the goods themselves. Useful information regarding declared values for import.

Consignment versus Goods

The the term “consignment” refers that ship together from a single consignor to a single consignee. A consignment is via the same transport waybill and tracking number.

E-commerce Ship Direct to Europe

Simpler Import beyond de minimis

The discussion of duty versus duty free sometimes side tracks the issue of non-tariff costs. This includes having to include HS codes for thousands of single e-commerce parcels. Read more about HS codes.

Again, the US is a leader for import of low value goods with easier processes. For imports via air or truck an HS code is not a requirement. The "type 86" provision opens up Section 321 for regular cargo.

Complication of de minimis

The very definition of de minimis varies by country. Common exceptions include excise goods such as tobacco and alcohol. Food, pharmaceuticals and supplements often do not benefit from low value duty free thresholds. Other limitations include from goods ship from and exclusion of commercial imports.

In conclusion, a low-value duty-free de minimis threshold brings numerous benefits to both individuals and businesses. It reduces the financial burden on consumers, making imports more affordable and accessible.

For businesses, it enhances their competitiveness by offering cost-effective products to a wider customer base. The simpler import process beyond the de minimis threshold saves time and resources for e-commerce imports. Overall, this threshold promotes economic growth, encourages international trade, and fosters a favourable business environment.

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