Customs authorities charge import duty on goods entering a country from abroad, calculated on the declared value of the consignment and payable before the shipment is released. The import duty definition stops at the goods: the charge attaches to the consignment rather than to the business importing it, which is why it follows the cargo.
How is import duty calculated: code, value, origin
Three inputs produce the figure. The commodity code, an HS classification, sets the rate that applies to that specific product. The customs value sets the base, normally the transaction price plus freight and insurance up to the border. Origin decides whether a preferential rate under a trade agreement is available, and origin means where the goods were substantially produced, not where they were shipped from.
Working the number from a commercial invoice
Take a consignment of headphones invoiced at 10,000 with 500 of freight, and assume the applicable rate is four percent. Duty is charged on 10,500, so 420. Consumption tax at import is then calculated on the value plus the duty, not on the value alone, so the two stack. A landed-cost estimate built without that stacking understates the bill every time.
Incoterms decide who gets the bill
The sales contract, not the customs rules, allocates the cost, so in commercial terms the import duty meaning narrows to one question: which side is importer of record and funds the charge. Under DDP the seller clears the goods and pays, so the buyer sees one all-in price. Under DAP the carrier bills the consignee on arrival, which is where surprise charges and refused deliveries in cross-border e-commerce come from. DDP requires the seller to hold or arrange importer registration in the destination country and to fund the duty as part of its cross-border payment flow, and it removes the largest single cause of post-purchase complaints.
What is import duty waived on: de minimis thresholds
Many countries waive duty below a de minimis value, and several have lowered or removed that relief for e-commerce consignments as parcel volumes grew. Consumption tax thresholds and duty thresholds are set separately, so a parcel can be free of duty and still owe value added tax or goods and services tax at import. Splitting one order into several parcels to stay under a threshold is treated as avoidance where authorities detect it.
A wrong code is the importer's problem
The classification on the declaration is the importer's statement, and liability for it does not transfer to a broker who typed it in. Misclassification or an understated value invites reassessment, penalties and holds, sometimes years later. Binding rulings, where an authority offers them, fix a code in advance for high-volume products. Documented classification decisions and periodic review of them belong in the same records as the rest of tax compliance, since rates and origin rules change with trade agreements.