Packages destined for international locations are subject to assessment of duties and taxes as imposed by the importing country’s government. Like other couriers, FedEx requires the payment of taxes on dutiable packages sent outside the origin country.
Duties and taxes both generate revenue and protect the local industries of the country against foreign competition. They are normally paid before the goods are released from customs.
Duties and taxes are not yet included in FedEx’s export rates. The amount will be billed to the recipient, unless otherwise requested by the shipper. It is also possible for a third party to be responsible for duty and/or tax fees.
The responsible party is determined by completing the FedEx International air waybill or FedEx Expanded Service International air waybill. The shipper can select “shipper,” “recipient” or “third party” to pay these fees.
Basis for Duties and Taxes of Shipments
Customs officials of the importing country assess duties and taxes based on the information provided on the air waybill, the commercial invoice and other relevant documents related to the shipment. According to the FedEx website, the amount paid for duties and taxes is based on the shipment's product value, trade agreements, country-of-manufacture, product use and its Harmonized System (HS) code. The HS code is an internationally standardised system of names and numbers. It is used to classify traded products in accordance to the information provided by the Brussels-based independent intergovernmental organisation, World Customs Organization (WCO), formerly the Customs Co-operation Council.
Based on the contract of carriage with FedEx, “The shipper is ultimately liable for any duties and taxes assessed on the shipment.” This means that if the receiving party refuses to pay the fees or the third party designated to pay the fees doesn't do so, the original shipper will be billed for duties and taxes.
FedEx Advancement Fee
Sometimes, FedEx is required to pay certain duties and taxes in advance. For instance, when a specific country requires duties and taxes to be paid prior to custom's release, FedEx assesses an "advancement fee surcharge." This is billed to the party that has been designated to pay for the duties and taxes of the shipment. This fee covers what FedEx pays in advance on behalf of the customer.
Non-FedEx account holders (those without official account numbers and records as FedEx clients) and FedEx account holders with poor credit are usually asked to prepay the duties and taxes before their item is shipped to the recipient. The item is held at the destination station until payment has been made; the item is then released for shipping.