Excise Duty and the USA

Selling your business’s goods to markets in the USA is similar to selling goods to countries outside of the EU (European Union) as you have to understand and pay and excise duty that is attached to a specific range of goods.

Also, you have to declare all exports to the USA with the HM Revenue & Customs (HMRC). Usually, any goods you export to the USA will not have any VAT applied to them as they would have a zero rate for VAT. And in most circumstances you won’t have to pay any additional export taxes as your goods leave the UK.

Import Duty and Taxes

As your company’s products enter the USA, they will usually be charged import duty. The level of duty that you have to pay will depend on the type of goods you are importing. It is vitally important to understand the duty regime that is attached to each category of products you are importing into the USA. This not only enables your business to clearly understand what is has to pay in duty, it also enables your business to quote fully inclusive prices to your customers that include any import taxes.

When your goods arrive at a port in the USA, they will be assessed for import duty. Your business cannot move its goods until this assessment has taken place, and your business has paid in full any duty that is liable. Note that if your business has initially imported a US product into the UK and subsequently combined this with components based in the UK that you then re-export to the USA, your business may be able to get a reduction in the amount of duty that you have to pay.

Classifying your Goods

The category and type of goods you are exporting to the USA can be identified by using what is called the Tariff. This is a reference guide maintained by the HMRC that lists every kind of good with a corresponding four or six figure number called the Commodity Code. The Commodity Code is how your goods are related to any duty that will be attached to them when they enter the USA. The Tariff is available in a number of formats including:

• Online
• CD ROM
• Printed books

If you are not sure of a classification, you can contact the HMRC Tariff Classification Service Enquiry Line on: 01702 366 077. Also, you can use the Commodity Code from the Tariff to locate the goods you are selling on the Market Access Database website that will give you more information about the duty that will be payable on the goods you are exporting to the USA. Note that the USA is revising its element of the Tariff. You can keep an eye on these changes by regularly visiting the United States International Trade Commission website.

Also, you should check whether your business requires and export licence with BERR (Department for Business, Enterprise & Regulatory Reform) as some categories of goods are controlled. It is also a good idea to check with customs in the USA, whether a corresponding import licence is required for the goods you want to sell to your customers.

Help and Advice

Exporting goods to the USA can be a complex process. Many businesses use specialised freight forwarders or logistics companies as they have long experience of moving goods to markets in the USA. If you want to handle your own exports to the USA, more detailed information about the customs and duty systems that are currently in place can be found on the US Customs and Borders Protection website.

After your business has paid any general import duty that is attached to your goods, no other taxes should be payable. Be aware that if your business sets up an office in the USA that you subsequently begin to sell goods from, any local sales taxes will be payable in addition to duty you may have paid on the goods that you originally imported into the USA. More information is available on the Internal Revenue Service website.