Global Shipping & Taxes: A Small Business Survival Guide

Posted by Boundr | 20 March 2025

Expanding your business internationally is an exciting step, but it also comes with tax and customs challenges. Understanding and complying with tax regulations is crucial to avoiding fines, shipment delays, and customer dissatisfaction. Here’s what small businesses need to know about tax compliance when shipping globally.

1. Understand Import Duties and Tariffs

Every country has different import duties and tariffs, which depend on the type and value of goods shipped. Research the destination country’s tariff codes and duty rates to determine the extra costs your customers might face. Some governments offer duty-free thresholds, while others charge high tariffs for certain products.

2. Register for VAT/GST Where Required

Many countries require foreign businesses to register for Value Added Tax (VAT) or Goods and Services Tax (GST) if they sell products within their borders. The EU, UK, Canada, and Australia have specific VAT/GST rules for cross-border sellers. Failing to comply can lead to shipment holds or penalties.

3. Provide Accurate Customs Documentation

Incorrect customs declarations can cause major delays. Ensure all required paperwork, including commercial invoices and packing lists, is filled out accurately. Classify products correctly under the Harmonized System (HS) codes to prevent miscalculations in duty fees.

4. Consider Tax Automation Tools

Tax compliance software can streamline VAT/GST calculations, duty assessments, and filings. Tools like Avalara, TaxJar, and others integrate with e-commerce platforms to automate tax collection and remittance.

5. Plan for Tax Collection and Payment

Decide whether to collect duties and taxes at checkout or let customers handle them upon delivery (Delivered Duty Paid vs. Delivered Duty Unpaid). Including duties in your pricing prevents surprises and improves the customer experience.

Please note that when using Boundr services, your package is sent Delivery Duty Unpaid.

6. Stay Updated on Tax Laws

Global tax laws frequently change. Stay informed about new regulations, especially those related to e-commerce and digital services. Working with a tax consultant or customs broker can help ensure compliance.

Final Thoughts

Tax compliance is a critical aspect of international shipping. Small businesses that proactively understand and follow these regulations can avoid financial and logistical setbacks. By investing in the right tools and expertise, you can expand globally while maintaining smooth operations and satisfied customers.

Navigating international tax compliance is complex, but you don’t have to do it alone. Boundr simplifies global shipping with transparent pricing and reliable delivery services. Take the hassle out of international logistics—ship with Boundr today!