Have you ever wondered why the final price of your order is higher than you expected? Tariffs are one of the culprits.
Tariffs play a key role in global trade and often affect the cost of products you buy from abroad. That's why it's important to know what tariffs are and how to calculate import taxes.
But don’t worry, we’ve got you covered with everything you need to know.
We’ll start by explaining what tariffs are, followed by the types and modalities that exist in Mexico. Additionally, we’ll discuss other taxes to consider, and we'll give you the steps to calculate tariffs.
This will help you better understand the costs associated with your purchases.
What Are Tariffs, Types, Modalities, and How to Calculate Them?
What Is a Tariff?
A tariff is a type of tax that governments impose on foreign trade operations, both for imports and exports. They are often used to protect key sectors of the economy, regulate foreign trade, and generate state revenue.
Types of Tariffs Charged in Mexico
The types of tariffs used in foreign trade affect the calculation of import taxes.
Ad valorem. Based on a percentage of the total value of the goods. To calculate it, you take the customs value of the product and multiply it by the percentage indicated in the corresponding tariff classification.
Specific. Imposed as a fixed amount per unit of measure of the product, such as liters, kilograms, or pieces.
Mixed. In some cases, both a percentage on the value of the goods and a fixed amount per unit of measure are applied. The final payment may depend on which of the two calculations results in a higher amount.
These types of tariffs are paid when goods are cleared through customs, according to the rates defined by law and the international treaties Mexico has signed.
Tariff Modalities
The tariff modalities in Mexico allow for determining how import taxes are calculated. These are the different ways tariffs can be applied to international trade of goods.
They are as follows:
Quota Tariff. Applied when limits are set on the quantity or volume of a product that can be imported or exported. Once exceeded, a higher tariff may be applied.
Seasonal Tariff. This varies depending on the season or time of year when certain products are imported. It is commonly used for agricultural products or those requiring seasonal production, such as fruits and vegetables.
Preferential Tariff. Defined through agreements like the T-MEC or other trade agreements.
The tariff modalities in Mexico align with foreign trade policies and allow the tariff policy to adjust based on market needs and the local economy.
Other Taxes Applied to Imports
Besides tariffs, there are other import taxes in Mexico that need to be considered:
Value Added Tax (VAT). The Mexican VAT law states that this tax must be paid by anyone bringing goods into the country. It applies to most products and services and is mandatory for any import operation.
New Vehicle Tax (ISAN). A specific tax for new vehicles entering Mexico. It’s charged when they are imported permanently into the country.
Customs Clearance Duty (DTA). This fee is charged for using customs facilities and storing goods while customs clearance is processed.
Special Tax on Production and Services (IEPS). Applied to certain products, with a rate that varies depending on the type of goods.
The VAT for importing products into Mexico is generally 16%, applied to the customs value plus the tariffs.
The formula would be: VAT = (Customs Value + Tariff) x 16%
5. Customs Processing Fee (DTA)
This is a percentage that may be charged based on the purchase amount. It’s usually 0.8% of the customs value, but it also depends on the import regime.
Let’s say you buy an item from a Chinese online store for $100 USD, with shipping at $20 USD. The tariff for the product is 10%.
Customs Value: $100 USD + $20 USD = $120 USD
Tariff (10%): $120 USD x 10% = $12 USD
Subtotal: $120 USD + $12 USD = $132 USD
VAT (16%): $132 USD x 16% = $21.12 USD
Total to Pay: $132 USD + $21.12 USD = $153.12 USD
The final cost, including tariff and VAT, would be $153.12 USD.
Additional Factors to Consider:
Some products may be exempt from tariffs depending on trade agreements like the USMCA.
If your purchase is less than $50 USD (excluding shipping), it’s generally tax-exempt.
For large packages or items requiring customs clearance, you may need a customs broker, which could incur additional costs.
Conclusion
Understanding what tariffs are and how they’re calculated is essential to avoid surprises when receiving your package.
In fact, calculating the import tax helps you anticipate the additional costs you’ll incur. As a result, you’ll pay more attention to where and when you make your purchases and can factor them into your budget.
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