Do I need to pay customs tax and VAT when I dropship from China to EU and USA? How can I avoid my clients pay custom tax and vat? If you are dropship or wholesale to ship from China you may have the same issues, frankly speaking it cannot be avoided as it is illeagal to the destination countries law. How to reduce custom tax vat for dropshipping business? Are there any tax free, double customs clearance and door to door delivery service shipping from China to USA and EU countries? Yes of course, there are some solutions available, firstly as dropshipper or wholesaler dropship or wholesale from China you should know the customs tax policy and tax free value for packages shipping from China to EU and USA as well as other countries, then we will introduce the tax free shipping delivery lines and suggestions to reduce or prepaid tax VAT for packages shipping from China.

Tariff threshold for different countries

Different countries have different custom policies, thus the custom duty threshold is also different.

Asia countries

Japan: 100 USD

Singapore: 300 USD

Thailand: 48 USD

South Korea: 130 USD

Malaysia: 120 USD

Vietnam:  45 USD

Mongolia:  50 USD

Indonesia: 50 USD


Europe countries

European Union: 22 euros

EU member states (France, Germany, Italy, Netherlands, Belgium, Luxembourg, Denmark, Ireland, Greece, Portugal, Spain, Austria, Sweden, Finland, Malta, Cyprus, Poland, Hungary, Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Romania, Bulgaria)

Comprehensive tariff: VAT (value added tax) + DUTY (duty) + customs clearance fees

VAT=(value of goods (declared to customs) + freight + DUTY) X19%

DUTY=(value + freight 70%) X product tax rate

Russia: 135 USD

United Kingdom: 17 GBP

Comprehensive tariff: VAT (value added tax) + DUTY (duty) + customs clearance fees

VAT=(value of goods (declared to customs) + freight + DUTY) X20% (general)

DUTY=value of goods X tax rate

Switzerland: 22 USD


North America

United States: 800 USD

Comprehensive tariff: DUTY (tariff) + customs clearance fees

DUTY=value of goods X tax rate

The United States does not include VAT

Canada: 20 Canadian dollars

Comprehensive tariff: VAT (value added tax) + DUTY (duty) + customs clearance fees

Canadian VAT is generally 5%


New Zealand: 1,000 USD

Comprehensive tariff: VAT (value added tax) + DUTY (duty) + customs clearance fees

GST=VAT (value of goods (declared to customs) + freight + DUTY) X15%

DUTY=value of goods X tax rate


Australia: 1000 Australian dollars

Composition of comprehensive tariff: DUTY+GST+ customs clearance fees

VAT=(value of goods (declared to customs) + freight + DUTY) X10%

DUTY=value of goods X tax rate


Latin America

Latin America: 50 USD

1. The customs policy is unclear, and parcels higher than US$50 are easy to lose.

2. Latin America includes Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, Cuba, Haiti, Dominica, Jamaica, Trinidad and Tobago, Barbados, Grenada, Saint Lucia, Saint Vincent and the Grenadines Spain, Bahamas, Guyana, French Guiana, Suriname, Venezuela, Colombia, Brazil, Ecuador, Peru, Saint Kitts and Nevis, Bolivia, Chile, Argentina, Paraguay, Uruguay, Belize, Antigua and Barbuda etc.

Custom duty is the customs policy of each country. The customs is an independent national agency, and its behavior is not controlled and interfered by anyone, and paying taxes is the obligation of every citizen.​​​​ From the custom policy from the above countries we can easily find out the packages shipping from China to UK, EU countries and Canada are more likely to pay tax. How can we pay less tax or how can we avoid clients to pay tax when they receive the packages? There are few tips for you as a reference.

Tips 1. Note customs tax and VAT in your Shopify store

When clients shopping on your store it is necessary for them to know there might have customs tax and VAT for their orders no matter it happened or not, although it might affect the sales in your store, it does save your time and energy on the aftersale dispute caused by the custom tax.

Tips 2. Declare lower product value

That’s the most easy way to avoid tax for small packages under 2 to 3 kg shipping from China to EU countries and Canada. Mostly Shopify store packages are under 2kg, the EU customs except Germany customs usually will release.

However, what if you declare under 20 usd for a 10kg or 20kg package? It is more likely being hold in the customs as package above 5kg are more likely to check in the customs, if the customs think the packages declared low value, they will notice the courier or shipping agent to provide the products links and photos as well as other information together, once they finally confirmed package declared low value, the client will receive a tax bill, once the payment made the package will be delivered.

Tips 3. Ship via ePacket e-ems or EMS

Compared to DHL, FedEx and other business courier, ePacket, e-ems and EMS belongs to Universal Postal Union which mainly focus on personal package mail delivery, ePacket mainly used for small packages shipping from China to 40 countries and districts, e-ems mainly for 0.05kg to 30kg packages shipping from China to Macau, Taiwan, Hong Kong, North Korea, Japan, South Korea, Philippines, Cambodia, Malaysia, Mongolia, Thailand, Singapore, Indonesia, Vietnam, Australia, Papua New Guinea, New Zealand, United States, Ireland, Austria, Belgium, Denmark, Germany, France, Finland, Canada, Luxembourg, Malta, Norway, Portugal, Sweden, Switzerland, Spain, Greece, Italy, United Kingdom, South Africa, Netherlands, Lithuania, Pakistan, Laos, Bangladesh, Nepal, Sri Lanka, Turkey, India, Argentina, UAE, Panama, Brazil, Belarus, Poland, Russia, Colombia, Cuba, Guyana, Czech Republic, Peru, Mexico, Ukraine, Hungary, Israel, Jordan, Lebanon, Uruguay, Costa Rica, Chile, Oman, Egypt, Ethiopia, Estonia, Bahrain, Bulgaria, Botswana, Burkina Faso, Congo (Brazzaville), Democratic Republic of the Congo, Kazakhstan, Djibouti, Guinea, Ghana, Gabon, Qatar, Côte d’Ivoire, Kuwait, Croatia, Kenya, Latvia, Rwanda, Romania, Madagascar, Mali, Morocco, Mozambique, Niger, Nigeria, Senegal, Cyprus, Saudi Arabia, Tunisia, Uganda, Iran, Chad, Uzbekistan, Azerbaijan, Algeria.

Both ePacket and E-EMS are ship to restricted districts and countries which are the mostly popular for online eCommerce,  but 0.5kg to 30kg package can be shipped via EMS from China to worldwide countries, however, the shipping rates is more expensive, but 5 to 10kg usually has no tax(not 100% guarantee).

Tips 4. Ship via tax free shipping line

Small packages usually apply tips 2. For the wholesalers packages usually above 22kg shipping from China to EU and USA, the tax free shipping line are usually prefered. For one thing, the wholesalers might be not able to clean customs themselves, for another thing they may not able to pick up at local ports, thus the double customs clearance tax free and door to door delivery service can save your time and money.

There are usually 3 ways for big packages shipping from China to EU and USA, tax free air delivery, tax free sea delivery and tax free train delivery(only restrict for package shipping from China to EU countries). Compared to courier like DHL, UPS and FedEx, the tax free line are slower, air delivery usually 10 to 15 days, train delivery 30 to 40 days, sea delivery 40 to 50 days. However, their shipping rates are more cheaper than courier and accounted the tax into the shipping rates.

Tips 5. Prepaid tax service

If you do not want to bother clients for customs tax, you can ask Chinese shipping agent to help youchoose prepaid tax service to ship from China, the shipping agent will help you declare the product value and prepaid customs tax when the packages shipping from China. However, the shipping agent usually need to charge 20% of the declared value in advance. For example, the product sold 100 usd in your store and your clients from Canada or EU countries, you prefer to pay tax in advance so your clients receive the package hassle free, then you can choose prepaid tax service, the Chinese shipping agent usually help you declare 70% of the products value, which means you will need to pay $100*70%*20%=14 usd together with shipping fee.

For mostly dropshippers 14 usd are too big profits as mostly of the products sell between $20 to $100, once the dropshipper chose prepaid tax service mostly profit margin go away. Thus the prepaid tax service is usually applied by product with high values. Before you chose the service you should calculate the profit margin affected by the tax or add them into the product price.

Of course, the above 5 tips aimed to help you reduce the tax for your business, no matter which way you applied for packages shipping from China to EU and USA, they cannot help you 100% avoid customs tax as the custom tax listed in all the countries tax law which cannot been evaded. When you start to dropship or wholesale from China to EU and USA or other countries, the custom tax and VAT should be considered a necessary cost in your store, then you can find a professional shipping agent in China to help you ship packages to your clients or your warehouse or Amazon FBA with proper declared value and shipping courier as well as tax strategies, the tax issue wont bother you anymore.