Before deciding which party to be responsible for paying duty and tax, you need to understand the meaning of DDP and DDU/DAP, as well as the pros and cons
Before you make your first sale to overseas customer, you’ll need to decide who is responsible for duty and tax.
What does DDU / DAP mean
Delivery Duty Unpaid (DDU): the duty and tax will be paid by the recipient when it arrives in the destination country
What does DDP mean
DDU/DAP
DDU is more affordable for sellers. You might be able to win customers at lower prices on your website and eCommerce platforms.
On the other hand, it is important to ensure customer understand their responsibilities to pay duty and tax to avoid troubles.
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Pros |
Cons |
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More affordable for the seller |
Customers may be shocked by customs fees |
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Easier costing computation for sellers |
May lead to additional delays |
| Customer may refuse to pay the import fee and cause additional return fee to shipper. |
DDP
DDP provides a much faster and more convenient experience for both parties.
Because import duties and taxes are hard to determine until your parcel arrives at customs, you will have to get an estimation and review the final cost in the invoice issued.
Most express courier charge additional service fee for DDP. You can check additional surcharge
before selecting the carrier. You may also save the DDP handling fee by standard shipping option like CheckOut Express.
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Pros |
Cons |
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Reduces risk of product abandonment, poor product reviews, customer complaints, and/or return-shipping fees |
Couriers can take on customs clearance on your behalf—for a fee. This can be expensive, or be counted as a percentage of the product price |
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Ensures that your shipment will clear customs and make it to your buyer with better customer experience |
More risk involved for the seller when clearance is delayed, storage is needed, or goods are damaged in transit |
Be aware of de minimis value
Most countries set a tax threshold for shipped parcels. A higher tax applies only if a parcel exceeds what’s called the de minimis value. This value impacts how many item and at what product price sellers can ship without tax.
For example, in Unite States, shipments below US$800 are mostly tax-free.
You can refer to this link for more import information.
Include DDP fee in your product price
If you choose to offer DDP, you can offset some of the costs by including a portion of tax in the price of a product, and another portion in your shipping fees. This distribution lessens the perceived added impact for customers. For more information, you can refer to the additional surcharge.
Set clear shipping terms
You could collect your DDP fee from the customers, but make sure to tell them why they’re paying more. You could include a note at checkout, on their purchase slip, or in a FAQ section to explain that the added fee ensures safe and timely parcel delivery.
As for DDU, please get your customers’ acknowledgment and consent for those extra fees before processing their orders. They may feel bad about paying extra, but knowing they’re doing business with an honest online seller is reassuring for them.
Last Updated: 21 Feb 2023