Shopping online from international retailers like Shein has become extremely popular. Shein offers trendy, affordable clothing and accessories to customers worldwide. However, many shoppers are surprised when they hear about ‘VAT and duty paid by consignee’ after placing an order. Understanding this phrase is essential to avoid unexpected costs and delays when shopping from Shein. This topic will explain what VAT and duty paid by consignee mean, how it applies to Shein purchases, and what shoppers should expect.
What Is VAT?
Understanding VAT
VAT (Value Added Tax) is a consumption tax applied to goods and services. In most countries, it is added to the price of products or services. For international orders, VAT is often not included in the product price but is charged when the goods enter the destination country.
VAT on Imported Goods
When you order from Shein, your items are shipped from overseas. VAT is applied when the package arrives in your country and is assessed based on the total value of the goods, including shipping and insurance costs.
What Is Customs Duty?
The Role of Customs Duty
Customs duty is a tax imposed by governments on imported goods. The duty rate depends on the product type and the country’s customs regulations. This charge is separate from VAT and can increase the total cost of your Shein order.
How Customs Duty Is Calculated
Customs duty is calculated as a percentage of the item’s declared value. Some products, such as clothing and footwear, may have higher duty rates. When buying from Shein, customs authorities review the shipment’s details and determine the duty based on the product category.
What Does VAT and Duty Paid by Consignee Mean?
The term ‘VAT and duty paid by consignee’ means that the customer receiving the package (the consignee) is responsible for paying all import-related taxes and customs charges. Shein or the seller ships the product, but the consignee handles all VAT and duty payments once the order arrives in the destination country.
How Does This Affect Shein Customers?
Payment on Delivery
When your Shein order arrives, you may receive a notice from the shipping carrier (such as DHL, FedEx, or local postal services) asking you to pay VAT and customs duty before your parcel is released for delivery.
Unexpected Costs
Many customers do not realize that the price they pay on the Shein website does not always include VAT and import duties. This can result in additional fees upon delivery, especially for larger orders.
Example Scenario
Let’s say you purchase clothes worth $200 from Shein. When the shipment arrives in your country, customs will calculate VAT and duties. If your country has a VAT rate of 20% and clothing duty rate of 12%, you may have to pay an additional $40 in VAT and $24 in duty before you receive your parcel.
Why Doesn’t Shein Include VAT and Duty?
Shipping Terms
Shein operates on Delivered Duty Unpaid (DDU) terms in many countries. This means they handle shipping, but local taxes and customs charges are the responsibility of the consignee.
Simplifying International Sales
Calculating taxes for every country can be complicated. By placing the responsibility on the buyer, Shein avoids dealing with customs procedures and tax systems in multiple countries.
How to Know If You Will Pay VAT and Duty
1. Check Your Country’s Import Rules
Each country has different thresholds for VAT and duty-free imports. In some countries, small orders may not be taxed. In others, even low-value shipments can attract VAT and duties.
2. Look for Shein’s Shipping Policy
Shein usually states whether VAT and duties are included or paid by the consignee in their shipping policy section. Always read this section before placing an order.
3. Be Prepared for Notifications
Shipping carriers will typically send a text or email with payment instructions if VAT and duty are due. Keep an eye on your messages after ordering.
How to Calculate VAT and Duty on Shein Orders
Step 1: Find the Customs Value
The customs value includes the product price, shipping fee, and insurance.
Step 2: Calculate Duty
Apply the duty rate for the type of goods to the customs value. This rate varies based on product category and country.
Step 3: Add VAT
VAT is applied to the sum of the customs value and duty.
Example Calculation:
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Product cost: $150
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Shipping: $20
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Customs value: $170
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Duty rate (10%): $17
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VAT rate (20%): $170 + $17 = $187 x 20% = $37.40
The consignee will pay $17 in duty and $37.40 in VAT upon delivery.
What Happens if You Don’t Pay VAT and Duty?
If you refuse to pay VAT and customs charges, your Shein parcel will be held by customs. If payment is not made within the given time frame, the package may be returned to Shein or destroyed. Some couriers may charge additional fees for handling or returning the package.
Can You Avoid VAT and Duty on Shein Orders?
1. Order Small Quantities
Some countries have a low-value exemption, meaning orders under a certain value are not taxed. Placing smaller orders can help you avoid charges.
2. Check for DDP Options
In certain regions, Shein offers Delivered Duty Paid (DDP) shipping. In these cases, VAT and duties are included at checkout, and no extra payment is needed on delivery.
3. Be Honest About Declared Values
Never ask sellers to under-declare the value of your order. This is illegal and can lead to confiscation of your shipment or penalties.
Tips for Shein Shoppers
1. Budget for VAT and Duties
Before placing large orders, estimate the extra costs and include them in your budget.
2. Track Your Shipment
Once Shein dispatches your order, use the tracking number to follow its journey and prepare for customs notifications.
3. Act Quickly
Pay customs charges as soon as you are notified to avoid delays and additional storage fees.
4. Register for VAT Refund (If Eligible)
If you are a VAT-registered business buying goods from Shein, you may be eligible to claim back the VAT on imported goods.
Pros and Cons of VAT and Duty Paid by Consignee
Pros
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Transparency: Buyers can see the exact tax and duty costs.
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Control: Consignees decide when and how to pay import charges.
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Possibility of VAT refunds for businesses.
Cons
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Unexpected costs for unaware shoppers.
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Delivery delays if charges are not paid promptly.
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Additional handling fees from courier companies.
Countries Most Affected by VAT and Duty Paid by Consignee on Shein Orders
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United Kingdom: VAT is charged on most imports above £135.
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European Union countries: VAT applies to all imports, regardless of value.
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Canada: GST and customs duties are common on imported goods.
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South Africa: Import VAT and customs duty apply, along with handling charges.
The phrase ‘VAT and duty paid by consignee’ on Shein orders means the buyer is responsible for paying import taxes and customs charges once the parcel arrives in their country. Understanding this helps shoppers avoid surprises and delays.
Before placing an order, always check Shein’s shipping terms, be aware of your country’s tax rules, and calculate estimated charges. By preparing in advance, you can enjoy smooth international shopping and receive your trendy Shein items without unexpected headaches.