If you are an American business, you may be considering fulfillment with a Canadian fulfillment service. If so, you may wonder what that might mean for you when considering import fees. Section 321 is a customs clearance rule put in place by the United States that determines how an American might import items from Canada.
How Section 321 Works
Section 321 establishes the maximum amount of value items can have that an American customer can import without incurring import costs. The amount of this value was recently raised to $800. Simply put, the items must be ordered on a single day for a single customer.
In more depth, Section 321 establishes an exemption administered by Customs and Border Protection that allows items from one person on one day to be exempted from taxes and duties. It establishes something called a “de minimis”, which is the maximum dollar amount that can be exempted. The de minimis is now set to $800 with the passing of new exemptions.
Because the number of items being shipped has increased dramatically in recent years, this allows for Americans to order more items than before when the amount allowed was $200. The increase is great for businesses who want to fulfill their items outside the United States.
How To Use Section 321 To Legally Avoid Tax
Businesses who want to legally avoid paying taxes on items for their consumers can use Section 321 to their advantage. Rather than importing a large number of items from another country, which comes with hefty import costs, a company can have the items shipped from that country to Canada. Canada has a number of free trade agreements with other countries.
As the customers place their orders, their orders are picked and packed in Canada and then shipped to US customers using Section 321. This eliminates the cost of import fees from Canada to the US consumer, unless the consumer orders more than $800 of product.
Ensuring Smooth Shipments
To ensure that your products are shipped in a timely fashion and that the US Customs and Border Protection can inspect packages as necessary, they unveiled a program meant to help the process go quickly and smoothly. The program allows fulfillment companies to send the information ahead of the shipment so that the paperwork is completed and waiting for the shipments to make it to US customs.
If you choose a Canadian fulfillment partner that ships from the United States, they will take the products to US Customs through Section 321 and ship the products from a United States shipping service such as USPS or FedEx. This ensures that shipping is quick and efficient.
Section 321 is a wonderful way for American companies to use Canadian fulfillment without incurring any major import fees or taxes. This ensures quick shipping while also having the benefit of the free trade agreements that Canada offers. It eliminates the need for any fees to be passed on to the American consumer and still ensures timely and efficient shipping.
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