Duties and Taxes Process
Merchants can choose between two methods of collecting duties and taxes from customers:
Optional/Forced DDP: Customers pre-pay duties and taxes at checkout, which are passed by Global-e to the Merchant, and in most cases passed on to their shipper. However in some countries, like the US, Global-e will retain and remit these to the authorities directly.
Hidden Forced DDP: Duties and taxes are built into the amount paid by the end customer. For most countries, Global-e will pass the full value of the product to the Merchant, including the duties and taxes intended for the shipper. In some countries like Australia, Global-e will retain and remit these taxes directly to the authorities.
Below are two examples of the financial process that takes place when a customer outside the US purchases from a US Merchant.
Example: Optional/Forced DDP for Duties &Taxes
US Merchant - UAE Customer
Product price in USD = $100 - exported to UAE
Shipping cost $10, charged to customer $5 (shipping subsidy $5)
Net product sale for Merchant: $100
Net after shipping subsidy: $95
Example: Hidden Forced DDP for Duties & Taxes
US Merchant - Australian Customer
Product price in USD = $100 + 30% Country Coefficient – exported to Australia
Shipping cost $20, charged to customer $10 (incl. 10% GST), shipping subsidy $10
This process is also used for Switzerland, the UK, New Zealand, Norway and the EU
Net product sale for the Merchant: $130
Net after shipping subsidy: $107.27