Updated March 22, 2018 - AvaTax REST has a new syntax for making LandedCost calculations. This post is retained for historical purposes. You may read about the new LandedCost integration at https://developer.avalara.com/blog/2018/03/22/calculate-customs-duties-in-rest/.
With the release of the LandedCost calculator functionality, AvaTax now provides features to help you sell across country borders. LandedCost will help you identify customs duty for various types of harmonized tariff codes.
Once you've begun using AvaTax REST v2, you'll have to make a few minor changes to begin using the LandedCost calculator. Here's what you need to know.
For every product in your taxable transaction, you need to identify the Harmonized Tariff Schedule code (HTS code) for that item. These tariff codes are published by the customs authorities in each destination country and you'll need to assign the appropriate code to your items. Update 2018-03-22: AvaTax REST has a new APIs for HS Code lookup. You may read about the new HS Code endpoints at https://developer.avalara.com/blog/2018/03/13/hs-code-search-in-rest/.You can search for a code online using Avalara's HTS code lookup page: https://www.avalara.com/hs-codes/
To identify this code for your item, you will add a "Parameter" for each line in your transaction. That parameter is called the AvaTax.LandedCost.HTSCode. For today's example, we'll use the code 6403519030, which refers to "Other Footwear With Outer Soles Of Leather". The exact details of these HTS codes are quite complex; but if you have a question you should certainly contact a customs office to verify that your code is correct!
Interesting item of note: most countries have a "de minimis" threshold - this is each country's threshold under which customs duty and tax does not apply. This example shipment will ship from Canada to the United States. In the United States, the value of a shipment must be greater than $800 USD for it to be subject to customs duty. For this example, this shipment will have a value of $1000.00 USD, which surpasses the de minimis threshold amount and triggers a customs duty to apply.
The next thing we need to know about your transaction is who is responsible for paying the your customs duty. The LandedCost calculator supports two options:
For this example, we'll say that the customer, the Buyer, is responsible. That means we'll use the code "DAP". This parameter is attached to the main body of the transaction, and it's called AvaTax.LandedCost.Incoterms.
Calculating the landed cost for cross-border transactions requires knowing how much is paid for shipping and insurance. To provide these data elements, we'll add a line item into our transaction for TaxCode FR010000, which is the tax code for freight charges, and a line item for TaxCode FR070100, which is insurance. If you forget what tax codes you want to use, you can always call the API at /api/v2/definitions/taxcodes - this will give a full list of all Avalara defined tax codes you can use for your transactions.
Let's plan to ship these shoes from Prince Edward Island in Canada to Bainbridge Island in WA. Here's what our request will look like:
{
"type": "SalesInvoice",
"companyCode": "DEFAULT",
"date": "2016-10-13T00:00:00-07:00",
"customerCode": "ABC",
"purchaseOrderNo": "2016-10-13-001",
"addresses": {
"ShipFrom": {
"region": "PE",
"country": "CA",
"postalCode": "C1A 4P3"
},
"ShipTo": {
"city": "Bainbridge Island",
"region": "WA",
"country": "US",
"postalCode": "98110"
}
},
"lines": [
{
"number": "1",
"quantity": 1,
"amount": 1000,
"description": "Footwear",
"taxCode": "P0000000",
"parameters": {
"AvaTax.LandedCost.HTSCode": "6403519030"
}
},
{
"number": "2",
"quantity": 1,
"amount": 50,
"description": "Shipping",
"taxCode": "FR010000"
},
{
"number": "3",
"quantity": 1,
"amount": 50,
"description": "Insurance",
"taxCode": "FR070100"
}
],
"parameters": {
"AvaTax.LandedCost.Incoterms": "DAP",
"AvaTax.LandedCost.ShippingMode": "air"
},
"taxDate": "2016-10-13T00:00:00-07:00",
"currencyCode": "USD"
}The result object is huge. It has information about all the line items, all the jurisdictions, and all the tax codes applied. For the moment, let's focus on the real results:
{
"id": 74898652,
"code": "c12fd57d-b01b-4785-b6ad-0f532f852e9d",
"companyId": 6669648,
"date": "2016-10-13T00:00:00",
"description": "Buyer's estimated import obligation is: 102 USD",
}As you can see, the import duty calculations made on this amount estimated that $102.00 USD would be the customs duty for importing this product in this manner. That's how it works! There are lots of other options available; we'll share more features and functionality here on the Avalara developer site each week.
In the REST v2 API, you can find a list of all other parameters via the /api/v2/definitions/parameters endpoint. When you call this API, it will list all the parameters that are available, and provide a quick description of each one. For further reading on parameters, check out the developer website.
May all of your shipments be speedy!
--Ted Spence, Director, AvaTax Core Engine