If you’ve lived in The Bahamas for any reasonable amount of time, you’ll know that the country depends heavily on imports. That reality has caused many freight-forwarding companies to be formed, allowing the average Bahamian to shop on foreign internet-based websites in order to ship to The Bahamas.
If you are new to importing items into The Bahamas or haven’t in a while. Here are 15 import terms used in The Bahamas that every Bahamian should know.
The first term may seem obvious, but we won’t take anything for granted. Customs is the department that is responsible for collecting duty for the items you import. In The Bahamas, when people say customs in terms of shipping, it could mean the department of customs or the amount that has to be paid to the department of customs, short for customs duty.
Duty is the amount paid to the department of customs. It’s the alternative to using the word customs as stated in the explanation of the customs. The amount you pay in duty is based on the duty rate.
The Duty Rate is a percentage that determines the amount paid for duty. It can range from 0% to over 100% for some items. The duty rates are usually updated once a year and go up and down to encourage or discourage the importing of certain items. For example, during the COVID-19 pandemic, the duty rate for disinfectants decreased from 35% to 0%.
Duty-Free as you might guess is a term used to describe items with a duty rate of 0%. While duty-free items are more affordable to import, there are other customs-related costs in The Bahamas. Examples of duty-free items are Computers, some Baby items, books, and medicine.
VAT stands for Value-Added Tax and is a tax that is based on a percentage of the value of the item you purchase. The Bahamas started out with a VAT rate of 7.5%. Now the VAT rate it’s 12%. For imports, VAT is based on the landed cost. There are some items that are VAT-free, but if those items are imported through a shipping company they may not qualify.
Landed Cost is the total cost of importing an item. It consists of, but is not limited to the value of the item, the duty, environment levy, processing fees, and freight. Landed cost is used to calculate VAT.
An environmental levy is a fee charged on imported items for environmental purposes. Depending on the item, it could be a percentage or a fixed amount. Items with an environmental levy are items that need to be disposed of correctly when no longer needed and so the fee paid goes towards it.
A Processing Fee is another cost that the department of customs charges for imported items. It’s a percentage with a minimum and maximum amount. The percentage is 1% of the item’s value. The minimum is $10 and the maximum is $500. Some shipping companies package items together then charge their customers 1% even if that results in the amount falling below the minimum.
Exemption is the process of not having to pay duty and/or VAT for imported items. As a Bahamian citizen or resident, you have 2 $500 exemptions per year if you accompany the items you import. Anything over $500 will be subject to duty/VAT charges. There are also some exemptions for certain items/organizations that fit certain criteria.
The Tariff Act is the official legal document that specifies the rates and conditions for importing items into The Bahamas. It’s the source of truth and is broken up into chapters, sections, and subsections for easy viewing.
Freight is technically the item(s) you’ll be importing into The Bahamas. It’s often used to refer to the amount paid to the shipping company for shipping the item to The Bahamas. Shipping companies determine freight based on the actual weight or dimensional weight of items. It can be a cost per pound or flat rate depending on the company and size of the item.
Dimensional Weight is sure to shock you the first time you have to pay for freight based on it. Since some items are bigger than they are heavy. A formula based on the dimensions is used to determine dimensional weight. Length x Width x Height divided by 139 or 166. If the dimensional weight works out to be more than the actual weight, some shipping companies use it to determine freight cost.
The documentation fee is a fee some shipping companies charge when items are over a certain size. It’s usually $25 for items over 30 pounds.
The handling fee is another shipping company fee. It’s often charged for heavy items weighing over 100 pounds and the amount is usually per 100 pounds in weight.
Insurance is a protection fee charged by shipping companies. In the event your product is damaged in their hands, they’ll cover the cost of replacing the item. Shipping companies usually charge 1.5% or a fixed amount for certain items as insurance.