How De Minimis can benefit SMEs ?

How De Minimis can benefit SMEs ?

Internet revolution in India has upended many unexplored business domains and one such is the e-commerce industry; this in turn, has made way for many small businesses to go online. The mass migration towards e-commerce businesses has persuaded the domestic market to the edge of saturation. If this is the case, have you ever given a thought on what could be the plan B in order to survive in the competition?  Unless you try out new innovations in business you cannot persist for a longer span of time. One of the most appropriate ways to broaden your e-commerce business is through penetrating into the International market.

Since the international market is still untouched by many sellers in the home ground, it’s the right time to unbind the market and get a good hold of it. International shipping is a little baffling especially the customs duties and taxes, but understanding the rules and regulations of the target country will make your journey easier. But the silver lining here is certain rules defined in ICC Custom Guidelines encourages and streamlines the process of shipping for the online merchants. One of the noteworthy guidelines which can be very helpful to newbie’s is de minimis.

De Minimis is a Latin word which means “the law does not care about very small matters”. De minimis is a threshold offered to the package while shipping internationally below which taxes and customs duties are exempted. This is a dream come true situation especially for online merchants who want to evaluate their products in a foreign country especially for sending samples. De minimis is advantageous for e-tailers doing cross-border shipping especially for USA importers, as the de minimis threshold rate was increased from $200 to $800 in the year 2016. The de minimis rate is set by the destination country’s government hence it varies with countries, while few countries do not have this rule.

There are different advantages of de minimis, some of the noteworthy features are:
De Minimis threshold for different countries
                                                                                        
1. Lesser documentation
Cross border shipping involves a lot of documentation especially customs clearance takes good amount paperwork and evaluation. Thanks to de minimis, importing low-value shipments take lesser time as it comes below the threshold rate, thus requiring lesser paperwork. Few of the products which are prohibited or hazardous do not come under de minimis hence check out the rules and regulations of the destination country for the products which you are shipping before you initiate the process.

2. Expedites shipment delivery and returns
Shipping to any international destination takes time depending on the destination location. Upon which customs clearance can stretch your shipments transit time. Sending shipments below the de minimis threshold rate will truncate the transit time. This is because the shipment does not qualify the customs duty and the delivery of the product speeds up as the evaluation, duty and tax procedures are skipped. Hence it reduces the time incurred in returns of the shipments as well.

3. Reduces cost for e-tailers & customers
De minimis has broadened the scope for cross-border shipping. One of the major concern of any e-tailer in international shipping is the shipping cost as it additionally involves customs duties, import taxes etc., With high de minimis rate it is easy to penetrate into the international market if your shipment is below the de minimis threshold, as you don't have to pay any duties or taxes. This helps the e-tailers ship to the customers at cheaper rates and customers also pay a lesser amount for the product which also encourages them to come back for more.

4. Encourages cross-border shipping
The prime stumbling block for international shipping is the customs. With de minimis lessening the burden of customs duties and taxes, etailer with a desire to expand their business internationally can make use of this opportunity to ship across the borders with low cost and quicker time span.

De Minimis is a blessing in disguise to entrepreneurs as the entire process of shipping happens at cheaper and faster rate which makes it easier for SME’s to kick-start the business internationally.




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