The High Cost of Online Shopping from Barbados

Low cost online shopping and free shipping are available to everyone of North America but seems to have bypassed Barbados. Online shopping is a little different in Barbados due to the import duties, VAT & fees that are applied to imported purchases and the shipping cost incurred to get them into the country. Calculating these fees can seem daunting but with the right information, it becomes a straightforward process. Once you understand how the system works, you will realize how unintuitive it is to go about lowering your total costs. Here are the steps involved in determining customs duties, VAT and fees for online purchases shipped into Barbados.

Understanding Customs Duties

Customs duties are taxes imposed on goods when they are transported across international borders. Customs duty in Barbados is calculated based on the Cost, Insurance, and Freight (CIF) value of imported goods. The CIF value includes:

• The purchase price of the goods
• International shipping costs
• Insurance fees for transportation

Duty rates vary significantly depending on the type of goods being imported. The Barbados Customs Tariff uses the Harmonized System (HS) code classification, with rates typically ranging from 0% to 60%. If you do not know the rate to use, you can assume a 20% duty rate in your calculations as an estimate as that is a rate that applies to many categories.  Some examples include:

• Raw materials: 0-5%
• Finished consumer goods: 20-45%
• Luxury items: Up to 60%

Value Added Tax (VAT)

After calculating the customs duty, Value Added Tax (VAT) must be applied. The standard VAT rate in Barbados is 17.5%, calculated on the CIF value plus the customs duty. This means VAT is charged on the total landed cost of the goods. Certain essential items may qualify for reduced VAT rates or exemptions.

Environmental Levy

Barbados applies an environmental levy on specific items, particularly those with environmental implications. The rate is typically 2% of the CIF value. We will ignore this levy in our calculations.

Shipping Agent Fees

Shipping agents handle the goods when they arrive in Barbados also charge fees for their work involved in getting your packages to you. In the simplest case, their fees are typically applied per package and may depend on what goods are being imported.

Customs Processing Fees

Customs will hit you will another fee which is applied to each importation and covers the administrative costs of processing imports.

Calculating The Fees

# 1. CIF (Cost, Insurance, Freight) = the purchase price of the goods, plus the shipping insurance, plus the cost of shipping

# 2. Customs Duty = #1 multiplied by the duty rate of the item (usually 20%)

# 3. VAT = (#1 plus #2) multiplied by 17.5%

# 4. Shipping Agent Fee = $15 per package (varies by agent)

# 5. Customs Processing Fee = $10

Now let’s see a few examples using common shopping sites and shipping methods.

 

Examples Comparing Sites (Estimated in $USD)

2 x Pampers Swaddlers  Size 3 (192 count each)	Amazon.com	Amazon.com via Ezone	OverInAway.com
Cost	$118.11	$118.11	$97.02
Shipping	$117.62	$61.23	$0.00
Duties (20%)	$47.15	$35.87	$19.40
VAT (17.5%)	$49.50	$37.66	$20.37
Broker/Agent Fee	$15	$15	$15
Customs Processing Fee	$10	$10	$10
Total	$357.38 (3 times cost)	$277.87 (2.4 times cost)	$161.79 (1.7 times cost)
Hisense 32” A4KV LCD TV	Amazon.com	Amazon.com via Ezone	OverInAway.com
Cost	$119.99	$119.99	$172.78
Shipping	$69.33	$125.49	$0.00
Duties (20%)	$37.86	$49.10	$34.56
VAT (17.5%)	$39.76	$51.55	$36.28
Broker/Agent Fee	$15	$15	$15
Customs Processing Fee	$10	$10	$10
Total	$291.94 (2.4 times cost)	$371.13  (3.1 times cost)	$268.62 (1.6 times cost)
Ninja Deluxe Blender Kitchen System	Amazon.com	Amazon.com via Ezone	OverInAway.com
Cost	$179.99	$179.99	$203.84
Shipping	$60.46	$137.71	$0.00
Duties (20%)	$48.09	$63.54	$40.77
VAT (17.5%)	$50.49	$66.72	$42.81
Broker/Agent Fee	$15	$15	$15
Customs Processing Fee	$10	$10	$10
Total	$364.03 (2 times cost)	$472.96 (2.6 times cost)	$312.41 (1.5 times cost)

 

Conclusion

As you can see, the lowest purchase price does not translate to the lowest total cost. Shipping costs and other fees are included in the calculations for duties and VAT and have a huge effect on the final cost. Package consolidation is also important as broker/shipping agent fees are  added for each package and would also lower shipping costs.

Taking this into consideration, OverInAway considers shipping a part of our internal business overhead. We purchase the products for you at great prices, we pack items ourselves to minimize shipping costs and agent fees. 

OverInAway ships only by sea which is the cheapest shipping route. When you factor in custom’s processing times, your packages will not take much longer to get to you. However, you will have more options and a higher quality of products available for yourself and your family. The total cost of our products is roughly 1.5 times the cost price you see online. If you buy elsewhere, your total costs will be anywhere from 2-3 times the cost you see online. These values would increase with increased duty rates.