Today, CUTS International published new research that analyzes the impact that de minimis regimes have on the ability of Micro and Small Enterprises (MSEs) to export. De minimis refers to the minimum value of goods, below which no duties and taxes are collected and streamlined border clearance is provided.

The research was presented at a session, organized jointly by eBay and CUTS,  during the World Trade Organization 2018 Public Forum. Pradeep Mehta, Secretary General of CUTS, described the main findings, namely that both the scope and threshold level of the de minimis regimes matter. The impact of a de minimis regime only covering customs paperwork is significantly lower than if it exempts from local consumption/sales tax. Moreover, a modest increase of the level of the de minimis threshold has a meaningful effect on MSE trade. By launching this early-stage research, CUTS hopes to elevate the issue of costs in the destination market as a barrier for MSE internationalization.

Key research findings:

• Increasing the customs duty de minims threshold by US$1 led to an increase of approximately US$5mn in average MSE exports
• Increasing the VAT de minimis threshold by US$1 led to an increase of more than US$115mn in average MSE exports
• Increasing the de minimis threshold on customs duty to US$200 and the threshold on VAT to US$30 on MSE exports led to a 96% increase of MSE exports

You can read the full policy brief here.