Here’s a fun one - import duties. If we ignore sales taxes for a minute, the real problem with duties isn’t calculating a number, it’s knowing which classification applies. You often have a giant table or spreadsheet of product codes and duties, but the hard part can be figuring out which products have which duties applied. Companies often pick the lowest duty or tax rating they can get away with, but in ambiguous cases, governments can use courts or regulations to insist on a particular interpretation for a particular time period and sometimes the rules even differ based on who is doing the importing for various legal reasons.
Now, the obvious answer then is that for most online stores, somebody picks a product classification at random or relies on a third-party service that matches a product description to a classification. Most of the time, getting it wrong has few consequences unless you’ve been informed of the problematic item and the same government sees a misclassification more than once, or wants to make a point with your shipment vs others. After all, saying others get away with it doesn’t absolve your need to try and get declarations and duties correct.
Now, I’m not going to say that there isn’t room for open source here, I could totally see how making, for example, an AI that can look at product description and product appearance and try to classify it for duties would be amazing work if done in open source. I’m just pointing out that the topic is complicated, especially when considering that the same item might have different duties if manufactured in different locations or sold under different circumstances.
Governments are unbelievably complicated even as their systems still don’t mirror or match the real world correctly.
Import duties don't just depend on the classification in the nomenclature. It also depends on its value and its origin, which also are sometimes really hard to determine. The origin isn't just where the product is shipped from.
As for the classification, it gets complicated. Sometimes it goes beyond what the product is at the moment of the importation. Say you're shipping fruits, well depending on whether they're for eating as-is, or for juicing once imported, the classification (and thus the import duties) will be different. It's also hard to classify a product that's hybrid (like a ceiling fan with a LED light, is it a fan or a pendant light ?) or a brand new kind of product.
If you have a doubt, you can ask the customs to find the right origin or classification for you, though you might not be happy with the duties they apply. But mostly, it takes weeks to get one and I've seen companies doing their declaration just the day before their shipment arrives.
And even then, different customs officers might classify the same products differently even though they work in the same economic union.
> Companies often pick the lowest duty or tax rating they can get away with
I've seen companies picking the highest duty when they have a doubt, thinking they might get less in trouble or at least don't have to pay the difference if they get caught. Because when they do, the customs can audit your whole import history, and make you pay the difference for every product misclassified (iirc they can go back up to five years) and that can be devastating.
In general, from what I've seen, the task of product classification is so hard that no time is spent trying to optimize sourcing or the nature of the product to pay less duties. In a company the department in charge of customs declarations is always seen as a cost center. The only example I know is Converse importing their sneakers as slippers[1].
And not only is the problem complicated, but some of the most important documentation is only available on subscription. The EU has an open-data policy and a most data on duties can be found[2]. But the World Customs Organization makes you pay for a lot of essential information that can't be reproduced[3].
Now, the obvious answer then is that for most online stores, somebody picks a product classification at random or relies on a third-party service that matches a product description to a classification. Most of the time, getting it wrong has few consequences unless you’ve been informed of the problematic item and the same government sees a misclassification more than once, or wants to make a point with your shipment vs others. After all, saying others get away with it doesn’t absolve your need to try and get declarations and duties correct.
Now, I’m not going to say that there isn’t room for open source here, I could totally see how making, for example, an AI that can look at product description and product appearance and try to classify it for duties would be amazing work if done in open source. I’m just pointing out that the topic is complicated, especially when considering that the same item might have different duties if manufactured in different locations or sold under different circumstances.
Governments are unbelievably complicated even as their systems still don’t mirror or match the real world correctly.