Roughly 37% of Sri Lankan e-commerce exporters lack full awareness of de minimis – the value threshold below which imported goods are exempt from customs duties, tariffs, and taxes – likely preventing them from optimising pricing, utilising other e-commerce related shipping strategies, and exposing customers to unexpected costs and delays, a report published by ODI Global titled ‘E-commerce and international trade in Sri Lanka’ said.
Noting the varying levels of awareness of the free-pass line threshold, the report said: “Table 1 shows the level of awareness of the de minimis rule among exporters that use e-commerce and those that do not. The finding that 27% of surveyed e-commerce exporters are not aware of de minimis, while a further 10% are unsure, points to a significant constraint to e-commerce trade.”
It noted that the lack of awareness hinders e-commerce exporters operating out of Sri Lanka from deploying better pricing, shipping and sales strategies, particularly in B2C sales, and retaining customers.
“This knowledge gap may prevent exporters from optimising pricing, market selection and shipping strategies, particularly in B2C sales, and may inadvertently expose customers to unexpected costs and delays, reducing repeat demand.”
De minimis in international trade refers to a country-specific value threshold below which imported goods are exempt from customs duties and taxes, allowing low-value shipments to enter without additional charges.
Utilising this benefits threshold, exporters are enabled to avoid paying duties when shipping to a particular country if the value of the shipment does not exceed the de minimis value.
The ODI Global report noted that this lack of awareness, paired with Sri Lanka’s comparatively high costs and limited scale in parcel-based trade, constrains its ability to leverage cross-border e-commerce and underscores the need for capacity-building interventions.
Further, it noted in the category of non-e-commerce exporters, only 32% of exporters were aware of the threshold benefits – indicating a thoroughgoing barrier towards exploring B2C e-commerce across both categories of exporters.
“Additionally, the fact that only 32% of non-e-commerce or traditional exporters are aware of de minimis threshold benefits is an indication that many exporters who operate in bulk B2B trade may not be likely to explore B2C e-commerce. Without the threshold knowledge, they are less likely to use low-value shipping opportunities or target individual consumers abroad. This limits their diversification into e-commerce and could represent a constraint to Sri Lanka’s export growth and participation in digital trade.”
Conclusively on the matter, the report noted: “For Sri Lankan exporters, particularly MSMEs engaged in e-commerce, the de minimis thresholds in destination markets are critical because they enable direct-to-consumer sales without triggering additional duties or delays that undermine price competitiveness and customer experience.”
Nonetheless, at present the EU and UK Governments are gradually phasing out the system. Several countries across Asia and Latin America have systematically dropped their thresholds near zero or added heavy flat-rate taxes to cross-border e-commerce parcels over the last few years.
The report’s findings were based on a survey of 953 exporters and importers.