The virtual nature of online transactions allows enterprises to enjoy a large degree of tax-free environment. Countries have great disputes over the collection of consumption tax or value-added tax on online cross-border trade. There are various international tax avoidance methods, and it is difficult to obtain tax evidence and conduct inspections. . Value Added Tax (VAT) is an insurmountable threshold for cross-border sellers today.
The first one proposed was the United Kingdom. When any individual or company imports goods to the United Kingdom, the customs will levy import taxes on the goods, including tariffs (IMPORTDUTY) and import value-added tax (IMPORT VAT) on eBay. And sellers on Amazon who do not have a VAT tax number can be removed from selling rights. The reason is that some overseas traders from non-EU countries avoid paying VAT on sales in the UK, weakening the business of local online and physical retailers in the UK.
The method is precise and ruthless, targeting the e-commerce platform directly. If you do not cooperate in handling the matter, you may be deemed to be jointly and severally liable for VAT. Sellers are required to make true, timely and accurate tax declarations. If there is intentional delay, error or false declaration, they may be subject to different actions by the British Revenue and Customs (HMRC), including seizure of goods, reporting to the platform, account closure, fines, etc. level of punishment.
Under this policy, sellers who have used British overseas warehouses but have not registered to sell VAT will be operating illegally if they continue to sell. For direct mail, according to regulations, goods less than 15 pounds are exempt from paying VAT when entering customs. However, if the cumulative annual sales exceed 70,000 pounds, you must register for VAT and make a declaration. The seller’s costs are inevitable, including not only taxes, but also subsequent tax accounting fees such as agency applications and quarterly declarations.
Due to the complexity of tax laws, Amazon has launched a pan-European plan, paying 8,000 euros can cover accounting processing fees for one year. Recently, the Simplify Global Selling plan has been piloted. Amazon.co.uk acts as an intermediary trader. Sellers only need to have British VAT. Amazon purchases the seller’s inventory according to the quotation (similar to VMI, after the customer places an order) and resells it. For German, French, Italian, Spanish and other EU users.
In fact, from the perspective of international trade, there is always the issue of tax when doing business with other countries. The key lies in the amount of tax to pay, and you don’t have to worry about whether you should pay it or not. In Europe, according to the European Distance Selling Regulation, as long as the goods are sold in an EU country and exceed the country’s distance sales tax exemption amount, after-sales tax must be paid according to the local VAT rate.
VAT sales value-added tax and import tax are two independently paid taxes. After the goods are sold, merchants can apply for import VAT tax refund. Amazon currently has sites in 5 European countries, and the VAT tax points are 20% in the UK, 19% in Germany, 21% in Spain, 20% in France and 22% in Italy.
The EU is unifying legislation on VAT regulations for cross-border e-commerce trade. VAT is available across Europe in one go. Cross-border sellers will uniformly report VAT tax to the EU on a quarterly basis. In addition, according to the China-EU WTO project plan, all international mail entering the EU from 2021 must undergo electronic data pre-declaration, or cancel the 22-euro tax exemption and implement a unified EU customs code. At first glance, there will be no way to avoid taxes when traveling to Europe across borders, but the establishment of the EU’s single e-commerce market will overall benefit cross-border e-commerce operations.
Overseas warehouse sellers must register their own unique VAT number in order to pay relevant taxes or apply for tax refunds. Third parties cannot help pay or use it fraudulently. Logistics and freight forwarders register VAT to clear customs on behalf of customers. If goods from different sellers are put together for customs clearance, it will be a disaster if Chiyu is affected. Only applying without declaring or making zero declarations also carries credit risks and has no tax records. You may later be investigated by the tax authorities for tax arrears and may be subject to other penalties or compulsory measures.
For those who operate multiple accounts, using the same VAT number may cause account association. In the United States, the good times of amnesty for e-commerce sales tax (SalesTax) are about to pass. Amazon has collected sales tax from consumers in 26 states; the Russian Customs Service proposed to reduce the personal duty-free import amount from 1,000 euros per month to 22 Euro, completely cancel the declaration of “goods for personal use”, and levy value-added tax and tariffs determined by customs codes on inbound packages based on the commodities; and the tariffs in South American countries are even more shocking.
In the future, other countries may follow the example of the UK. To understand in detail, follow up in a timely manner, and adapt accordingly, you can check each country’s tariff website for basic tax rates/WTO tax rates, most-favored nation tax rates, preferential tax rates, etc.