How Do You Estimate Sales Tax and Import Duties on Goods Bought Online?
When you purchase goods online for personal use or someone sends you a gift which has been purchased online or is just being sent across borders, there is generally an import duty and there may also be local taxes that need to be applied. Most online merchants do not include the customs import duties or the local taxes when charging for the items online and this you would be responsible for these costs yourself when the goods arrive.
Shopping in store vs online…
When goods are purchased from a local retailer, you are charged the local taxes upfront when you pay for the goods and the only extra charges are generally the packaging and delivery costs. When purchasing overseas and across international borders, the items are subject to the local customs duty which is a tariff charged by the receiving country and varies from country to country. Some courier companies will actually pay the duties on your behalf to ensure faster delivery of your goods, but you will be liable to pay the full value of all the duties and taxes to the logistics company on delivery of your items. The customs duties levied on the goods can be varied according to the type of goods, where they are coming from and might even take the size or weight of the package in to account. You need to ensure that you know how much you will be paying in extra charges on arrival of your goods so that you know the true cost.
Using a price comparison shopping site on the internet is a great way to shop and is becoming more and more popular due to the savings to be had when shopping this way. You can buy anything from second hand goods to designer clothing and accessories and everything in between on the internet these days and comparison shopping means that you end up with significant savings in the cost of these items. You just need to ensure that you are shopping smart so that you don’t end up with an item costing you a lot more than you expected due to added costs on arrival.
When you purchase online from an overseas or cross border country you are literally importing the item in to your country. The shipping and handling that is generally charged by the online retailer is usually the basic cost to package the item up and send it to you via courier. They are not responsible for the duties and taxes payable when the item arrives in your country. This will be an added cost for you to settle when collecting your item. Each government has different customs and excise tariffs that they levy on goods and there is sometimes a penalty tariff on certain goods in various countries. It is important for you to know what the estimated charges could be on the particular item you are purchasing.
Looking at some of the bigger countries, you can get an idea of the average customs duty payable on goods received : EU tariff costs can vary from 10 to 15% of goods value, Canada charges a standard 8% while goods arriving in the US can have an extra duty of 7 to 10% becoming due. These costs are payable as soon as you receive your item at home or at the post office. You may also have to pay the local sales tax based on the import value of the goods. Most countries levy import duties as well as sales tax on all imported items. This is a revenue stream for the government of the country and import duties may be higher on goods that are manufactured or produced in your country. There are some limits in most countries on the goods value that is taxed and items under this threshold may not be taxed. You need to check these issues with your local customs officials before you import the goods.
Why are there import duties & tariffs?
Higher import tariffs may be levied on goods that are also locally produced or manufactured as a way of protecting the local industries. Various countries may have lower wage or material costs and can produce an item a lot cheaper than another country and importing goods at a vastly cheaper price could cause an negative impact on the local industries and cause unfair competition. In order to protect the local industries, levies are imposed on the imported goods, making them more expensive and less likely to impact as harshly on the local markets. While this does help sustain the local economy and prevent job losses in the manufacturing and producing industries concerned due to sales losses, this can impact a lot on the consumer as well, forcing them to pay higher prices than necessary for goods.
Most countries will require a customs declaration to be signed and completed and sent with the package. This details the contents, value of the items and specifics on whether they are purchased for commercial purposes or as gifts. This is used to levy your duties on the items when they arrive. Your added costs may include local taxes, customs duty, import taxes, excise duty, penalty taxes and so forth. Various countries have slightly different regulations, but you would probably be paying charges on goods for sale, private use, used goods, new items and even some charges on items received as gifts.
Some merchants may offer a service which allows you to work out the estimated extra costs you could expect to pay when receiving your purchases. This gives a far more accurate account of the actual cost of the item that working only on the item cost plus shipment costs. If a merchant does not provide this service and you can not find a price comparison website with this option, you would need to contract your local customs offices for a basic quotation of the cost of the import duties and taxes payable on receipt of your purchases.
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