Category: Customs & Taxes

Customs & Taxes When Importing from China: US, EU, Australia & Canada

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Understanding import duties, customs fees, VAT and other taxes is crucial when importing products from China, especially in a time when trade tensions are at an all-time high. However, each country or market have their own customs duty rates and tax calculation methods.

In this article, we explain what every Importer must know about custom & taxes when importing products to the following countries and regions.

US-China Tariffs: How They Hit Importers & Amazon Sellers

Posted on by Fredrik Gronkvist — 18 Comments

US-China Trade War

Like many others, I assumed the US-China trade war would be a short affair. I envisioned some deal involving mutual trade concessions taking place in a matter of weeks.

How wrong I was.

Now we are facing the prospect of a decade-long trade war, that will possibly mark the end of an era. Given that the United States is our main market, in terms of users, the trade war has a severe impact on our business too.

I’m not here to discuss which side is morally right or wrong. But I do have an obligation to share my views of how the US-China trade war may impact small businesses in the US, importing from China.

  • Why the trade war could massively benefit Chinese sellers
  • Which products are affected by the new tariffs?
  • Which products are not affected by the new tariffs?
  • What does this mean for US importers?
  • Will China or the US win the trade war?

The trade war also comes with some unintended consequences, that have the potential to backfire massively. Continue reading US-China Tariffs: How They Hit Importers & Amazon Sellers

What is a Purchase Order and Proforma Invoice?

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purchase order

Importers issue Purchase Orders (PO) as a formal procedure to state their intention to buy certain products, according to the terms specified in the PO. The supplier should then counter by issuing a Proforma Invoice (PI), stating their intention to sell the products to you according to the terms stated in the PI.

While this may sound like an outdated formality, understanding the Purchase Order and Proforma Invoice issuing process can help avoid severe misunderstandings – leading to quality issues, receiving the wrong product or delays.

In this guide, you will learn what every importer should know about the following:

  • What is a Purchase Order?
  • What do I need to include in my Purchase Order?
  • How do I submit the purchase order to the factory?
  • Do I need to submit a Purchase Order before each production run?
  • Why do I need a Proforma Invoice from the factory?
  • What kind of information should the Proforma Invoice include?
  • How do I avoid payment fraud?
  • What is the difference between a Proforma Invoice and a Commercial Invoice?
  • Can I use the Proforma Invoice as proof of importation value?

In addition, we also provide sample invoice documents:

  • Purchase Order Sample
  • Proforma Invoice Sample
  • Commercial Invoice Sample

Continue reading What is a Purchase Order and Proforma Invoice?

Importing from China to Australia: A Complete Guide

Posted on by Fredrik Gronkvist — 22 Comments

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About to import products from China to Australia? This guide is a comprehensive introduction to everything that Australian importers must know, before getting started.

Keep reading, and learn more about Australian product safety standards, mandatory labeling requirements, GST, customs duties, and other import taxes.

As a bonus, this guide also includes an exclusive Import Cost Calculation Case Study, providing you with a tool for calculating all relevant taxes and fees in Australia.

Australian Product Safety Standards

Australia regulates products in many industries, including Children’s products, furniture, vehicles and chemicals in consumer products.

When importing from China to Australia, the buyer is responsible for ensuring compliance with all mandatory product safety standards, and compliance procedures.

As such, you must keep track of the following:

a. Product safety standards (i.e., AS/NZS standards)
b. Substance restrictions (i.e., AZO dyes) Continue reading Importing from China to Australia: A Complete Guide

Import Duties in Australia When Buying From Asia: An Essential Guide

Posted on by Fredrik Gronkvist — 1 Comment

Understanding the Australian import duty and tariff system, with many its exemptions and country of origin classes, can be rather complicated. In this article, we explain what Australian importers must know about import duty rates, HS codes, and tariffs:

  • Country of origin classifications
  • How to confirm the applicable HS code and duty rate for your product
  • Chapters and sections
  • How to (legally) reduce the import duty rate
  • When to pay import duties
  • How to calculate the customs value and import duty
  • Other import taxes in Australia

Continue reading Import Duties in Australia When Buying From Asia: An Essential Guide

Australia Import Processing Charge When Importing From Asia: A Complete Guide

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About to import products from China, Vietnam or elsewhere, to Australia? If the total importation value is above AU$1,000, you’ll need to submit an import declaration and pay an import processing charge of at least 50 Australian Dollars.

In this guide, we explain what Australian importers must know about the Import Processing Charge:

  • Import Processing Charge Overview
  • Reduced rates for warehoused goods
  • When and how to pay the Import Processing Charge
  • Exemptions, small volumes, and sample orders
  • Import Processing Charge for online purchases and private importers

What is the Import Processing Charge when importing from China, Vietnam or India?

The importing processing charge depends on the customs value (CVAL) and whether you submit the import declaration manually or online. However, unlike import duties which may differ depending on the country of origin, the import processing charge is always the same.

As such, you’ll pay as much for a shipment coming in from China, as one from Vietnam or any other foreign country. Continue reading Australia Import Processing Charge When Importing From Asia: A Complete Guide

Australia GST When Importing From Asia: A Complete Guide

Posted on by Fredrik Gronkvist — 1 Comment

Importing from China, Vietnam or India to Australia? Most likely, you’ll need to pay a Goods and Services Tax (GST) of 10% on top of the taxable importation value.

In this article, I explain what every Australian importer must know about GST, including:

  • GST rates on imported goods
  • GST calculation examples
  • How to (legally) reduce the payable GST
  • How to correctly declare GST
  • GST credits when importing goods
  • GST exemptions and thresholds on imported goods
  • GST for private importers
  • GST registration for overseas companies

What is the GST rate when importing from China, Vietnam or other countries in Asia?

The GST rate for imported goods in Australia is 10%. Unlike for import duties (which may differ depending on the manufacturing country), the GST rate is the same regardless of the country of origin.

As such, you’ll pay a 10% GST on top of the customs value (CVAL) regardless of whether the products are manufactured in or imported from China, Vietnam, India or another country. Continue reading Australia GST When Importing From Asia: A Complete Guide

EU VAT Registration for American and Asian Importers: A Complete Guide

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Matthias Oldiges

Businesses in the US and Asia importing or selling products to the European Union must get their act together when it comes to Value Added Tax (VAT). Yet, understanding how to register and pay VAT, as a non-European company, is complicated.

As such, we decided to ask one of the Europes leading VAT experts, Dr. Matthias Oldiges – Managing Associate at KMLZ (Küffner, Maunz, Langer and Zugmaier) in Munich.

These topics are covered:

1. VAT when selling cross-border (B2C) to customers in the European Union as a non-EU company

2. VAT when importing into the European Union (i.e., Amazon FBA) as a non-EU company

3. VAT threshold in different EU states

4. How to get VAT registered as a non-EU company

5. How to pay VAT as a non-EU company

Matthias, how did you end up working for KMLZ?

You can know something about everything or know a lot about something. KMLZ decided on the latter and concentrated on VAT law, customs law and criminal law. I wrote my doctoral thesis on a VAT legal topic.

This ultimately led me to KMLZ, where I have now been working as a lawyer (Managing Associate) for almost six years. We advise our clients on VAT and customs law related matters within Europe, as well as worldwide.

Our strong network of experienced and leading VAT experts, in all Member States of the European Union and beyond, enables us to provide our clients with international advice at the highest levels. Continue reading EU VAT Registration for American and Asian Importers: A Complete Guide

VAT on Imported Goods from China: A Complete Guide

Posted on by Fredrik Gronkvist — 76 Comments

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Importers based in the European Union must pay Value Added Tax (VAT) on top of the Customs value. In this article, we help you navigate the complexities of ‘Import VAT’ when buying from China.

Keep reading, and learn more about VAT calculations, and whether or not Import VAT is deductible.

We also explain how and when you declare and pay VAT, and much more.

What is Value Added Tax (VAT)?

VAT is a consumption tax in the European Union. In B2C transactions, VAT is always included in the price. If you, for example, buy a product online from an EU based online store, the price you pay includes VAT.

The seller can then offset the VAT it ads on its sales, to the VAT it paid to other other EU businesses, when buying products or services.

Below follows an example:

  • Sales: $10,000 (Including VAT, 20%)
  • Expenses: $5,000 (Including VAT 20%)

This allows us to make the following calculation.

  • Sales VAT: $2,000
  • Paid VAT: $1,000
  • Total: $2,000 – $1,000 = $1,000

Thus, I would need to pay $1,000 of VAT. If I’d spent more on VAT than I added on top of my sales, I would instead get money back from the state.

Continue reading VAT on Imported Goods from China: A Complete Guide

Import duties from China: How much should I pay?

Posted on by Fredrik Gronkvist — 2 Comments

import duty calculation

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Not sure how to calculate import duties on your incoming shipment from China? Read this article, to learn how you can make an accurate customs duty estimation, find the right customs value for your country and HS code for your product.

You will also learn how, and when, to declare import duties to your local customs authorities – and why it’s a really bad idea to undervalue your goods for the sake of paying a lower duty rate.

How do I calculate the import duties?

Two factors that decide the amount of import duty you must pay are the following

a. Import duty rate (%)
b. Customs value

The import duty rate depends on the product and its assigned HS code. The customs value, on the other hand, depends on the target market.

Below follows an overview:

Country / MarketCustoms ValueComment
United StatesFOBOnly the product cost is included
European UnionCIFIncludes product and freight cost
United Kingdom (EU)CIFIncludes product and freight cost
CanadaFOBOnly the product cost is included
AustraliaFOBOnly the product cost is included
New ZealandFOBOnly the product cost is included
SingaporeCIFIncludes product and freight cost
Hong Kong S.A.R (PRC)NoneNo import duties

In many markets, the customs value also includes the cost of samples, tooling and any services provided by the foreign supplier.

However, the customs value never include services generated domestically, such as forwarding from the port of loading to your address.

Note: Read this article about Incoterms to learn more about FOB (Free on Board) and CIF (Cost Freight Insurance)

Continue reading Import duties from China: How much should I pay?