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Need HELP to Understand drop shipping taxes

Discussion in 'eCommerce' started by Rushiru21, Jul 25, 2016.

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  1. #1
    Hi everyone !
    I am totally new in the e-commerce business so I have a lot of dummy questions!
    Would anyone help me?

    I am planning to create an e-commerce by drop shipping mainly Chinese products (less than 10$) first to the US and then to Europe and Asia and eventually become global. I am located in Japan and I have no nexus in any other countries. Would it be possible?

    I am struggling understanding how taxes would work in that case. I know taxes vary even within the US. So if I don't have to pay taxes, is it the consumer that will have to pay? (And what about customs and VAT in Europe?)
    I want my consumers to be fully aware of the amounts they'll have to pay. When do they pay taxes for the product I will sell? While purchasing on my website?

    I am using PayPal and shopify. On shopify POS app there is a button "auto-retrieve local taxes rate" what does it mean?
    Does it mean that it automatically add the fees of local taxes and that the calculated tax goes directly to my customer 's country's pocket? And that would be it? Nothing more to worry about but checking this button?

    Would it be perfectly legal then if I just declare my income to the Japanese government?

    Sorry if I ask for stuffs that might be obvious to you guys but I am alone doing this so I need some advice!
     
    Rushiru21, Jul 25, 2016 IP
  2. seoaceindia

    seoaceindia Banned

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    #2
    i think you should higher tax expert or contact him which is know cyber law.
     
    seoaceindia, Jul 25, 2016 IP
  3. Rushiru21

    Rushiru21 Greenhorn

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    #3
    Thank you for your response.
    Actually I cannot afford to hire a tax expert, but I guess I can manage to deal with it asking on the internet.
    Right now I would like to understand more how to use the tax session of the shopify app!
     
    Rushiru21, Jul 26, 2016 IP
  4. AimeeA

    AimeeA Peon

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    #4
    Hi! Have you tried asking in the Shopify University Forum? https://ecommerce.shopify.com/ You might have already tried but just in case.
     
    AimeeA, Aug 12, 2016 IP
  5. AimeeA

    AimeeA Peon

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    #5
    Another great free source of information is this page - http://www.vatlive.com/ It won't help with the Shopify question but it might help you understand the tax laws a little better. You can click on different countries and it explains a little about each one.

    Good luck!!
     
    AimeeA, Aug 12, 2016 IP
  6. bargainrocks

    bargainrocks Peon

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    #6
    Usually Tax fee include customs fee and VAT, the VAT rate is different in different countries. For example, VAT rate is 20% in UK, 10% in Australia while there is no VAT in the USA. In addition, the same product with different materials has different tariff rates and the same product customs rate is different in different countries. The VAT charge should base on CIF which means it should include customs fee and shipping fee. There is the tax calculation formula:

    UK: Tax fee= customs fee+ VAT (20%)

    Customs fee= product value* tariff rate

    VAT= (product value+ customs fee+ shipping fee)* 20%

    USA: Tax fee= customs fee=product value* tariff rate

    AUS: Tax fee= customs fee+ GST (10%)

    Customs fee= product value* tariff rate

    GST= (product value+ customs fee+ shipping fee)* 10%

    For more details you can check http://www.taobaoguides.com/2016/08/08/how-to-avoid-customs-tax-on-packages-shipping-from-china/.
     
    bargainrocks, Aug 13, 2016 IP