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  • 1 Post By businessdude
  • 1 Post By flameproof

Charging sales tax on online shop in HK when shipping overseas?

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  1. #1

    Question Charging sales tax on online shop in HK when shipping overseas?

    I'm in the process of setting up a Shopify site for a business I'm started. Having good understanding of how to setup the site, and obviously the business itself from branding, the actual products, fulfillment etc, I've found myself a little puzzled when it comes to charging sales tax.

    For the first month of the site, I plan to limit shipment to HK only, to ensure a smooth fulfillment process of my products. Eventually, I want to ship worldwide. As my business is registered in HK, no physical presence overseas or anywhere for that matter, should I be charging any sales tax when shipping to i.e the UK, US or anywhere else? I know there's no sales tax in HK, but..

    US, with all its states, has a lot of different taxes. If this was the case, how would I even get around collecting and remitting taxes?

    This might be a funny questions, and the answer might be completely obvious, but taxes and this side of the business isn't quite my area and I haven't talked to a tax expert.

    If I don't have to collect any VAT from buyers in UK for instance, will they be slapped with any taxes when the receive the goods?

    Would love some comments on this topic.


    Thanks guys,

    bd


  2. #2

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    No. No VAT for selling in our out of HK. And yes, buyer might pay VAT and customs depending on the value in many countries. This is the buyers problem, but buyers need to be give a clear understanding.

    I think for UK that trigger amount is GBP 18, below is free of any duty.

    Last edited by flameproof; 02-04-2016 at 06:56 PM.

  3. #3

    Thanks for your reply. Ok that makes sense. So basically, as I'm in HK, I won't charge any sales tax regardless of which country the buyer is in / country I ship to. Will need to add some sort of disclaimer that our shop doesn't collect sales tax in that case, so that it's clear. It wouldn't be good for a customer if they get slapped with a surprise fee when they receive the good though. But I guess that's how it will be.

    That's where I got confused. If for instance shipping to US, different states have different taxes. And it wouldn't really make sense for me to collect taxes..

    Well that certainly makes selling internationally a lot easier and no reason not to sell to overseas customers.

    Many thanks!


  4. #4

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    Quote Originally Posted by businessdude:
    Thanks for your reply. Ok that makes sense. So basically, as I'm in HK, I won't charge any sales tax regardless of which country the buyer is in / country I ship to. Will need to add some sort of disclaimer that our shop doesn't collect sales tax in that case, so that it's clear. It wouldn't be good for a customer if they get slapped with a surprise fee when they receive the good though. But I guess that's how it will be.

    That's where I got confused. If for instance shipping to US, different states have different taxes. And it wouldn't really make sense for me to collect taxes..

    Well that certainly makes selling internationally a lot easier and no reason not to sell to overseas customers.

    Many thanks!
    You are correct but not all in-bound miro-value products get identifieed by customs and duty applied.

    The US lags most of the world and still does not have a VAT but relies on an antiquated sales tax system that hugely benefits the likes of Amazon against local mom & pop shops.

    You should still declare the value of the contents on the declaration form and include an invoice.

  5. #5
    Quote Originally Posted by East_coast:
    You are correct but not all in-bound miro-value products get identifieed by customs and duty applied.

    The US lags most of the world and still does not have a VAT but relies on an antiquated sales tax system that hugely benefits the likes of Amazon against local mom & pop shops.

    You should still declare the value of the contents on the declaration form and include an invoice.

    Thanks. Yes definitely, will have to do that. I guess if I add a section on the site about shipping with a disclaimer along the lines of:

    " {My company} complies with Hong Kong regulations; however, your country may have different requirements for importing our products. Now, we can’t be liable for any additional duties, taxes or surcharges that you may have to pay on delivery to your country. If you are unsure, we suggest checking with local authorities before placing your order."

  6. #6

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    Quote Originally Posted by businessdude:
    Thanks. Yes definitely, will have to do that. I guess if I add a section on the site about shipping with a disclaimer along the lines of:

    " {My company} complies with Hong Kong regulations; however, your country may have different requirements for importing our products. Now, we can’t be liable for any additional duties, taxes or surcharges that you may have to pay on delivery to your country. If you are unsure, we suggest checking with local authorities before placing your order."
    While I think you're spot on with the disclaimer, imo, I would keep it a little more simple with something like, "Please note that any country, regional or local charges and/or tax is/are the sole responsibility of the buyer"...

    At the very least, I would suggest not mentioning anything about their "local authority"... that might freak a few of your potential customers a bit!

  7. #7
    Quote Originally Posted by lbear40:
    While I think you're spot on with the disclaimer, imo, I would keep it a little more simple with something like, "Please note that any country, regional or local charges and/or tax is/are the sole responsibility of the buyer"...

    At the very least, I would suggest not mentioning anything about their "local authority"... that might freak a few of your potential customers a bit!

    Thanks. That's a good point!
    lbear40 likes this.

  8. #8

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    Quote Originally Posted by lbear40:
    I would keep it a little more simple with something like, "Please note that any country, regional or local charges and/or tax is/are the sole responsibility of the buyer"...
    A disclaimer is good, specific information - if you know them for sure - is better.

    For example, in the UK the below tax amount is £18 , in Germany it's EUR 22. I think in the US it's well, well over $100.

    And while learning about it, check also import requirement, if your items can be actually imported. There are things like parallel import restrictions, and of course labeling, such CE.

    Only braindead sellers make items as Gift with $1 value.
    lbear40 likes this.