A puzzle - balancing ethics and profit.

[Nerida]

Here in Australia, I pay brokerage fees (around $45 or so), duties on finished goods or findings (5%), but not on unstrung pearls; and GST of 10%. Thing is, if I then sell these goods in Australia, I collect 10% GST from my customers - my quarterly activity statement to the government balances it all out and I give them the surplus of what I have collected in GST versus what I have paid. Therefore if I skip paying GST on entry into the country, I simply pay more afterwards - there is simply no point in doing it in a dodgy way. I won't ask my suppliers to provide false information (although some automatically do), and I object if any overseas customers I have ask me to provide false information for ease of entry into their own countries.
These costs are simply a cost of doing business. They need to factored in to every transaction I make, and the pricing of every item I sell. Transparency in business is important!

Great discussion, Amrita!

 

[pattye]

Amanda,

In the US, different states and each municipality has varying requirements. Only 5 states in the US do not collect sales tax. I operate under my legal name and my gov't issued social security number, and only have online business, not a store front. If I had a different business name, I would file it with the state for $50, and be assigned a registration number, renewable yearly. Most of the large wholesalers recognize that Oregon is tax exempt, and I have wholesale accounts, but with some of the smaller artisans, it takes a few emails back and forth.

 

[Amanda]

Thanks Pattye. Our VAT is similar to a sales tax, I suppose - it's levied on most things, but not all. Most foods are exempt from VAT, as are children's clothes and shoes, books, that sort of thing.

 

[lisa c]

I dont think tax laws and speed-limits carry MORAL weight. They aren't static, enforcement isn't applied even-handedly, and often the reason behind the law is dodgy, or protectionistic or outdated, or who knows what.

Maybe it all comes down to who has the strongest Lobby.

 

[pearlescence]

Does everywhere have cheaper sales tax than the UK
As for whole of EU..once an item has entered any one of the EU countries that is it. It pays its tax on entry then not again (although if I pay VAT/sales tax on something as a temp strand then sell it for more as finished jewellery there is tax on that added value). But if I sell a temp strand or whatever to any other EU country no tax for them and no customs.What happens when someone in one state sells to someone in another state..are there taxes as the item crosses the state line?
There is a moral and ethical dimension to paying taxes etc....it is ethical and moral to obey the law. so tax avoidance (not paying more than you have to by using legal means to minimise what is due) is okay but evasion..which is deliberately under-declaring so as to evade a properly due tax is not. It's part of the whole way you conduct your business

 

[KarinK]

I'm a consumer and live in Denmark. Here's an example why I do consider very carefully how and where I buy on-line. I resently bought a beaded vintage cardigan on eBay. It was $20. The Danish International Postoffice decided to open the envelope and sent me the following bill: Duty $0, VAT of importet goods $4.75, Fee $22, VAT of fee $5.40. Total extra cost for buying a used cardigan for $20 on eBay that I could not possibly get in Denmark = $32

When I need gemstones for my private projects, I do buy from dealers who routinely throw the strand in an envelope and write "samples" on it. If I was a dealer it would be different. Then I could deduct all the expenses including the VAT.

- Karin

 

[pearlescence]

Hi KarinK
If you buy anything from within the EU it should not be taxed any more or be subject to any tax or impost or whatever as it crosses a border between member states. If that cardigan came from another member state that looks like your post office is putting up a barrier to free movement of goods
Although since you have quoted the price in $ it might have come from America in which case it is entering the EU. Did it have a proper customs declaration on the outside which should have shown that no duty was due?
It is really annoying when that happens. When I get goods from outside the EU Fedex seems to be the worst for slapping any and every tax and duty i can think of (incorrectly) on items with UPS a close second (and they take about three weeks to think about it as well) (note that is these two companies's operations in the UK, not anywhere else in the world where they may be splendid)

 

[Adeline Leigh]

Oh Pattye, you have no idea! It's not just one freight forwarding centre in Oregon, it's an entire freight and logistics zone riding on the fact there is no sales tax in Oregon. http://www.cargofreightlogistics.com/Oregon.php

Numerous companies operate there to freight goods on to Asia and even Australia. Prices are ridiculously cheap as the packages are consolidated. So if I buy from 3 different vendors within the US (e.g. Gap, Kojimapearl and Drugstore.com) I have a fortnight to consolidate my 3 (or more) packages and as I said before, as long as each package's value does not exceed $320, I pay nothing for import charges nor taxes nor customs fees into Singapore, only $30 (or more) for the consolidated shipping. Thank the numerous Free Trade Agrrements Singapore has signed with the US.

Anyway, I thank you lot of ethical business owners for standing by your guns but like Karin, if the vendor decides to 'help' us out with a little cost savings, I'm not averse to that. Though I do hear my dad exhorting from Matthew now, "Render unto Caesar the things which are Caesar's..."

Since we are on taxes, I have to share Singapore's low low personal income tax rates. For the first $100 000, its 15%. No kidding. No wonder Eduardo Saverin (he of FB founder fame) is in town.

 

[pearlescence]

The converse problem with those freight forwarding centres is that I will not ship to them - every credit card fraud attempt I have ever encountered has used one as a shipping address

 

[Adeline Leigh]

Really Wendy? Wow! A magnet for crime as well? I never knew.

Should I have reason to be in doubt? I'm referring to Oregon, Portland. Though I have shipped my European buys through Merseyside in the UK before. Nothing bad came out from it but the shipping was expensive.

Back to Oregon: I've used their services for more than 5 years now and have so far have lost only 1 parcel. On average I have 3 shipments per month and this has been going on for the last 5 years.

Don't rule all of us out, we're not all shady characters

 

[KarinK]

Hi Wendy,

The Danish government was within their rights to charge me for the beaded eBay (US) sweater. Anything above a value of $13 is subject to VAT. But that doesn't mean I like it - or won't work my way around it if I can. What I paid here was almost all fee. They usually charge VAT of the shipping too. To me it seems more like concealed trade protection than anything else.

By now, of course, I am fully aware that if anything is shipped by courier from outside of the EU, it will be checked by customs. I know what the rates are, and I decide if I still want to purchase. Usually the answer is no, and in most cases the high taxes means that I just don't buy - not that I buy locally instead. There is no extra charge if I buy from e.g. the UK, so I do take that into account when I plan my on-line purchases. I also plan ahead for my yearly US visit.

- Karin

 

[Caitlin]

AZ has a sales tax. I can't remember what it is, about 5%. For years, we could get stuff shipped from other states and pay no sales tax to AZ. This year, they are going to collect sales tax from anything coming into AZ. I do not know how they will check us and enforce it, but I am planning on paying the State taxes about the time I do the income tax forms. The tax is on all goods except for what I resell, then I have to pay the tax, after I sell.

 

[Amanda]

Should I have reason to be in doubt? I'm referring to Oregon, Portland. Though I have shipped my European buys through Merseyside in the UK before. Nothing bad came out from it but the shipping was expensive.

A centre in Merseyside wouldn't reassure me, to be honest. It has a UK-wide reputation as a place for dodgy deals (-:

For example, "What do you call a Scouser* in a suit? Answer - the accused".

* Scouser is a person from Liverpool (Merseyside).

 

[est190]

I am not sure how it works outside of the United States, but in the United States the duty is on the importer (buyer) to categorize and classify and item that is being imported, not the Chinese (or any other) exporter to classify, for purpose of calculating duties. An item can be classified a number of different ways using different HS codes. If you classify a necklace as a pearl necklace, it may be subject to a 10.5% duty. If that same necklace has a has a silver clasp and is classified as a silver necklace, it may not have a duty at all. Same thing can be said for value. Value of the item is not the same as the purchase price, although it could be. A pearl necklace may be $50 in china and that same necklace could be $200 in the United State--what's the value of the item? Well, that's up to the importer to decide. Customs officers may check items, but they aren't appraisers and they aren't going to question the values and prices of most eBay purchases. It gets a little dicier when you're importing on a commercial level--that's when you need claims agents and brokers to help get shipments cleared. Fortunately, we don't have a VAT in this country (and God willing we never will).

Morphius, just a fyi, you can be as honest as you like and you because under NAFTA will never have to pay any import duties or taxes on any items you bring across the border. I am not sure if you have to declare a sales tax in Ontario, but I think that's also prohibited under NAFTA.

 

[morphius]

Morphius, just a fyi, you can be as honest as you like and you because under NAFTA will never have to pay any import duties or taxes on any items you bring across the border. I am not sure if you have to declare a sales tax in Ontario, but I think that's also prohibited under NAFTA.

Between Canada and USA, of course we have NAFTA - I wasn't referring to purchases coming into countries that are being sent from countries with which there is a shared free-trade-agreement...though I realize now that I did not specify this.

That said, I just ordered around $100 worth of silk thread from an American company...and I was charged duty when it came across the border...which I found rather odd.

 

[est190]

It may be that the product was actually imported from and manufactured in China. For NAFTA to apply, the product needs to be assembled/manufactured in the US. For example, you may be subject to duties if you bought loose pearls from pearl paradise, sine the we're not produced or manufactured in the US. However, if you by a necklace from pearl paradise, the necklace was strung in the US (i.e., assembled) and would not be subject to duties. It can get a little more complicated, but tat the scoop.

 

[Amrita]

There is a moral and ethical dimension to paying taxes etc....it is ethical and moral to obey the law. so tax avoidance (not paying more than you have to by using legal means to minimise what is due) is okay but evasion..which is deliberately under-declaring so as to evade a properly due tax is not. It's part of the whole way you conduct your business

That about sums it up for me Wendy - thanks!

 

[Amrita]

As perhaps the only expatriate online pearl seller based in China, I am ever so careful of following all the rules and laws both local and international. I like to think I work hard, I love the miracle of pearls, and would like to make available these pearls to pearl lovers all over the world with an assurance of trust, reliability and quality. I have acheived that to a limited extent, but it is so common to hear from people who contact me that they get pearls cheaper elsewhere (and have been assured of the same quality); that they routinely get under-invoiced pearls (with either the value understated or the item stated as gift/sample etc or as something else) from other vendors, that it gets demoralizing at times. I then hear so many people complaing that they received quality much "different" than they ordered..

Anyway, to go back to the basic question in my mind when I started this thread....I needed an affirmation and I have received a strong one from many good folks here. That affirmation has been summed up in the above words from Wendy that I have quoted in my post above. I believe that the essence of those words ought to be the fundamental principal based on which international buying and selling is conducted across frontiers. Thanks - I feel much better now!

It is interesting to see that there has been so much informative and knowlegeable exchange of facts about the commercial rules and regulations regarding import, export duties, taxes etc. at various places around the world. Keep the discussion going folks!

 

[Amrita]

I won't ask my suppliers to provide false information (although some automatically do), and I object if any overseas customers I have ask me to provide false information for ease of entry into their own countries.
These costs are simply a cost of doing business. They need to factored in to every transaction I make, and the pricing of every item I sell. Transparency in business is important!

Great discussion, Amrita!

Thanks Nerida! Great input!

 

[Amrita]

Hi KarinK
When I get goods from outside the EU Fedex seems to be the worst for slapping any and every tax and duty i can think of (incorrectly) on items with UPS a close second (and they take about three weeks to think about it as well) (note that is these two companies's operations in the UK, not anywhere else in the world where they may be splendid)

I have found TNT to be the fastest and most hassle-free when shipping into Europe from China - Fedex were terrible there. For USA shipments, Fedex service is unmatched.