When you ship your products internationally, you have to keep many things in mind. People must know foreign shipping laws, taxes, import and export duties. Many companies fail because they do not know how to deal with international taxes. Regardless of where you are shipping your goods, taxes should not be taken lightly. In some countries, you have to pay excise and customs duties on your shipments. People have to pay tariffs, also known as import taxes in some places. Import duties vary from category to category. Each country has its own harmonized codes that are used to classify the products into various categories and types. People have to pay different taxes like import tax, value-added tax, IFTA tax, and the government’s goods and services. Let’s know about all the taxes and what is IFTA tax in detail.Read More
Sales Tax: Sales tax is the additional amount of money a person pays when he purchases a good and service. This is mostly calculated in the form of a percentage. The local government imposes this tax on goods and services. The seller collects this tax from the customer after the purchase of a product. After collecting people’s sales tax, the government uses it to maintain schools, roads, and other government properties; for example, if you purchase a washing machine worth $450 and have to pay an additional sales tax of 6 % on it.
Goods and Services Tax (GST): GST is an indirect tax that has replaced many taxes like VAT, excise duty, and service tax. It is imposed on goods and services used for consumption. Some countries use GST in place of VAT. Before shipping your goods, you must be aware of the tax law in that country or state. This will make the whole process of shipping easier and allow people to save them from excise duties. Both central and state governments impose GST.
Value-added Tax (VAT): This tax is imposed on every step of the supply chain, but it is ultimately charged at its final stage. In simple words, VAT= output tax – input tax. It added to the raw materials and then the finishing products. It is a type of consumption tax that is imposed on goods and services. Most companies and businesses add VAT to the final price of a product. The VAT rate depends on the type of product being sold.
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Many have come to know that the companies have to pay several taxes to ship their products internationally from the above tariffs. The main reason for paying taxes is that the companies have to declare their import to the local customs if they do not want to face legal actions. People have to pay import taxes on foreign goods in a country. After the companies have shipped their cargo, they have to pay the customs department’s duties and taxes. You must clear these duties and taxes before delivering the products to your customers. People can calculate their taxes by the following methods. There are two types of taxes that people do not know about, CIF and FOB. CIF stands for money spent on goods, insurance, and freight. Freight and logistics businesses use fuel tax software to pay and calculate their taxes.
Meanwhile, FOB stands for free on board. This indicates the additional price the companies need to deliver goods to their customers. Businesses include transportation, handling, dispatching, and other essential costs in FOB.
Other charges on import and export include excise duty, consumption, and clearance tax. The customers have to pay the airline handling, security, and courier fee to get their goods. Tax fees are specified to a country. Some charge more money and some less, but overall both the customers and the companies have to pay the taxes. Some countries have a specific process to clear your goods from taxation, and others allow people to pay their dues online. Generally, people panic at the thought of paying taxes. This should not be the case. While understanding taxes is complicated, you save your time and energy if you do it right. The companies should understand the process of calculating, compiling, and filing their taxes. This will allow them to do their business legally and follow the guidelines set up by the government.
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Many ifta program and tools are available for companies to understand the taxes they have to pay to the government. These softwares are user-friendly and can be operated by anyone without any prior training. They make your work easier and allow you to pay your tax dues on time. This saves a business from tax audits and defaults. Many IT and software companies have made tools and softwares to help businesses to file their taxes. You just fill in the required information, and these programs generate automated tax reports for you. As they are web-based, they leave a place for errors or mistakes. It allows the companies to file their taxes on time and saves them from tax and penalties. Using these softwares, they can manage their dues with ease and concentrate on other aspects of their business.