How much is import tax
Help! Why did I have to pay so much import duty?
AS more and more people learn how to build a successful Import Export Business by trading profitably on international internet auction sites like eBay. there is a constant flow of new enthusiasts who are becoming importers for the first time. Auction site discussion forums regularly feature complaints from novice buyers about the unexpected import taxes they are expected to pay on the doorstep when that eagerly awaited parcel from abroad actually arrives. Many such people importing goods for the first time are surprised (and often shocked) at the amount of tax which they can be required to pay. Some buyers even try to claim these unexpected import charges back from the unfortunate seller, who could be on the other side of the world.
To help avoid these unpleasant surprises, below is an outline of how the UK (United Kingdom) and EU (European Union) import taxes are calculated. Notice that UK and EU import tax rates are now harmonised into one combined tariff - the TARIC. The UK import regulations outlined below are equally valid for all member states of the European Union.
Importing From European Union States
In order to know whether import tax is likely to be charged, you need to know which countries are currently members of the European Union, because imports from EU states into the UK are not charged import duty.
National Currencies and the Euro
Some of the EU member States have merged their individual currencies into a Single European currency - the Euro. However, the Euro is not yet a common European currency, as is sometimes assumed outside Europe. Membership of the European Union does not also mean automatic immediate membership of the common Euro currency.
EU members Denmark. Sweden and the UK have not adopted the Euro currency, and retain their own national currencies. Switzerland and Norway also retain their national currencies, because they are not members of the EU. Some fear sleepwalking into a European Superstate, and a loss of political and economic independence, particularly the ability to vary interest rates according to the current prevailing local economic conditions.
How countries agree common trade practices with each other
In order for international trade to operate as smoothly as possible, it is necessary for countries to agree a common set of trade standards and practices between them. A previous more loose arrangement called the General Agreement on Tariffs and Trade (GATT) has grown into the World Trade Organisation (WTO ). International trade practices are in the first instance agreed between countries via the WTO, which is the only international organisation overseeing the rules of international trade. There are at present around 147 member countries. The WTO administers and polices free trade agreements, arbitrates in trade disputes
between governments, and organises trade negotiations. Whereas GATT only regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking. more.
In the volatile world of international commerce political tensions often give rise to trade disputes. It is possible that increased import duties and/ or sanctions may be in force between certain countries which may affect you as you read this. Check current trade disputes reports or with HM Revenue & Customs if substantial sums of money could be involved.
Import Duty and Excise Duty
All goods, new or used, imported into the EU from outside the EU are subject to Customs Duty (Import Duty or Import Tax) and VAT (Value Added Tax) according to their value and import tax classification. All goods imported into the UK from outside the EU must be declared to HM Customs & Excise and in most cases this includes goods bought over the Internet.
How to Get Started in International Trade!
by Carl A. Nelson
". a beginner's guide to starting an import export business. It covers the basics, including choosing a product, making contacts, market research, market planning and pricing. It explains the intricacies of taxes, customs and tariffs and a new chapter examines e-commerce, outlining the ins and outs of importing and exporting online. Tips and success stories appear throughout the text. Covers trading procedures for EU countries. more. "
Imports by Mail, Freight and Cargo
(Personal travel imports - see below)
Import Duty rates are set annually by the EU, and run from 1st January to 31st December. They are published by each EU country in a "Customs Tariff". The UK version is published in three large loose leaf binders, allowing for constant updates to be inserted or substituted.
The Customs Tariff groups all goods into various classifications in order to arrive at a rate of Duty. The broad classifications are divided into 21 sections, which are divided into 97 chapters. There are approximately 14,000 sub-classifications. Each classification is identified by a ten digit code number. more.
Import Duty is usually percentage based. It averages at between about 5% and 9% - but with extremes in some cases between nil and 85%.
IF the consigment is liable to Customs Duty (see the "Tax Free Allowances" section below) Customs assess the total amount of Customs Duty to be paid based on the value of the goods, PLUS the transport and insurance costs to the country of destination. Other costs may be included such as tools, dies, moulds, design work, royalties, licence fees. more. Note that VAT (Value Added Tax) is then added.
Example of Import Duty and VAT calculation
The Ј sign indicates UK Pounds
(sometimes written as GBP - Great Britain Pounds)Source: www.sloanefox.freeserve.co.uk