The Wholesale Forums

[kyrool]

With the EU garnering a high import rate of products from around the world and resellers like most from the forums getting their stuffs from outside the EU. I was just wondering, would it be wise for suppliers outside the EU to actually devise a tax claiming system? It will allow customers to claim a decent or limited amount of money to cover the taxes imposed on the transaction of the products and they get to gain a competitive advantage over their competitors.

The prices of the products would be something that the suppliers would have to work out to their advantage. I know something almost similar in this line has been discussed before in the forums, whereby greedyboy actually asked on what people's preference were when it comes to prices of imported goods and its association with custom duty fees. (refer to link Imported Goods?)

Well, my idea was somewhat in between. Price the products moderately, somewhat between the price brought into the EU and already marked up, inclusive of VAT and the price before being brought in. But in addition, the supplier offers an incentive whereby it agrees to pay 50% of the tax or up to a max of 30 pounds if the goods imported are taxed. (just an example)

The objective of this incentive is to open up to a new target market; consumers who are not willing or fear of being taxed and those who have doubts in importing products and incurring a higher cost than expected. It would help kickstart those who are new to the import industry and simulatenously, give some confidence in them knowing that they will ultimately be assisted with their taxes. I may not be someone from Europe, but I have read instances whereby customers are only informed of their taxes on a particular product which they bought as far back as 3 months ago. So yeah, it might help these guys out too.

Also, the supplier will have some benefits to a certain extent. Besides being able to penetrate to a new market segment, I've read that there is a possibility that not 100% of the transaction of imported goods will be taxed. So in such a scenario, the supplier will manage to gain more loose change than usual.

On the other hand, suppliers may not generally want to incur any unnecessary cost and I believe this incentive would not be favourable to some. The whole idea is about being customer centric and putting the supplier at a competitive advantage. I don't think I have seen anyone done that before, but hey, I just thought I hear what your opinions are on this and perhaps I'd like to do something concrete on it eventually, test run the incentive or something.

Cheers.

[anotheruser]

skoolboyz, do your sums. Taxes and duties are due as a proportion of the value payable on those goods. Increase the price in any way and the amount of duties increases, so part of your "incentive" will be immediately swallowed. Try telling Revenue & Customs you're just hiding part of the tax . Here's their reaction:

I don't know how the Singaporean authorities would perceive such a scheme, but UK Revenue & Customs would identify it as tax fraud and jump on participating importers like a ton of bricks.

That's the legal side. From a practical side, I can see no advantage in taking on extra administration in exchange for dearer goods.

greedyboy's example was about giving his customers the option of letting him do the import administration, for which they would have to pay in dearer goods but duties already paid, accounting for part of the price difference, or doing their own and getting the full cost benefit, but having more work to do. In other words, prices were higher if they did less administration.