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Importing & Taxes Question

Discussion in 'Import & Export' started by Jack Nelson, Oct 21, 2017.

  1. Jack Nelson

    Jack Nelson

    Joined:
    Oct 20, 2017
    Messages:
    3
    Hey All,

    Not sure if someone on here may be able to help with some confusion I’m in. It is with regards to importing, tax & duties and who is liable for them. I’ve done a lot of importing from China so very familiar with all correct terms, payment etc. if it is straight forward as me as the buyer.

    However, this one might be different but it may not be…….I have a feeling I know the answer but wanted some other thoughts.

    Initially, just to let you know what I do. Company is call Muztag Outdoor Fire Ltd & I import outdoor fires to sell to retail & trade (not consumers). The factory in China is a joint venture.

    Situation 1

    I have a slightly larger retailer wanting to buy the product in volume, 20ft or 40ft, so wants a better price than the standard trade delivered price.

    However, I do not want to process the order direct with our Chinese factory.


    So, they will place an order on Muztag Outdoor Fires in UK, then Muztag Outdoor Fires will place order against our factory in China.

    Muztag Outdoor Fires work FOB with my factory in China.

    I want the container to be delivered direct to the customer. It isn’t a problem if the end user sees the shipper on BOL, as they know that it is coming from China & if they tried to make contact/order with my production factory direct the factory would refuse.


    So here are the questions:

    1) Would Muztag UK have to deal with the shipment once its loaded onto the vessel at origin port to destination port & then pay all the shipping duties/VAT etc.?

    2) Could the end retail customer pick up the responsibility once its loaded onto the vessel at origin port to destination port & then pay all the shipping duties/VAT etc. although the order was between Muztag & Chinese factory?


    If the answer is 1, which I think that it is, as Muztag are technically the importer because the order is between Muztag & the Chinese factory, then how would you quote this?


    - Possibly quote the unit price, then charge the shipping, duties & VAT separately?

    - If we did it that way, do I still need to charge VAT on the unit price to the retailer, as they would have technically paid Muztag UK VAT for these products during import?



    Situation 2

    Similar (ish) scenario but I’ve got a large Swedish wholesaler wanting to buy container loads of the product.

    Again, I want to process it through Muztag UK instead of direct through our China factory.


    So, they will place an order on Muztag Outdoor Fires in UK, then Muztag Outdoor Fires will place order against our factory in China.

    Muztag Outdoor Fires work FOB with my factory in China.

    I want the container to be delivered direct to the customer. It isn’t a problem if the end user sees the shipper on BOL, as they know that it is coming from China & if they tried to make contact/order with my production factory direct the factory would refuse.


    So here are the questions:

    1) Would Muztag UK have to deal with the shipment once its loaded onto the vessel at origin port to destination port & then pay all the shipping duties/VAT etc. in Sweden?

    2) Could the end wholesaler pick up the responsibility once its loaded onto the vessel at origin port to destination port & then pay all the shipping duties/VAT etc. Sweden although the order was between Muztag & Chinese factory?


    For this one, I think its actually 2, because I wouldn’t be charging any VAT to Sweden anyway, nor would I be paying any import duties because its not landing in the UK or being used/sold in the UK.


    Not sure if any of you may have had similar situation that you can offer any thoughts.


    I really appreciate any advice on this.
  2. Cody

    Cody

    Joined:
    Feb 17, 2016
    Messages:
    1,221
    Import Expert likes this.
  3. Cody

    Cody

    Joined:
    Feb 17, 2016
    Messages:
    1,221
  4. Import Expert

    Import Expert

    Joined:
    Oct 6, 2011
    Messages:
    3,331
    Hi Jack,

    Essentially both 1) and 2) are options for Scenario 1. 1) Muztag UK could be the import of record, you could pay the import Duty and VAT and then get the container delivered direct to your customer. What amount you charge per unit should therefore reflect that you would be paying the Import Duty (VAT can be reclaimed). With regards to sales VAT, this is different to import VAT so you should do whatever you would do normally for this. 2) Muztag can still be the importer but you could get your customer to make the customs declaration, so they would pay any Duty/VAT. With this scenario they would need to customs clear the goods using the commercial invoice from Muztag UK to the customer, rather than the invoice from the factory to Muztag UK, so it would be a little more expensive as would incorporate your margin.

    For Scenario 2) as the buyer is in Sweden and goods would be shipping there directly then your customer would need to be the importer and make the import customs declaration.

    I hope that helps?

    Kind regards,
    Darren.
  5. Jack Nelson

    Jack Nelson

    Joined:
    Oct 20, 2017
    Messages:
    3
    Thanks for the advice Darren. This has been really helpful.

    I would prefer the customer to go with option 2, which I'm sure they will :)
    Import Expert likes this.
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