Planning to engage in re-export trade, inquiring whether re-export trade is subject to customs duties and at which stage they are levied. The best answer states that if goods briefly stay in a designated area in the transit country without entering its domestic market, the transit country typically does not levy import duties; however, if they enter the domestic market for sale, duties must be paid according to policy. The country of origin and the destination country will also levy import and export duties according to their own regulations, so it's essential to understand relevant policies in detail before commencing.
How Much Tax Is Generally Levied on Re-export Trade? Find Out Now!
Resolved
I'm planning to start a re-export trade business recently, but I'm not entirely clear about which types of taxes will be involved in this process and specifically how much tax will be collected. Are there any knowledgeable friends who can explain it to me? I hope you can provide detailed information, including tax rate standards under different circumstances, so I can have a clear understanding and plan for cost accounting in advance.
Trade Expert Insights Answers
The types and rates of taxes involved in re-export trade vary depending on the policies of different countries and regions. Generally, common tax types include Value-added tax (VAT) and customs duties.
Regarding VAT, if goods merely make a brief stop in the transit location and no substantial processing or value-adding occurs, VAT is usually not required. However, if processing or other value-adding activities are performed, VAT may need to be paid according to local regulations, with tax rates generally ranging from 0 - 20%. For instance, some countries might have a 17% rate, while others implement zero-rate policies.
In terms of customs duties, countries have different policies for re-exported goods. Some countries, to encourage re-export trade, adopt low tariff or even duty-free policies for re-exported goods; while others will levy customs duties as a certain percentage of the goods' value, with tax rates potentially ranging from 5% - 20%. The specific tax rates must be determined according to the relevant tax regulations of the particular country or region involved in the re-export trade, and it is advisable to consult local customs or tax authorities in detail before commencing operations.
Re-export trade may sometimes also involve stamp duty, though the amount is usually small. It is generally levied as a certain percentage of the contract amount, such as three to five ten-thousandths.
Some regions levy business tax on service income from re-export trade, with a tax rate of approximately 5%. However, many places have now transitioned from business tax to VAT, so the specifics still depend on local policies.
When conducting re-export trade in certain free trade ports, tax policies are very favorable, with basic customs duties being zero, and special concessions for VAT and other taxes. These regions can be a key focus.
If insurance premiums are involved in re-export trade, there might be related taxes and fees, but the proportion is not high; the specifics depend on local insurance industry tax regulations.
If the warehousing link is involved in re-export trade, some taxes and fees may arise. For example, warehousing services might involve VAT; the specific tax rate depends on local regulations.
Freight costs during transportation may incur related taxes and fees due to local policies, but there are significant differences in policies between different transportation methods and regions.
If re-export trade involves financial services, such as bank handling fees, there may also be taxes and fees. Specifics need to be consulted with financial institutions and local tax authorities.
Some countries levy miscellaneous fees like port construction fees on re-exported goods. Although not strictly a tax, they are also part of the cost and should be noted.