8 beliefs that can land you in trouble while selling across international borders.
Summary-This blog sheds light on
- Common beliefs that cross border sellers have
- Why do those understandings mean trouble?
- How to avoid trouble and have a seamless selling experience?
Businesses looking for new opportunities to grow their horizons should consider trying out new markets. For example, a local seller of handmade purses from Rajasthan would do great business selling in Germany. Or Lucknowi Kurtas would trend like wonders in the USA. This isn’t new for 2021. Many sellers are approaching international markets with the help of online marketplaces, and even independently. But a lot of such trades are happening without a complete understanding of international compliances. As a result, sellers face hindrances. That means a bad experience for the sellers and disappointment for the buyers. Here is a list of the most common misbeliefs that are observed in the minds of the majority of international sellers.
1) Selling across the border is only receiving money and shipping.
As easy as it seems, many businessmen are quickly venturing into international markets. The ways of reaching out to new buyers and the means of shipping have become very accessible. Therefore, people jump into selling quickly. Only a few of them come across the complexities involved in selling abroad before a deal is set. They often think that once you sell something and take care of shipping, it reaches the buyer. The goods are then stuck at customs. Sometimes they also have to pay heavy fines/duties to release them.
2) Selling goods and calling them gifts.
Many sellers sell their goods and categorise them as gifts. As common as this way out is, the authorities are catching up with discrepancies. Laws are becoming more and more stringent and the consequences are heavy penalties and even jail, depending on what country you are shipping to.
3) Shipping company takes care of the costs.
This is another belief that a lot of small, new businesses have. But who pays the dues at customs or what the final landing costs are, depends totally on the incoterms you picked. If you are someone who had this belief at the time of your first international sale, you would know the kind of trouble you landed into.
4) We only ship products, the rest of the compliance is taken care of by the customers.
The DAP model for cross border sales works this way, where the seller takes care of the shipping cost but the buyer has to collect the parcel after paying whatever duties and taxes that are applicable in that particular country. Although this model is convenient for the sellers, there is ambiguity regarding the final take-home price of the product. The amount of taxes come to the buyer as a surprise. Despite the convenience, customers are unhappy and the reputation of the business is also hampered.
5) Undervaluing products to avoid customs.
‘Jugaad’ is now an internationally recognized word. Many sellers resort to this commonly known jugaad of disclosing a lesser value than the actual value for goods that they export. This is mainly done to avoid or reduce taxes. But as mentioned before, this jugaad is commonly known and the authorities are taking it seriously by weeding out suspicious transactions. Rules are getting strict and if you are resorting to such methods, you better be careful. The fines and penalties are high and in some cases, you might even get into jail.
6) Delivery time isn’t our concern. The parcel has been shipped.
Sellers should know that every action they choose to take or choose to not take is ought to affect their business. If parcels are getting stuck at customs and the goods are reaching the customers later than what was promised, the customers are disappointed and it might affect the goodwill of your business.
7) Weight of the product would decide the duties.
The weight of the goods you are shipping affects the shipping costs. But that hardly affects the taxes of duties you would have to pay. The taxes depend on the category the product falls into. These categories are dependent on many factors, the type of product, tax categories they fall into, the country of sale as well as the country of the buyer. These are defined by globally recognised HS codes. If you assign proper HS code for the product you are selling, you can.
8) Sellers often think that anything can be sold to other countries.
But they miss the fact that almost every country in the world restricts the trade of certain goods into their country. This obstructs sales but is done with the sole purpose of protecting the local businesses or safeguarding the health and wellbeing of its citizens. You can land in trouble for selling restricted or prohibited goods into a foreign land and so you need to know more about what you can sell and what you can not. You’d find more about restrictions and prohibitions here.
Avalara helps businesses of all scales in managing their tax compliances with the help of automation. Avalara Cross Border Solution makes use of AI to map HS codes according to the details of transactions and the duties can be calculated within no time. Now is a good time to automate your tax complexities for a better selling experience.
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